* Dow Jones Industrial Average closed down 1.53%, marking the largest single-day drop since March last year

* Nvidia's stock surged 9.32% after earnings, with a market value exceeding $2.55 trillion

* US May Composite PMI index rose to 54.4, the highest level since April 2022

On Thursday, May 23rd, local time, investors weighed the prospects of inflation and interest rates, leading to a decline across the three major US stock indices. The Dow Jones Industrial Average experienced its largest single-day drop since March 2023, following data that showed the US economy regaining momentum after two months of slowing growth. The expansion of business activities in May was the fastest in over two years, coupled with more hawkish signals from Federal Reserve members on interest rate prospects, which offset the optimism brought by Nvidia's strong earnings expectations.

By the close of the day, the Dow Jones Industrial Average had fallen 605.78 points, or 1.53%, to 39,065.26; the Nasdaq Composite Index fell 65.51 points, or 0.39%, to 16,736.03; the S&P 500 Index dropped 39.17 points, or 0.74%, to 5,267.84.

JPMorgan analysts believe that the steady growth of the US economy and the strong performance of AI chip leader Nvidia imply that there may be room for further increases in US stocks.

"As the artificial intelligence theme continues to play out and macro assumptions remain unchanged, we may continue to set new historical highs," wrote Andrew Tyler, head of US market research at JPMorgan, in a report to clients. He believes that the growth of the US Gross Domestic Product (GDP) reaching or exceeding trend levels, positive earnings prospects, and the possibility of slightly looser monetary policy from the Federal Reserve later this year are factors that currently place the US stock market in a favorable position.

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PMI initial values hit a new high since April 2022

Data released by S&P Global on the 23rd showed that the US May Markit PMI initial value recorded 50.9, a new high in two months; the May services PMI initial value recorded 54.8, a new high in 12 months; the May composite PMI initial value recorded 54.4, a new high in 25 months.

Meanwhile, data released by the US Department of Labor showed that for the week ending May 18th, the number of initial jobless claims fell by 8,000 from the previous week, adjusted for seasonality to 215,000, lower than the expected 220,000.After the data release, the interest rate futures market anticipates that the Federal Reserve will only cut interest rates once in 2024, with the possibility of a rate cut in September falling to 52.2%.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that these figures indicate that the U.S. economy will once again achieve strong growth in the second quarter. In addition to output rising due to the recovery in order growth, business confidence has also improved, suggesting a positive outlook for the coming year.

Atlanta Fed President Bostic said on Thursday that despite a slight cooling of U.S. inflation data in April, the pressure of rising prices continues to exist, and interest rate cuts may have to wait longer than previously expected.

"In terms of inflation returning to our target, we are not out of the woods yet. The proportion of goods with price increases exceeding 3% or 5% in the latest CPI reading is also higher than the level under normal circumstances," Bostic said during an event at Stanford University, "At the same time, job growth has been very strong... This tells me that the economy still has a lot of vitality, which reassures me about maintaining a more restrictive level, as we currently do not face the risk of falling into a recessionary environment."

NVIDIA's stock price breaks the $1,000 mark to set a new historical high.

On the 22nd, NVIDIA announced its financial results for the first quarter of the fiscal year 2025, with sales and earnings exceeding expectations and providing strong forecasts for the current quarter. During the reporting period, the adjusted earnings per share were $6.12, higher than the analysts' expected $5.59; revenue reached $26.04 billion, a year-on-year increase of 262%, also higher than the analysts' expected $24.65 billion; net profit was $14.88 billion, a year-on-year increase of 628%. NVIDIA expects sales for the current quarter to reach $28 billion.

In addition to the financial report, NVIDIA also announced a stock split plan — 1 for 10, shareholders holding NVIDIA common stock after the market closes on Friday, June 7, will receive an additional 9 shares, and trading will begin on Monday, June 10, based on the split-adjusted foundation.

Furthermore, NVIDIA increased its quarterly cash dividend by 150%, from $0.04 per share to $0.10 per share of common stock. The increased dividend, equivalent to $0.01 per share after the stock split, will be paid on Friday, June 28, 2024, to all shareholders of record on Tuesday, June 11, 2024.

As of the close on the 23rd, NVIDIA's stock rose by 9.32%, and its closing stock price broke the $1,000 mark for the first time in history, setting a new high, with a market value exceeding $2.55 trillion. Market analysts said that although the stock split itself does not change the valuation of the stock, the reduction in the per-share value of the stock will attract individual investors, as individual investors, due to limited funds, often trade in smaller volumes compared to well-capitalized institutional investors.

Marco Iachini, Senior Vice President of Vanda Research, said: "The stock split may be the biggest catalyst for continuously attracting retail investor funds."In terms of other individual stocks, Dell rose by 3.92%, benefiting from NVIDIA's positive earnings report, and Citigroup raised its target price for Dell to $170 on the 23rd. The day before NVIDIA released its financial report, NVIDIA CEO Jen-Hsun Huang stated that the company's collaboration with Dell would spread artificial intelligence to a broader range of customers, helping businesses and organizations to create their own "AI factories."

Boeing plummeted by 7.55% after the company forecasted a negative free cash flow for 2024 due to slow deliveries.

Gold prices fell for the third consecutive trading day to a one-week low.

In the commodity market, on Thursday, the futures price for West Texas Intermediate (WTI) crude oil for delivery in July at the New York Mercantile Exchange fell by 70 cents, a decrease of 0.6%, closing at $76.87 per barrel.

The main COMEX gold futures contract fell by 2.3%, to $2,337.20 per ounce.

TD Securities commodity strategist Daniel Ghali stated that the market has reduced bets on the number and magnitude of interest rate cuts by the Federal Reserve this year, and the rise in the US Dollar Index has catalyzed a round of gold profit-taking. However, he believes that the downside potential for gold prices may be limited.

On the 22nd, the Federal Reserve released the minutes of the Federal Open Market Committee (FOMC) meeting from April 30th to May 1st. The minutes indicated that "many" officials were uncertain about the restrictive degree of monetary policy; "several" participants were willing to further tighten policy if necessary.

Ghali said, "Investors who are concerned about the Fed's outlook are not actually bullish on gold. They have missed the rally, and thus do not have as much gold to sell. Therefore, although we believe that gold prices may experience a correction at current levels, the magnitude is relatively small."