Salesforce shares plummet, US market reacts to economic concerns

On Thursday, the US stock market faced a downturn as Salesforce shares tumbled, impacting the Dow. This decline was triggered by concerns over slower economic growth in the first quarter, leading to speculations of potential interest rate cuts by the Federal Reserve later in the year. Salesforce's stock took a hit of 20% after the company projected lower second-quarter profits and revenue, citing weak client spending on its cloud and enterprise products.

The US gross domestic product growth for the first quarter was revised down to 1.3% from the initial estimate of 1.6%, primarily due to adjustments in consumer spending, as reported by the Commerce Department. Additionally, the core Personal Consumption Expenditures Price Index for the first quarter was slightly revised down to 3.6% from 3.7%, setting the stage for the upcoming personal consumption expenditure report for April.

Following these developments, US Treasury yields saw a decline, with the likelihood of a 25-basis-point interest rate cut in September rising to nearly 52%. Analysts believe that the revised inflation data could help stabilize stocks and ease pressures in the bond market.

The uncertainty surrounding monetary policy, coupled with increased Treasury issuance, has led to higher bond yields and downward pressure on stocks. Investors are eagerly anticipating statements from key Federal Reserve officials to gain clarity on the market's direction.

Despite the declines in the S&P 500 and Dow Jones Industrial Average, small-cap stocks represented by the Russell 2000 Index showed some signs of recovery. Noteworthy stock movements included Tesla's 2.7% gain following progress in registering its 'Full Self-Driving' software in China, and American Eagle Outfitters' 6.5% drop due to disappointing quarterly revenue.

Retailer Kohl's experienced a significant 25.2% decline after revising its annual sales and profit forecasts downward. On a positive note, Best Buy and HP emerged as top gainers in the S&P 500, with Best Buy reporting better-than-expected quarterly profits and HP surpassing second-quarter revenue expectations.

In summary, the US stock market remains responsive to economic data and corporate earnings, influencing investor sentiment and driving stock movements. While challenges persist, opportunities for growth and recovery are also evident, highlighting the dynamic nature of the financial landscape.