On the evening of the 12th, the three major indexes of US stocks opened high and went up. The May CPI of usa fell to a three-year low, showing that inflation is rapidly cooling down, making the probability of the Federal Reserve cutting interest rates in September greatly increased. Investors are waiting for the Fed's interest rate decision and the news conference of Fed Chairman Powell.
As of press time, the S&P 500 index rose 1.13%, the Nasdaq Composite index rose 1.66%, and the Dow Jones Industrial Average rose 0.79%.
Software provider Oracle's stock price has risen sharply. Although the company's recent quarterly performance was below expectations, the market noted the company's new announcement of cloud trading with Google and OpenAI.
Apple released updates to its iOS 18, iPadOS 18, watchOS 11 operating systems this week and announced a partnership with OpenAI to integrate ChatGPT, which has driven a surge in the stock price.
The monetary policy meeting of the Federal Reserve is receiving attention.
The Federal Reserve will conclude its two-day policy meeting on Wednesday and announce its interest rate policy decision at 2pm Eastern Time. Then, Federal Reserve Chairman Jerome Powell will hold a press conference.
Although market pricing suggests the Federal Reserve will maintain rates - keeping its benchmark overnight lending rate in the range of 5.25%-5.5%, investors will closely watch Powell's latest forecast on the economic outlook, as this could help to gain a clearer understanding of the Federal Reserve's policy path.
Investors are increasingly concerned that strong job reports and sticky inflation in recent months will support the Federal Reserve's maintaining its existing high-interest-rate environment for longer periods of time.
A key suspense of tonight's Federal Reserve meeting is whether the median projection of the dot diagram will show one or two rate cuts by the Federal Reserve this year. In the latest survey of economists by financial media, 41% of economists believe that the Federal Reserve will forecast two rate cuts later tonight, while 41% believe it will be one rate cut or even no cut.
Quincy Krosby, chief global strategist at LPL Financial, said, "Given Powell's recent hints that the Federal Reserve may ease its interest rate policy if there are signs of deterioration in the economy, the market will focus on the Federal Reserve's statement, the Fed officials' interest rate path dot diagram, and Powell's comments on Wednesday, especially his concerns about the labor market."
US May CPI drops to a three-year low, and market predictions of rate cuts in September have risen sharply.
On the economic data side on Wednesday, the US Bureau of Labor Statistics showed that the consumer price index (CPI) for goods and services, the broadest measure of commodity and service costs, was flat MoM in May, up 0.3% in April.
Specifically, US May CPI was up 3.3% YoY, lower than the expected 3.4%, and lower than the previous value of 3.4%, to the lowest level in three months. May CPI was steady with April, with a MoM growth rate of 0%, the lowest level since July 2022, also lower than the expected 0.1%, and the previous value of 0.30%.
Excluding the more volatile food and energy prices, the core CPI was up 3.4% YoY in May, lower than the expected 3.5%, with the previous value of 3.6%. May core CPI grew 0.2% MoM, lower than expected and previous value of 0.3%.
Analysts pointed out that since the published stable data in February and March, the US CPI has been in a downward trend. With major retailers sharply lowering prices on goods from food to diapers, inflationary pressures may continue to ease.
After the release of May CPI data, the market's expectations for a rate cut by the Federal Reserve in September rose sharply. Interest rate futures now suggest a 70% chance of a rate cut by the Federal Reserve before September.
Swap contracts show that the market expects a 100% chance of a 25 basis point rate cut by the Federal Reserve in November. Futures traders have fully digested the expectation of two rate cuts this year, according to data from the London Stock Exchange Group (LESG), while prior to the May CPI data release, the expected number of rate cuts within that year was one to two times.
Some analysts believe that the unexpected decline in May US consumer prices is due to the drop in gasoline prices, but with strong employment in the job market, inflation may still be excessive, so the Federal Reserve cannot start rate cuts before September.
Analyst Chris Anstey pointed out in his commentary on the May US CPI report: "This is actually the first month of a good inflation report. We need a few more of these good reports to really get the Federal Reserve to cut interest rates in September." He noted that interest rate futures indicate that traders are slightly more confident in the Federal Reserve's two rate cuts this year.
Mild CPI data may set the tone for the upcoming highly anticipated Federal Reserve policy meeting.
Focus stocks
Most growth tech stocks rose, with Taiwan Semiconductor up more than 5%, Nvidia and Apple up around 3%, and Tesla up more than 1%.
China concept stocks had mixed performance, with NIO Inc. down over 3%, New Oriental down nearly 3%, and PDD Holdings up nearly 1%.
$Oracle (ORCL.US)$Microsoft rose nearly 12%, hitting a historic high, and reached a cooperation with Google Cloud. Company executives expect cloud demand to boost revenue growth in the current fiscal year to double digits.
$Taiwan Semiconductor (TSM.US)$Apple rose more than 5%, reaching a new high, and Bank of America raised the target price to $180, saying that Apple's AI and the Taipei International Computer Show may boost semiconductor demand.
$NVIDIA (NVDA.US)$Nvidia rose nearly 3%, approaching its all-time high, and saw its target price raised to $135 by Goldman Sachs after the stock split.
$Apple (AAPL.US)$Market cap overtakes [unknown], retaking the number one spot in US stocks with a market cap of $3.25 trillion, now up over 2%.$Microsoft (MSFT.US)$The Nasdaq Composite index regained its position as the top U.S. stock with a market cap of $3.25 trillion, up more than 3%.
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