After the US stock market closed on Thursday, Biden and Trump will hold the first US presidential election debate, and the economy is an important issue. Prior to this, many latest released data pointed directly to the weakening of the US economy, which caused the US bond yield and the US dollar to decline.
Last week, the number of first-time applications for unemployment benefits in the United States declined, but the continued claims rose to the highest level in two and a half years since the end of 2021. In May, the core durable goods orders fell by 0.6%, the largest decline this year, representing weak equipment spending by companies. The final value of real US GDP in the first quarter was 1.4%, which was in line with expectations but lower than the initial value of 1.6%. The core PCE inflation in the quarter increased by 3.7%, higher than the expected and previous value of 3.6%. Personal spending growth was weak, representing the loss of economic momentum. The high interest rates also caused the US existing home sales volume index to unexpectedly fall to a record low of 160 in May.
This year, Bosstick, a committee member and president of the Atlanta Federal Reserve Bank, praised the inflation cooling trend shown by the May CPI and reiterated the Fed's expectation of a rate cut once in 2024, estimated to occur in the fourth quarter, and may cut interest rates four times next year. But Bowman, a committee member, voiced hawkish again, reiterating that the timing of the rate cut is not yet mature, and is willing to support interest rate hikes when inflation rebounds.
The market focuses on the US Federal Reserve on Friday and pays more attention to inflation indicators-the PCE price index of personal consumption expenditures in May is expected to increase by 2.6% year-on-year, weakly lower than the previous value of 2.8%. Futures traders are still betting that the probability of the Fed starting to cut interest rates in September is as high as 70%, and the most likely scenario this year is still two interest rate cuts, that is, loose expectations are always greater than the Fed's outlook.
The Swedish central bank kept interest rates unchanged after a rate cut in May, but raised its expectations for up to three rate cuts this year, citing a more optimistic inflation outlook. The market generally expects the European Central Bank to cut interest rates twice this year, but some commissioners have emphasized that it may only cut interest rates once this year.
The Bank of Japan surveyed bond market participants on its bond reduction plan, and the yield on 30-year Japanese government bonds rose to the highest level in 13 years, while the yen rose slightly against the US dollar, still below the 160 mark, approaching the lowest level since Wednesday of 160.88 in 38 years.
The S&P and Nasdaq have risen for three consecutive days and are close to their highs. Technology and AI stocks have risen together, but Nvidia has fallen by nearly 2%, and Amazon, Google, and Microsoft have hit new highs.
On Thursday, June 27th, the S&P 500 and Nasdaq rose after a relatively flat opening. Nearly two hours after the opening, the S&P wiped out a 0.2% gain and fell, and the Nasdaq also rose 0.5% and then fell. The Dow opened low and then went high and rose more than 120 points at one point. During the session, the S&P and Dow fluctuated and fell, and the main indexes rose slightly in the late trading, with the Russell small-cap stocks, closely related to economic cycles, leading the gains by 1%.
At the beginning of the session, the Internet Stock Index ETF and the Global Technology Stock Index ETF rose the most, but most semiconductor and Chinese concept stocks fell. The S&P real estate sector led the gains, and essential consumer goods did not perform well. The Global X Cybersecurity ETF rose 3% during the session, the best since November last year, among which Blackberry rose 14%, the best single-day performance since August last year.
As of the close, the S&P and Nasdaq have risen for three consecutive days to a new high for a week, and have also approached the historical high set last Tuesday. The Dow rose for two consecutive days from a low point last week, and the Russell small-cap stocks stopped falling for two consecutive days to a two-week high:
The S&P 500 rose 4.97 points, or 0.09%, to 5,482.87 points. Dow Jones rose 36.26 points, or 0.09%, to 39,164.06 points. The Nasdaq rose 53.53 points, or 0.30%, to 17,858.68 points.
Nasdaq 100 rose 0.2%, and the Nasdaq Technology Market Value Weighted Index (NDXTMC) measuring the performance of Nasdaq 100 technology stocks rose slightly. The Russell 2000 small-cap stocks rose 1%, and the "panic index" VIX fell for two consecutive days, more than 2% to 12.24.
Growth tech rises. The 'Metaverse' Meta increases by 1.3% and approaches its historical high, Amazon increases by 2.2% and sets a new historical high, with a market cap close to $2 trillion. Tesla rebounds by 0.5% to hit a new high in nearly four months, Netflix rises by about 1% and approaches its highest level, Google A rises by 0.8% and returns to a new high. Apple rose by 0.4% and has risen for four consecutive days, with a market cap of $3.22 trillion, ranking second in the U.S. stock market; Microsoft rose by 0.2% and hit a new high for three consecutive days, with a market cap of $3.36 trillion, the largest in the U.S. stock market.
Chip stocks continue to decline. The Philadelphia Semiconductor Index fell more than 1%, closing down 0.6%, approaching a two-week low of 5,400. The industry ETF SOXX fell 0.5%. Nvidia fell nearly 2%, stopping its previous two-day increase. It had risen 6.8% on Tuesday and fell 6.7% on Monday, the largest drop in two months. Its market capitalization is $3.04 trillion, ranking third in the U.S. stock market. The double-long ETF of Nvidia dropped 4%, and Broadcom dropped 0.3% to its lowest level in two weeks. Qualcomm fell more than 1% to a multi-week low, while ARM turned up more than 1%. After Taiwan Semiconductor rose 2% on the U.S. stock market, it turned slightly lower. Lam Research nearly erased a 2.7% gain, Applied Materials nearly erased a 2.4% gain, and Micron Technology fell more than 7%, all of which had reached new highs last week. Intel turned up 0.2%, but AMD rose more than 1%.
AI concept stocks rose together. CrowdStrike rose nearly 2%, approaching a new high. Oracle rose 1.4%, stopping its five-day decline from a new high. SoundHound.ai rose 0.3%, BigBear.ai rose more than 7%, C3.ai rose more than 3%, Snowflake rose nearly 4%, further distancing itself from its 17-month low. Palantir rose 4.7%, Adobe rose more than 3%, Dell rose nearly 1%, super micro computer rose more than 7%, but IBM turned down 0.6%.
On the news front, OpenAI signed a multi-year content use agreement with Time magazine. Reports said that OpenAI's annual revenue from model access is about $1 billion. Micron Technology's third-quarter results exceeded expectations, but its guidance for the next quarter was not bright enough. Reports said that Apple will adopt new battery technology in iPhone 16. Wells Fargo & Co said that the prosperity of artificial intelligence will benefit industrial and materials stocks.
Chinese concept stocks fell deeper. The KraneShares CSI China Internet ETF (KWEB) fell 2.8%, the KraneShares SSE STAR Market 50 ETF (KSTR) fell 2.3%, and the NASDAQ Golden Dragon China Index (HXCN) fell 2.2%, approaching 5,800 points, falling to a four-and-a-half-month low on the seventh day of the nine trading days.
Among the popular stocks, JD.com fell 4.5%, Baidu fell 1.3%, and PDD Holdings fell 4.6%. Alibaba fell 2.4%, Tencent ADR fell 1.8%, Bilibili fell 2.9%, NIO Inc fell more than 5%, Xpeng fell 6.7%, and Li Auto Inc fell more than 3%. However, Hu Yifan of UBS Group is bullish on the potential of Chinese Internet platforms in AI.
Other stocks with significant changes include:
Jeans manufacturer Levi Strauss & Co. fell more than 15% to a low of 11 weeks, with quarterly revenue below expectations.
Walgreens, the retail drugstore that was removed from the Dow Jones Industrial Average component stock in February, fell more than 22% to a 27-year low, marking its worst performance in over 50 years, lowering its full-year profit forecast, and saying that the U.S. consumer environment is challenging.
Pet e-commerce company Chewy rose more than 34% and closed down 0.3%, completely wiping out the skyrocketing caused by the "retail investors' leader roars at the cartoon cat" post with the dog image. Ryan Cohen, a co-founder of Chewy, is now the CEO of GameStop.
The 31 largest banks in the United States passed the Federal Reserve's stress test, and their stock buyback plans are expected to be announced after the close on Friday. Goldman Sachs fell more than 2%, but JPMorgan rose 0.9%. The company rarely said that the Federal Reserve overestimated a key revenue indicator, or may delay the announcement of the shareholder feedback plan.
After passing the Federal Reserve's stress test, Goldman Sachs fell more than 2%, but JPMorgan rose 0.9%.
European stocks generally fell, with only German stocks rising, and French and Italian stock indices both falling 1%. The pan-European Stoxx 600 index closed down 0.43%, falling for three consecutive days to a one-week low. Oil and gas stocks led the gains, while retail stocks fell more than 1%. French stock L'Oreal fell more than 5% to its deepest in five months, lowering its expectations for the growth rate of the beauty market. H&M's European and U.S. stocks both fell about 13%, with second-quarter profit growth below expectations, or unable to achieve full-year profit margin targets.
Economic data pushed down U.S. bond yields, with the 10-year yield coming off a two-week high. The spread between French and German government bond yields widened the most in 12 years, causing French and German government bond yields to rise by more than 3 basis points as safe-haven sentiment rose, pushing the spread to 83 basis points, the widest in 12 years since 2012.
Waiting for the heavyweight inflation data on Friday, and the latest U.S. economic data running weak have both pushed down U.S. bond yields.
The two-year U.S. Treasury bond yield of U.S. dollars, which is more sensitive to monetary policy, hit a five-week low of 4.7%, down 5 basis points from its recent high. The 10-year basic bond yield fell 4 basis points to 4.27% off a two-week high, which had fallen to the lowest level in ten weeks since early April more than a week ago.
The yield of the 10-year benchmark German bond fell slightly to hover around 2.45%, and the yield of the two-year bond fell nearly 2 basis points. The yield of the French 10-year bond rose by about 4 basis points ahead of the parliamentary election debate, driving the yield of Italian bonds up more than 3 basis points. The safe-haven sentiment pushed the spread of French and German government bond yields to rise to 83 basis points at one point, the widest in 12 years since 2012.
Oil prices rose more than 1% to the nine-week high since the end of April. It rose more than $1 in intraday, and US oil once rose above $82.
WTI crude oil futures for August rose $0.84, or about 1.04%, to $81.74 per barrel, approaching the closing price on April 26 of $82.35. Brent futures for August rose $1.14, or about 1.34%, to $86.39 per barrel, approaching the closing price on April 29 of $86.42.
US oil WTI rose a maximum of $1.13 or 1.4% intraday, once rising above the integer of $82, recovering nearly half of the decline since last Thursday. Last week's main contract had hit a new high since April 30 for three consecutive trading days. The more active international Brent September futures rose $1.11 or 1.3% at one point, returning to above $85, both leaving the weekly low.
Some analysts pointed out that the escalating Middle East tensions between Israel and Lebanon, the concern about supply disruption outweighs anxiety about weak US demand. Oil prices will realize the monthly cumulative increase for the first time since March, and it is not ruled out that it will once again break through $90 per barrel like in April.
Last week, US EIA crude oil and gasoline inventories rose instead of falling. JPMorgan said that the floods caused by tropical storms have had a serious impact on US gasoline demand. Gasoline consumption fell below 9 million barrels per day for the first time in three weeks.
The European benchmark TTF Dutch natural gas futures rose the highest 2.7%, leaving the lowest point in nearly two weeks, and ICE UK futures also rose by more than 2%. The US natural gas August contract fell more than 2%, falling below the lowest point in three weeks of $2.70. The year-to-date increase narrowed to nearly 8%. The year-to-date increase in US gasoline futures expanded to 21%.
The US dollar index fell from an eight-week high, and the yen was trading at around 160.80, hovering at the lowest level since 1986. Offshore RMB is less than 7.30 yuan.
The DXY basket that measures the US dollar against six major currencies fell 0.3% and re-fell below the 106 mark, leaving the eight-week high since May 1. In June, the US dollar has risen by more than 1%, and it has risen by about 4.6% since 2024.
The euro against the US dollar rose the highest 0.4% and returned to above 1.07, leaving the lowest point since May 1 in intraday, but fell by about 1.4% in June, dragged down by political turmoil caused by France's early parliamentary elections this weekend.
The pound against the US dollar also rose 0.4%, leaving the six-week low since mid-May, and is expected to achieve weekly cumulative gains for the first time in a month. Pound is one of the best performing currencies, with a slight decline against the US dollar this year. Some analysts said that if the UK welcomes the Labour Party's governance or improves its relationship with the EU.
The yen against the US dollar has risen slightly, still below the 160 point, trading at 160.80, approaching the lowest level since 1986 that fell to 160.88 on Wednesday. Japan's Finance Minister reiterated that intervention in the exchange market is necessary, but the market believes that if the yield spread of Japanese and US government bonds remains unchanged, the yen's weakness cannot be concealed. The yen has fallen by about 2% against the US dollar in June and has fallen by 12% this year. The offshore renminbi against the US dollar has fallen slightly, still less than 7.30 yuan.
The mainstream cryptocurrencies collectively rebounded. The largest market cap leader Bitcoin rose by 1.6% and is still less than $62,000. On Monday, it fell below the psychological integer of $60,000 for the first time since May 3, and once fell below $59,000, hitting the lowest point in nearly eight weeks since May 1. The second largest Ethereum rose more than 2% and rose above $3,400 again, slightly away from the five-week low since mid-May.
Spot gold rose more than 1% to exceed $2,330, silver rose 1.7% and then significantly narrowed, and London copper hit a ten-week low again.
The fall in the US dollar and US Treasury yields is good for the prices of precious metals. COMEX August gold futures rose 0.9% to $2334.30 per ounce, but COMEX July silver futures fell 0.2% to $29.185 per ounce.
Spot gold rose the highest by more than $32 or 1.4%, exceeding the psychological integer of $2,300 and approaching $2,330, leaving the near three-week low since June 7. Last week it approached a two-week high of nearly $2370, and the gold price has fallen by 5% since the highest historical point of about $2450 on May 20. Spot silver rose by the highest 1.7% and briefly returned to $29, and then the rise was significantly narrowed, still hovering at the six-week low.
Some analysts say that if the US core PCE data for May released on Friday disappoints the financial market about the timing of the Fed's first rate cut, the gold price may fall back to the $2270 level. The gold price is currently in a tug-of-war between the Fed's less-dovish stance and escalating geopolitical tensions. However, in the long run, as the global economy recovers from 2025 and risk appetite increases, the gold price will be under pressure.
London industrial metals are mixed. The "Copper Doctor", an economic indicator, fell by $24 or 0.3% to below the integer mark of $9500, hitting the lowest level in ten weeks since mid-April. London aluminum fell 0.8%, hovering around a two-month low. Yesterday's 2.4% gain in London zinc turned into a 0.4% decline, while London lead fell another 0.6%, but London nickel rose slightly, hovering around the lowest level in twelve weeks since early April, and London tin rose 0.6%. Citibank said that after the copper price fell, investors were looking to buy with $9500 per ton being a good entry point.
In September, US Chicago SRW wheat futures hit a two-month low on Wednesday and rebounded 3.6% on Thursday, but accumulated a decline of more than 17% in June, which is expected to yield the worst monthly performance in two years since June 2022. It has fallen 11% so far this year.
Edited by Jeffrey