Source: Wall Street See
Author: Du Yu, Fang Jiayao
Last week, initial jobless claims in the USA were higher than expected, and new home construction and Philadelphia manufacturing data both showed economic slowdown, maintaining the market's expectation of two interest rate cuts by the Federal Reserve within the year.
The S&P broke through 5500 points to reach a new high before falling, while the Nasdaq stopped at a seven-day high. However, Dow Jones rose 300 points to a four-week high. Nvidia rose 3.8% to the highest level in intraday trading, but then jumped down 8% from its high and ended down 3.5%, ceding its market value to Microsoft. Chip stocks, which had performed well for the previous two days, also opened high and fell, with sector indexes and AI stocks such as TSMC, Micron Technology, Qualcomm, Arm and Oracle all slipping away from their recent highs, and Super Micro Computer rising 10% before turning down. The China-U.S. concept stock index fell 1% to a two-month low, but Tencent ADR rose more than 1%, and Bilibili rose more than 5%.
The yield on U.S. Treasuries was briefly pressured by economic data, but then resumed its upward trend and rose from its ten-week low. The dollar hit a seven-week high, the Euro approached a one-and-a-half-month low, and central bank decisions weighed on the pound and Swiss franc while the yen hit an eight-week low and offshore yuan broke through 7.29 yuan. Commodities rebounded, with U.S. crude rising for three consecutive trading days to a seven-week high above $82, Brent oil approaching $86, and spot gold rising over 1%, peaking at $2,360 for a two-week high. London copper and aluminum rose from their two-month lows, while London tin rose more than 2%.
While the number of new applications for U.S. unemployment benefits fell last week, the total number was higher than expected, with new home construction and building permits for May unexpectedly falling to their lowest level since June 2020, and the Philadelphia Federal Reserve's June manufacturing index lagging behind expectations, all indicating that the labor market and the U.S. economy are cooling down.
Financial markets still expect two rate cuts by the Federal Reserve this year, with bets on a September rate cut falling slightly but still close to 60%. Minneapolis Federal Reserve President Kashkari, a hawkish voting member in 2026, said wage growth was still too high and inflation would take one or two years to fall to 2%.
Although the UK's May inflation rate fell to its target of 2%, the Bank of England left interest rates unchanged, but suggested that more policymakers may support a rate cut, with traders betting 50% on a cut in August. The Norwegian central bank said it would not cut interest rates before next year, and the Swiss central bank cut rates for the second time this year.
Some analysts have pointed out that the dovish sentiment expressed by the Bank of England and the Swiss National Bank's rate cut both have brought forward expectations of the Federal Reserve's first rate cut, and further confirm that global interest rates have peaked, with central banks in the US and other countries expected to cut rates in the short term.
The S&P opened at a new high but fell, while the Nasdaq stopped at a seven-day high and Nvidia rose 3.8% to a new high before falling more than 3.5% later.
On Thursday, June 20, the U.S. stock market showed divergent trends throughout the day. AI and chip stocks such as Nvidia rose and then fell, leading the S&P 500 and Nasdaq to turn downward at midday, with the S&P 500 losing 0.6% at its deepest and the Nasdaq falling more than 1%. At the opening, the S&P 500 rose 0.3% to a historic high and the S&P tech sector hit a new high at the beginning of the day. The Dow Jones opened low and then rose, rising nearly 400 points or 1% at its highest, breaking through the integer mark of 39,000, and finally closing up about 300 points to lead the major indexes.
At the close, the S&P 500 fell for the second day in eight days and fell out of its new high, while the Nasdaq and Nasdaq 100 fell from their new highs after seven consecutive record-breaking days. The Dow Jones rose for three consecutive days to a four-week high, and the Russell small-cap index stopped its two-day rally.
The S&P 500 fell 13.86 points, or 0.25%, to 5,473.17. The Dow Jones rose 299.90 points, or 0.77%, to 39,134.76. The Nasdaq fell 140.64 points, or 0.79%, to 17,721.59.
The Nasdaq 100 fell 0.8% off its new high, and the Nasdaq Technology Market Cap Weighted Index, which measures the performance of technology component stocks in the Nasdaq 100, fell 1.5% off its new high. The Russell 2000 small-cap index fell 0.4%, and the "panic index" VIX rose more than 6% to break through 13.
Some analysts believe that due to the AI craze and market hopes for soon-to-come Fed rate cuts, the US stock market will rise this week. However, concerns are mounting about the lack of breadth and irrationality of rising trends being concentrated in technology, chip, and AI stocks. In addition, the US stock index is overbought, and on Friday, derivative contracts tied to stocks, index options, and futures expire, leading to a downturn in the index.
Growth tech stocks had mixed performances today. 'Metaverse' Meta rose 0.4%, Google A rose 0.7%, both breaking away from their weekly lows. Amazon rose 1.8%, breaking away from its two-week low, while Tesla fell 1.8%, further distancing itself from its seven-week high. Netflix fell about 1%, breaking away from its two-and-a-half-year high. Apple fell more than 2% to a one-week low, breaking away from its historical high for two consecutive days. With a market cap of 32.15 trillion US dollars, it ranks third among US stocks. Microsoft's decline narrowed to 0.1%, breaking away from its new high for two consecutive days. With a market cap of 33.1 trillion US dollars, it surpassed Nvidia and returned to the first place in US stocks.
Chip stocks that performed well in the past two trading days opened high and closed low. The PHLX semiconductor index fell 2.7%, breaking away from its new high. The SOXX industry ETF also fell 2.7% and broke its highest point. Nvidia rose 3.8% and then fell 4.5%, finally closing down 3.5% and breaking its new high. With a market cap of 32.17 trillion US dollars, it ranks second among US stocks. Its double long ETF rose 7.6% and then fell 7%, also breaking its new high. Broadcom fell 3.8% for two consecutive days. ARM fell 7.7%, Qualcomm fell more than 5%, Taiwan Semiconductor fell more than 2% in US stocks, Lam research fell more than 2%, Applied materials fell more than 3%, and Micron technology fell 6%, all breaking away from their new heights. However, AMD rose 4.6%, breaking away from its one-month low and rose nearly 8% during the trading, creating its largest four-month increase. Intel rose 1.6% and then closed lower.
AI concept stocks also led the decline in the Nasdaq. CrowdStrike fell nearly 2%, breaking away from its new high for two consecutive days; Oracle fell more than 1%, breaking away from its new high; SoundHound.ai fell 1%, BigBear.ai fell 7%, C3.ai fell more than 4%, Snowflake fell nearly 1%, approaching its lowest point in 17 months, and Palantir fell 1%. Adobe nearly erased its 2% increase and hovered around its new high for three months. Dell rose 8% and then turned down 0.7%, while Super Micro Computer rose 10% and then turned down 0.3%. Accenture opened high with an 11% increase and closed up more than 7% to a four-week new high.
On the news front, Musk said that Dell and Super Micro Computer will provide servers to help his AI start-up company xAI develop supercomputers. IT service provider Accenture's latest quarterly report is lower than expected, but it disclosed Q3 generated AI new orders exceeding $900 million, and its annual revenue growth will be higher than expected. Anthropic, an AI start-up company supported by Google and Amazon, released the latest version of its Claude AI model. Oracle will invest more than $1 billion in AI and cloud computing in Spain. Piper Sandler bullish on AMD's prospects for the second half of the year and is listed as a top pick for large-cap stocks. It is reported that Taiwan Semiconductor is exploring new AI chip packaging technology that allows more sets of chips to be placed on a single wafer. Insiders said that the Chinese companies such as Apple AI, Baidu, Alibaba and Baichuan Intelligence are discussing cooperation on AI models, but there is no public response yet.
Chinese concept stocks followed the US stock market down. KWEB (KraneShares CSI China Internet ETF) fell 0.6%, CQQQ (Invesco China Technology ETF) fell 1.3%, and the NASDAQ Golden Dragon China Index (HXC) fell 1%, breaking through the integer level of 6000 and falling for four consecutive days to hit a two-month low.
Among the popular stocks, JD.com fell 1.3%, Baidu fell 2.3%, and Pinduoduo almost recovered a 1.4% drop. Alibaba fell 0.2%, Tencent ADR rose more than 1%, B station rose more than 5%, NIO fell more than 2%, Xpeng fell more than 2%, and Li Auto fell nearly 2%.
Retail investors held the stock leader Gamestop together, and its price rose by 3.6% on Thursday, still the lowest trading volume since May 31, almost wiping out the gains in June. Previously, there were significant fluctuations: it fell by nearly 40% the Friday before last, fell by 12% on Monday of last week, rose by nearly 23% on Tuesday, fell by more than 16% on Wednesday, rose by more than 14% on Thursday, and fell by 1.4% on Friday, leading to a cumulative increase of 1.7% last week. It fell by more than 12% on Monday of this week and oscillated down 2% on Tuesday.
Among other stocks with significant changes, Trump Media (DJT) fell by more than 14%, falling for five consecutive days to a two-month low, and SEC approved the reselling of some stocks and warrants. Investors are worried that issuing more shares will dilute the company's stock value. The stock has fallen 45% since June.
European stocks rebounded significantly on Thursday, technology and real estate sectors led the way. The pan-European Stoxx 600 rose by 0.93%, regaining more than half of the decline since last Wednesday. The Euro Stoxx 50 index rose by more than 1%, further away from the four-month low. German, French, and Italian stock indexes all rose by more than 1%. The UK stock index rose by nearly 1%, and the French stock index was close to recovering its losses since last Thursday. Wafer manufacturer ASML Holding drove the Dutch stock index to a new high.
The US bond yield was briefly restrained by economic data but later rebounded and left the 10-week low.
The US economy has continued to be weak, and market bets on two interest rate cuts within this year are higher than the Fed's outlook. The US bond yield fell briefly after economic data was released but rebounded later. The increase in the last trading session was significantly narrowed.
The highest sensitive two-year US bond yield rose by 5 basis points to 4.75%, wiping out most of the decline this week. It had previously approached the 10-week low since April 5th and rose by 1.5 basis points at the end of the session. The highest 10-year basic bond yield rose nearly 8 basis points to 4.29%, leaving the nearly two-and-a-half-month low since April 1st set on Friday of last week, and rose by less than 3 basis points at the end of the session.
The benchmark 10-year German bond yield rose nearly 3 basis points at the end of the session, continuing its two-month low. The yields of 10-year French and Italian bonds rose slightly, while the yields of 2-year French and Italian bonds fell by more than 1 and 2 basis points respectively. The yield spread between French and German basic bonds is still hovering at a long-term high. UK bond yields fell after the Bank of England's decision. The two-year yield once hit a three-month low.
US oil has hit a new seven-week high for three consecutive trading days and has risen above $82. Brent oil is approaching $86.
US oil has hit a new seven-week high for three consecutive trading days. WTI July crude oil futures rose by $0.60, an increase of more than 0.73%, to $82.17 per barrel. Brent August crude oil futures rose by $0.64, an increase of more than 0.75%, to $85.71 per barrel.
The more actively traded US oil WTI August futures stood at $81, once again breaking through the integer mark, the highest intraday increase was $0.80 or about 1%, and the international Brent rose the highest intraday by $0.89 or about 1%, approaching $86, both hitting the highest since May 1st. On Wednesday, the US financial market was closed, but Brent oil had previously fallen slightly by 0.3% and moved away from the seven-week high.
The commercial crude oil inventory in the US last week decreased by nearly 2.55 million barrels. It was in line with expectations and significantly decreased from the increase of more than 3.7 million barrels in the previous month. Both gasoline and refined oil inventories did not increase but rather decreased. Gasoline exports reached a seasonal historical high, indicating a bullish demand.
The oil price is expected to accumulate gains on the weekly line for the second consecutive week, with a 4% increase in US oil prices this week and Brent oil may increase by more than 3%. JPMorgan predicts that as the inventory decreases, causing the market supply to tighten, Brent oil may rise to $90 per barrel due to summer fuel demand in September. At the same time, the geopolitical tensions in the Middle East have escalated again, boosting oil prices in the short term due to concerns about supply disruption.
The TTF Dutch natural gas futures, which is the European benchmark, fell by more than 3%, almost wiping out the gains since Tuesday. The ICE UK futures also fell by 3%. The US natural gas contract for July fell by 5% and fell below $2.80, reaching a two-week low. It has risen nearly 13% so far this year and has reached a half-year high. According to CCTV news, the EU has imposed new sanctions on Russia, this is the first time it targets liquefied natural gas.
The US dollar hit a new seven-week high, the euro approached a one-and-a-half-month low, the Japanese yen approached the lowest in eight weeks, and the offshore renminbi dropped below 7.29.
The US dollar rose, the British pound and the Swiss franc fell, and the central bank was busy. The euro approached a one-and-a-half-month low.
The US dollar index DXY, which measures against six major currencies, rose by 0.4% and rose above 105.60, the highest since seven weeks since May 1st. The euro against the US dollar fell by 0.3% and approached the 1.07 mark. It fell to 1.0667 last Friday, hitting a six-week low.
The GBP fell 0.4% against the USD to 1.266, a five-week low since mid-May, as analysts believed that the Bank of England was approaching a rate cut. After the rate cut, the Swiss franc fell from a three-month high, and the Norwegian krone against the euro rose to a five-month high after the central bank kept interest rates unchanged.
The JPY fell 0.5% against the USD and attempted to break through 159, the lowest point in almost eight weeks since April 29th, when the Japanese government launched a new round of intervention in the foreign exchange market, and the yen was hovering near a thirty-four year low. The offshore RMB fell more than 100 points against the USD and fell below 7.29 yuan, a seven-month low.
Some analysts believe that the increased volatility in the currency market over the past 10 days is mainly due to political uncertainty in Europe and speculation about the timing of rate cuts by major central banks. Good and bad economic data in the U.S., and the Indian rupee hit a record low against the USD on Thursday.
Major cryptos fell again, but the decline was narrower than in the previous few days. The largest crypto, Bitcoin, fell slightly and continued to fall below $65,000, hitting a one-month low; the second-largest, Ethereum, fell more than 1% and approached $3,500 again, close to a four-week low.
Spot gold rose more than 1%, briefly breaking through $2,360 to a two-week high. Metals rose across the board, with London tin up more than 2%.
Weak U.S. economic data, maintaining market expectations for two interest rate cuts this year, is bullish for precious metals that do not provide fixed income. Political uncertainty in elections in many parts of the world and the escalation of conflict in the Middle East have provided support for safe-haven assets.
COMEX August gold futures rose 1.07% to $2,372 per ounce at the close, and COMEX July silver futures rose 3.99% to $30.74 per ounce.
Spot gold rose more than $37 or 1.6%, briefly breaking through the 2360 integer mark to a two-week high. Spot silver rose as high as 3.5%, breaking through the psychological integer mark of $30 and approaching $31 continually.
Some analysts believe that when the U.S. really cuts interest rates, it will trigger a new round of gold price increases. ANZ analysts are optimistic about gold and believe that the target price at the end of 2024 will reach $2,500 per ounce, breaking the historical record.
London industrial metals prices rose across the board. Dr. Copper rose $72 or 0.7%, breaking through $9,800 to exit a two-month low. London aluminum rose 0.9%, also exiting a two-month low. London zinc and nickel rose slightly, London lead rose 0.8%, breaking through $2,200, and London nickel rose from a ten-week low, while London tin rose more than $700 or 2.2%, breaking through 33,000 USD to a one-week high.
Editor/Jeffy