Worries are rising about the hit Accenture may take to its revenue from the US government as Elon Musk leads efforts to cut federal spending. The federal government accounted for 17 per cent of Accenture’s North American revenue last fiscal year, and its stock dropped 7.2 per cent.
The broad US stock market was likely due for its recent drop, which took it more than 10 per cent below its all-time high in just a few weeks, after prices climbed so much faster than corporate profits to make it look too expensive, said Barry Bannister, chief equity strategist at Stifel.
He said the S&P 500 could bounce higher in the near term, particularly after Fed officials indicated Wednesday they still see room to cut interest rates twice this year. Lower interest rates would give a boost to the economy, as well as prices for investments. The market has also traditionally had “relief rallies” after major, long-term upward runs for stocks cracked.
But Bannister expects stock prices to remain under pressure as the economy’s growth slows more sharply in the second half of the year and as inflation remains stubbornly high. That could create a mild form of “stagflation,” which is something the Fed doesn’t have good tools to fix. The Fed could lower interest rates further to help the economy, but that would also push upward on inflation.
On Wall Street, Darden Restaurants climbed 5.1 per cent after reporting profit for the latest quarter that matched analysts’ expectations. That was despite what the company behind Olive Garden, Ruth’s Chris Steak House and other restaurant chains called “a challenging environment.”
Discount retailer Five Below rose 7 per cent after reporting quarterly revenue and profit that topped analysts’ expectations. The Philadelphia company also issued strong sales guidance and said it expects to open 150 stores this year.
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In stock markets abroad, London’s FTSE 100 fell 0.1 per cent after the Bank of England held its main interest rate steady.
Indexes fell more sharply across much of the rest of Europe, and German stocks in the DAX lost 1.2 per cent. The loss was even worse in Hong Kong, where the Hang Seng index fell 2.2 per cent following heavy pressure on tech-related stocks.
In the bond market, the yield on the 10-year Treasury fell to 4.23 per cent from 4.25 per cent late Wednesday.
