Today in the Market (5/23/2024)

Good Morning! On Thursday, U.S. markets declined from their highs with the Dow Jones falling the hardest by 1.53%, followed by the S&P 500 with a decrease of 0.74%, and the Nasdaq down by 0.39%, despite the great Nvidia (NVDA) earnings.

OOPS WRONG BUTTON

Citigroup (C) has been fined a total of £62 Million ($79 Million) by UK authorities due to flaws in its trading system, which posed a significant risk of flooding European markets with equities worth $189 Billion.

How did this even happen? In May 2022, the Bank of England pointed out an event involving a Citigroup trader who mistakenly sold equities worth $1.4 Billion on European markets. This mistake caused a sudden and significant drop in stock prices, often referred to as a “flash crash” by brokers.

So how much was supposed to be sold? The Financial Conduct Authority (FCA) said that the trader had originally planned to sell equities valued at $58 million. However, due to a mistake in data entry, an order was placed to sell stocks worth $444 billion instead. Luckily, Citigroup’s systems prevented $255 billion from being processed, resulting in $189 billion being transferred to its trading platform for further sale during the remainder of the day. However, the dealer eventually terminated the transaction, but only after $1.4 billion worth of equities were sold

25 MONTH HIGH

In May, S&P Global’s flash U.S. composite PMI, which measures activity in both the services and manufacturing sectors, increased to 54.4 from 51.3 in April. However, economists had anticipated that the index would stay relatively stable in May, but PMI has reached a 25-month high.

So is the 54.4 good? Well, if the index has a score over 50 then it implies sector growth, while levels under 50 suggest contraction. With that in mind, the service business activity was the primary driver of the increase in the PMI index. In fact, the service business activity increased from 51.3 to 54.8, while the manufacturing output only increased from 51.1 to 52.4 from April to May.

How does this line up with other reports?  According to other recent reports, the economy is showing signs of slowing. The first estimate of the Q1 GDP revealed that the U.S. economy expanded at a slower pace than previously assumed, while the April jobs report showed that there were fewer jobs created than projected and that the unemployment rate had increased.

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