On Thursday (June 27), before the key inflation report PCE was released in May, the main stock indexes on Wall Street barely moved.
The S&P 500 index rose 0.09% to 5482.87 points at the close; the Dow Jones Industrial Average rose 0.09% to close at 39164.06 points; the technology-based NASDAQ Composite Index rose 0.30% to close at 17858.68 points.
(Source: FX168)
(Source: FX168)
May PCE expectations.
Traders are focusing on the release of the core personal consumption expenditure price index (PCE) for May, which is the Fed's most important inflation indicator.
Economists expect the inflation rate to fall slightly to 2.6% in May, down from 2.7% in April. This figure is lower than the peak of 7.1% of PCE in mid-2022. Other inflation indicators, including the consumer price index, have also fallen sharply in the past two years.
Traders hope that the report will show a easing of price pressures, further consolidating the Fed's possibility of a rate cut later this year.
Quincy Krosby, Chief Global Strategist at LPL Financial, said: 'If the PCE data is disappointing, stagnant inflation will be headline news, but if the forecast remains unchanged, or the data unexpectedly cools, it should help the market enter July smoothly.'
Slower consumer spending may help further ease inflation, but excessive slowing may do more harm to the economy. The Fed is trying to time the control of the inflation rate at its target level of 2% and not let the economy slow down too much to fall into recession.
In addition to monthly PCE data, tonight's presidential debate in the United States is also worth investors' expectations: tonight! Biden vs. Trump, these thematic sectors are worth paying attention to!
Economic data.
Economic data released on Thursday showed that the number of first-time jobless claims fell slightly, demand for long-term big-ticket items was better than expected, first-quarter economic growth (GDP) increased slightly, and the inflation rate also increased.
US first-quarter GDP slowed slightly, but second-quarter economic growth is expected to rebound. The actual annualized quarterly growth rate of US GDP in the first quarter increased by 1.4%, in line with expectations. This figure was slightly revised upward from the previous estimate of 1.3%. This is the slowest quarter of growth since the spring of 2022.
The annualized quarterly core personal consumption expenditure (PCE) price index in the first quarter of the United States increased by 3.7%, higher than expected and the previous value.
The US Labor Department reported that the total number of people applying for initial unemployment benefits in the United States last week was 233,000, a decrease of 6,000 from the previous week, lower than the expected 235,000. However, the number of continued claims for unemployment benefits has risen to its highest level since the end of 2021.
The US Census Bureau stated that core durable goods orders in May had the largest decline so far this year. In May, the "durable goods" new orders unexpectedly increased by 0.1%, lower than the 0.2% growth downwardly revised in April, but better than the expected 1% decline.
Bond market
Treasury yields fell.
The yield on the 10-year US Treasury bond fell from 4.33% on Wednesday evening to 4.29%.
The yield on the two-year US Treasury bond fell from 4.75% to 4.72%.
Focus stocks
Chip maker Micron Technology fell 7.12% as the company's third-quarter results exceeded expectations but the guidance for next quarter was not bright. Semiconductor giant Nvidia also experienced a decline, falling 1.91%.
Retail investors' favorite stocks are back on the rise. BlackBerry once rose more than 10%, and the company's first-quarter revenue exceeded expectations. GameStop once rose sharply by about 10%, and closed up 3.68%.
Walgreens Boots Alliance's stock price plummeted 22.16%, experiencing its worst day in over 50 years, and becoming the component stock with the largest decline in the S&P 500 index. The company's announced performance was lower than expected, and the performance expectations were lowered. At the same time, the company also stated that it may close hundreds of stores in the next three years.
Stocks of jeans manufacturer Levi Strauss fell by 15.4%, disappointing investors with its latest quarterly revenue results that were lower than analysts' expectations, and its profit forecast for this year also fell short of expectations.
Stock prices of spice manufacturer McCormick rose by 4.25%, exceeding analysts' expectations for profitability, becoming one of the biggest gainers in the market.
International Paper's stock fell by 7.21% amid reports that Brazilian paper and pulp producer Suzano would not pursue the acquisition of International Paper.
Nike fell 4.6% in after-hours trading after unexpectedly weak fourth-quarter revenue due to increasing competition from brands such as On and Hoka, leading to weak demand for the apparel and footwear of this apparel manufacturing company.