Dow Plummets 300 Points as Salesforce Takes a Nosedive

May 31, 2024
Paul Svensen

The Dow Jones Industrial Average fell by 300 points on Thursday, driven primarily by a significant drop in Salesforce shares. The broader market also experienced declines, with the S&P 500 and Nasdaq Composite both ending the day in the red. Investors are increasingly concerned about the economic outlook and potential interest rate hikes by the Federal Reserve.

Key Takeaways

Dow Jones Industrial Average fell by 300 points, or 0.9%.
Salesforce shares plummeted nearly 20% after a disappointing earnings report.
S&P 500 and Nasdaq Composite also saw declines of 0.6% and 1.1%, respectively.
Treasury yields slipped, with the 2-year note falling to 4.927% and the 10-year yield down to 4.553%.
Economic data showed slower-than-expected U.S. GDP growth and a slight increase in weekly jobless claims.

Market Performance

The Dow Jones Industrial Average dropped 300 points, or 0.9%, closing at its lowest level since May 1. The S&P 500 fell by 0.6%, and the Nasdaq Composite declined by 1.1%. Despite the overall market downturn, the Russell 2000 index managed to gain 0.8%, driven by small-cap stocks.

Salesforce’s Impact

Salesforce was the biggest drag on the Dow, subtracting about 352 points from the index. The company’s shares plummeted nearly 20% following a disappointing earnings report, which revealed that sales growth would stall to the slowest pace in its history. This marked Salesforce’s most significant decline since 2004.

Economic Indicators

Economic data released on Thursday showed that the U.S. economy grew at an annualized rate of 1.3% in the first quarter, down from an initial estimate of 1.6%. Personal consumption, the main driver of economic growth, also saw a downward revision from 2.5% to 2.0%. Additionally, weekly jobless claims increased slightly, adding to concerns about the labor market.

Treasury Yields and Inflation

Treasury yields fell on Thursday, with the 2-year note dropping to 4.927% and the 10-year yield declining to 4.553%. The decline in yields was attributed to softer economic data, which has fueled hopes for potential interest rate cuts by the Federal Reserve later this year. Investors are now closely watching the upcoming release of the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, which could significantly impact market sentiment.

Corporate Movers

In addition to Salesforce, several other companies made headlines on Thursday:

Nvidia: Shares slipped but remained up around 123% for the year.
Merck: Shares fell 1.6% after a competitor’s cancer-treatment candidate outperformed its top-selling drug, Keytruda.
Natural Gas Futures: Fell by 3.5% following a mixed inventory report.
Dell Technologies: Shares dropped nearly 8% despite better-than-expected results in its infrastructure solutions group.
MongoDB: Stock plummeted more than 20% due to revenue guidance falling short of analysts’ estimates.

Looking Ahead

Investors are now turning their attention to the upcoming release of the PCE price index on Friday. This key inflation measure could provide further insights into the Federal Reserve’s future monetary policy decisions. Additionally, earnings reports from Costco, Gap, and Dell are expected to offer more clues about the health of the corporate sector.