Key Takeaways
- US indices opened lower following a significant miss in the Philadelphia Fed Manufacturing Index, which plunged to -0.4 in May, far below the 17.8 estimate.
- WTI Crude futures surged 4%, continuing a strong rally, while Spot Gold fell 1% to $4,507.37 per ounce as market volatility shifted toward energy.
- Microsoft (MSFT) announced a massive $1 billion+ collaboration with EY and claimed its new Maia 200 chip is more cost-effective than Nvidia (NVDA) hardware for specific AI tasks.
- Initial Jobless Claims remained steady at 209K, slightly beating expectations, while Housing Starts and Building Permits both outperformed analyst forecasts for April.
- The Trump administration signaled a major policy shift, announcing plans to postpone Biden-era refrigerant regulations and HFC phaseout requirements.
Markets Open in Red Amid Manufacturing Slump
Wall Street started the day in negative territory as investors reacted to a sharp contraction in manufacturing activity. The S&P 500 dropped 31.53 points (0.42%) to 7,401.44, while the Nasdaq fell 146.48 points (0.56%) to 26,123.88. The Dow Jones Industrial Average also slipped 0.29% to 49,862.25.
The primary catalyst for the decline was the Philadelphia Fed Business Outlook, which crashed to -0.4 from a previous reading of 26.7. This unexpected weakness overshadowed positive data in the housing sector, where Building Permits rose 5.8% to 1442K, beating the 1384K estimate.
Energy and Commodities Diverge
WTI Crude futures jumped 4% on Thursday, extending recent gains amid shifting global supply expectations. Market analysts suggest the rally reflects tightening energy markets, even as other commodities faced selling pressure.
In contrast, Spot Gold retreated from recent highs, dropping 1% to trade at $4,507.37 per ounce. The move comes as the U.S. dollar showed resilience despite the mixed economic signals and as investors rebalanced portfolios following the manufacturing data release.
AI Arms Race: Microsoft, Anthropic, and Intel
Microsoft (MSFT) made several major announcements, including a partnership with EY to invest over $1 billion in a new project. The tech giant also claimed its Maia 200 AI chip offers better cost-efficiency than Nvidia (NVDA) chips for certain inference workloads, signaling intensifying competition in the semiconductor space.
Meanwhile, Anthropic is reportedly in early talks with Microsoft regarding AI chips and is expanding its Azure server rentals. Intel (INTC) also revealed its "Superclaw" design, aimed at powering AI PCs, agentic computers, and edge devices, as the company seeks to regain footing in the hardware market.
Geopolitical and Regulatory Shifts
The White House announced that President Trump will postpone the phaseout of hydrofluorocarbons (HFCs) and other refrigerant regulations established by the previous administration. This decision, to be formally announced with the EPA Administrator, represents a significant rollback of environmental mandates.
On the global stage, President Putin characterized nuclear weapons usage as a "last-resort measure" during drills with Belarus. Simultaneously, the IMF warned that the French economy faces "high uncertainty" due to election concerns and Middle East conflicts, which may hinder necessary budget adjustments.
Corporate Developments and Labor Trends
Parker-Hannifin (PH) reached a $2.5 billion deal to acquire a unit of KKR-owned Circor, marking a significant consolidation in the industrial sector. In the labor market, Bank of England official Taylor noted that while the UK labor market is "quite weak," wage normalization remains on track, though GDP growth is expected to remain sluggish.
In the U.S., Initial Jobless Claims for the week ending May 16 came in at 209K, nearly matching the 210K estimate. The stability in claims suggests the labor market remains resilient, even as manufacturing indicators point toward a potential slowdown in industrial production.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.