On the evening of the 13th Beijing time, US stocks opened slightly higher on Monday. The market is paying attention to the latest PPI and CPI inflation data this week to further judge the Fed's monetary policy prospects. Morgan Stanley says the US economy is “cooling down,” and the Federal Reserve is expected to cut interest rates 3 times this year.
As of press release, the three major indices have risen slightly.$S&P 500 Index (.SPX.US)$up 0.09%,$Nasdaq Composite Index (.IXIC.US)$Up 0.05%,$Dow Jones Industrial Average (.DJI.US)$Up 0.27%.
US stocks closed mixed last Friday. The Dow closed 0.3% higher, rising for the eighth consecutive trading day and recording gains for the fourth consecutive week. Both the NASDAQ and the S&P 500 recorded their third consecutive week of gains.
This week, the US will release the much-publicized producer price index (PPI) and consumer price index (CPI) reports for April. Investors will use the report to further judge the Fed's monetary outlook.
Although inflation data for recent months has continued to be higher than expected, traders generally believe that it is largely impossible for the Federal Reserve to resume interest rate hikes.
Data released last week showed that while inflation remains high, the US economy is slowing down, which poses a challenge to the Federal Reserve's policy outlook.
Morgan Stanley believes that the US economy is “cooling down,” and the Federal Reserve is expected to cut interest rates 3 times this year.
The agency's research department believes there are signs that the US economy is cooling down and that deflation will return to the April CPI data and accelerate in the second half of 2024.
Morgan Stanley Research wrote in a recent report: “As deflation accelerates in the second half of 2024, inflation data for the next few months will weaken, which should provide the Fed with the confidence it needs to believe that inflation continues to advance towards the 2% target.”
The agency said, “We are still optimistic that the Fed will cut interest rates three times this year, but starting in September instead of July, and cutting interest rates two more times in November and December.”
In this context, Morgan Stanley wrote that it currently favors essential consumer goods stocks over non-essential stocks.
The Morgan Stanley report said, “We believe that the US essential consumer goods industry is in a better position compared to non-essential consumer goods stocks. Furthermore, compared with the non-essential consumer goods sector, consumer goods companies have recently turned higher relative to earnings revisions, indicating that there is potential room for improvement in the latter's relative performance.”
The April CPI data will be a key indicator for measuring whether the US stock market can remain stable. Despite recent data showing that US inflation remains high, good earnings results so far have helped the US stock market remain resilient.
The US stock quarterly report is nearing its end. According to FactSet data, as of Friday, 92% of the S&P 500 companies have published financial reports, and nearly 80% of these have surpassed Wall Street's forecasts.
Barclays analyst Venu Krishna said in the research report: “Profit expectations may have become too pessimistic until the results for the first quarter of '24 are announced. As a result, the results for this earnings season were generally better than expected, which seems to have catalyzed an improvement in market sentiment.”
A number of Federal Reserve officials will be sent to the market this week to introduce their latest ideas, including Federal Reserve Chairman Powell and others.
Individual stocks in focus
Star Technology stocks had mixed ups and downs. Tesla rose more than 3%, Micron Technology rose 2%, Apple rose about 1%, and Meta and Google fell more than 2%.
Most popular Chinese securities rose. Bilibili rose nearly 10%, NIO rose more than 8%, JD and Tencent Music rose more than 6%, and Alibaba rose more than 5%.
Meme concept stocks are in full swing. Game Station rose more than 110%, AMC Cinemas rose nearly 16%, and Blackberry rose nearly 10%.
$Tesla (TSLA.US)$The increase was more than 3%. According to reports, Tesla's Shanghai energy storage gigafactory construction project has completed the issuance of construction permits.
$Apple (AAPL.US)$The increase was more than 1%. Some media quoted people familiar with the matter as revealing that Apple is close to reaching an agreement with OpenAI to use the ChatGPT function in iOS 18, the next iPhone operating system. According to another report, J.P. Morgan Chase increased its Apple stock holdings by more than 18 million in the first quarter.
$GameStop (GME.US)$Trading has been suspended several times due to fluctuations, and now the increase is as high as 110%, with a turnover of US$1,026 million. The recent upward trend has once again made individual investors the main driving force.
$Novavax (NVAX.US)$It continued to rise by more than 12%, after the company announced that it had reached a multi-billion dollar cooperation agreement with internationally renowned pharmaceutical giant Sanofi.
$Arm Holdings (ARM.US)$It has risen by more than 4%. It is said that AI chips will be developed and mass production is scheduled to begin in the fall of 2025.
edit/emily