Stock market news for May 16, 2024: Dow 40,000

Stocks closed lower, turning their performance around after all three major indexes rose to new intraday highs Thursday morning.

The Dow Jones Industrial Average lost 38.62 points, or 0.10%, to settle at 39,869.38. The 30-ticker benchmark had earlier crossed over the 40,000 level for the first time in history.

The S&P 500 and Nasdaq Composite, which also notched intraday highs, respectively slid 0.21% and 0.26%. The broader market index closed at 5,297.10, while the tech-heavy Nasdaq closed at 16,698.32.

— Lisa Kailai Han

Backed up by artificial intelligence-related tailwinds, the tech sector has largely led the current market rally. Shares of graphics processer manufacturer Nvidia are up 91% this year alone.

Despite this bull run, Barclays is still constructive on the sector.

“Big Tech fundamentals still look good here and we think there’s room to run over the next couple of quarters, even though the bar for the group to deliver has been set very high. Big Tech revisions have strengthened further post-Q1 earnings, bifurcating even more from the rest of the S&P 500,” strategist Venu Krishna wrote in a note.

Krishna added that the defensible margins that characterize the sector also have scarcity value in an increasingly troubling macroeconomic environment.

— Lisa Kailai Han

Costco Wholesale Corporation rose more than 1% Thursday to an all-time high of $804.50 per share on an intraday basis, marking the first time the membership-only big-box store has topped the $800 threshold.

When the retailer merged with Price Club in 1993, the shares were only trading under $10 apiece. The stock is up more than 20% this year, outperforming the S&P 500’s 11% gain.

The late Charlie Munger, who was on Costco’s board, was an early investor and a big champion of the retailer, calling himself a “total addict” to the company. He was a big fan of Costco’s membership business and rewards program as well as its big, efficient stores and consistently strong management. He believed Costco will eventually become a huge internet player, threatening Amazon in the process.

The company is set to report fiscal third-quarter earnings on May 30. Costco had missed Wall Street’s revenue expectations for its holiday quarter despite reporting year-over-year sales growth and strong e-commerce gains.

— Yun Li

While Big Tech has led the current market rally, Barclays sees much more room ahead for outperformance from other sectors.

“Broadening has been modest and we think there’s room for a lot more. Earnings growth is the most likely catalyst, in our view,” strategist Venu Krishna wrote in a Thursday note.

Krishna noted that investors have already accounted for much optimism in Big Tech’s current earnings estimates, meaning that comps could be challenged going forward.

“We think this creates an opportunity for the rest of the S&P 500 to contribute more meaningfully to YoY earnings growth in 2H24 and into 2025, provided the macro backdrop remains supportive,” the strategist added. “In an encouraging sign, revisions for the rest of the SPX have also improved following the Q1 earnings season.”

— Lisa Kailai Han

Retail investor participation in GameStop hit a three-year high on Monday, according to JPMorgan.

Everyday traders were involved in the video game retailer’s stock at a level of around 30% on Monday after the online return of “Roaring Kitty,” the user credited with helping spur 2021’s epic meme stock squeeze. That is a level not seen since 2021, JPMorgan data shows.

Despite that, the meme stock rallies have fizzled as the week has gone on, making Monday’s moves appear to be more of a fad than a harbinger.

— Alex Harring