On the evening of the 11th in Beijing time, the US stock market slightly declined on Tuesday. The Federal Reserve began its June monetary policy meeting today, and the interest rate decision will be announced on Wednesday in US Eastern Time (early Thursday in Beijing time). The important US May CPI inflation data will also be released on Wednesday in US Eastern Time.
As of press time, the S&P 500 index fell 0.33%, the Nasdaq Composite Index fell 0.03%, and the Dow Jones Industrial Average fell 0.75%.
US stocks rose slightly on Monday, but the S&P 500 index and the Nasdaq Composite index both set new record closing prices.
JPMorgan's chief market strategist Marko Kolanovic warns investors that the US stock market seems to be "ignoring" many risks. He said that the company maintains a reduction in stock positions in its model portfolio, while commodities and cash are increasing.
Kolanovic supports this position, stating that the stock and bond markets further "decoupled" last Friday as yields soared after investors lowered their rate expectations due to better-than-expected non-farm payroll report in May. "In addition, the stock market seems to be ignoring too many risks," these risks include political factors that disrupted several emerging markets last week.
Kolanovic said that risks also include the re-rise of MEME stocks and crypto trading, which may indicate a bubble, high inflation, and signals of an economic slowdown. "Although there are many risks, the stock market is still trading near record highs, and investor confidence and positions have increased," he added.
Renowned American economist Harry Dent said that US stocks may have a significant pullback, and its crash may be even more severe than what investors experienced during the financial crisis. Dent said that the excessive loose monetary and fiscal policies over the past decade have led to inflated asset prices, and the stock market seems to be in a "bubble".
"We have to see a 40% decline in the stock market before we can say that the bubble has finally burst. Once the momentum is so strong, I think it is difficult to stop," Dent warned.
He pointed out that the US stock market bubble has been formed for 14 years, much longer than the duration of most historical bubbles, which usually last for five or six years before bursting.
"This week we have two big events: Wednesday morning's CPI data, and Wednesday afternoon's Fed meeting," said Zachary Hill, head of portfolio management at Horizon Investments.
The Federal Reserve has started its two-day monetary policy meeting from Tuesday of the Eastern United States time and will make its interest rate policy decision on Wednesday of the Eastern United States time. Federal Reserve Chairman Jerome Powell will then hold a press conference.
Investors generally expect the Federal Reserve to keep rates unchanged. According to the CME Group's FedWatch tool, federal funds futures show almost no possibility of a rate cut this week's meeting.
According to a median estimate in a survey, 41% of economists expect policy makers to hint at two rate cuts on their interest rate dot plot, while another nearly 41% of economists expect estimates to show one rate cut or none at all.
"We expect the dot plot to show two rate cuts in 2024, four in 2025, and three in 2026, and slightly upward long-term or neutral rates. We think leadership is inclined to two rate cuts to maintain flexibility, but there is a risk of one rate cut, especially if core CPI released on Wednesday unexpectedly rises," according to Goldman Sachs.
The most watched economic data this week is the May Consumer Price Index (CPI) on Wednesday morning. Currently, the market generally expects the May consumer price index (CPI) to rise slightly by 0.1%, but the core price index will rise by 0.3%.
Bank of America Global Research pointed out that the strong growth of the US economy is favorable for the US stock market as long as inflation is under control. Analysts in the bank stated in a report that the scenario of the economy not landing has become a renewed focus of discussion. They pointed out that the non-landing of the economy is not bad news for the stock market, and added that in a strong growth environment, the stock market can withstand some inflation.
Bank of America analysts expect earnings per share to accelerate strongly in the second half of this year. They stated that at least for now, the US has avoided the "worst-case scenario" of weak employment data and high inflation shown by the Consumer Price Index.
On the corporate earnings side, Oracle and Rubrik will release their performance after the close on Tuesday.
Focus stocks
Star technology stocks rose and fell, Apple rose nearly 2%, Nvidia and Google A rose nearly 1%, Qualcomm and Tesla both fell nearly 2%.
Most of the popular China concept stocks fell, with Xpeng down over 2%, NIO and Taiwan Semiconductor down over 1%, and Baidu, Alibaba, and PDD Holdings followed suit.
The cryptocurrency sector fell, with Marathon Digital down more than 9%, MicroStrategy down nearly 6%, and Coinbase down over 5%.
$Apple (AAPL.US)$Up more than 2%, the company announced a new series of AI products at the WWDC conference.
$Affirm Holdings (AFRM.US)$Up nearly 5%, Apple announced that US users can directly apply for loans from Affirm Holdings through Apple Pay.
$GameStop (GME.US)$Down nearly 8%, the company's stock price has been falling continuously in recent days.
Edited by Jeffrey