Zhitong Finance and Economics APP learned that on Friday, the three major US stock indexes rose and fell, closing down collectively, and the S&P 500 and NASDAQ once reached new highs intraday. Traders digested the latest US economic data, which showed that inflation slowed and consumer confidence was better than expected. US stocks also drew a close to their strong performance in the first half of the year.

[US stocks] At the close, the Dow fell 45.20 points, or 0.12%, to 39,118.86; the NASDAQ fell 126.08 points, or 0.71%, to 17,732.60; the S&P 500 index fell 22.39 points, or 0.41%, to 5,460.48. During Friday's trading, the NASDAQ broke through 18,000 points for the first time in history, and the S&P 500 index rose to a high of 5,523.64 points, a historical intraday high. Most of the large technology stocks fell, with Microsoft (MSFT.US) down 1.3%, Apple (AAPL.US) and Google (GOOG.US) down nearly 2%, Amazon (AMZN.US) down more than 2%, and Meta Platforms (META.US) down nearly 3%. Nike (NKE.US) disappointed in its earnings and its stock price fell 20%, the biggest drop since 2001, with stocks such as Lululemon (LULU.US) and Levi Strauss (LEVI.US) following suit.

In the first half of 2024, driven by the AI boom, the NASDAQ rose by 18.1%, the S&P 500 rose by 14.5%, and the Dow rose by only 3.8%. Mike Dickson, head of research and quantitative strategies at Horizon Investments, said that the AI theme "has dominated this year and has really driven the concentration of the entire market. This has made this year's performance very strong."

[European stocks] Major European indices fell, with the German DAX30 index up 0.14%, the UK FTSE100 index down 0.19%, the French CAC40 index down 0.68%, and the Euro Stoxx 50 index down 0.18%.

[Gold] Spot gold fell 0.03% to $2,326.75 per ounce, down about 0.10% in June, and up 12.78% in the first half of 2024.

[Cryptos] Bitcoin was reported at $60,400.00, down 2.34% from New York's Thursday close. Ether was reported at $3,396.00, down 1.91% from Thursday. Spot bitcoin fell by 10% in June, up about 41.60% so far this year.

[Crude oil] WTI August crude oil futures fell $0.20, or 0.24%, to $81.54 a barrel, up nearly 6.27% in June and up nearly 13.74% in the first half of the year. Brent August crude oil futures rose $0.02, or 0.02%, to $86.41 a barrel, up more than 6.53% in June and up more than 13.44% in the first half of the year.

[Metals] London metals rose, with LME copper futures up $84 to $9,599 per tonne. LME aluminum futures rose $32 to $2,524 per tonne. LME zinc futures rose $8 to $2,938 per tonne. LME tin futures rose $531 to $32,739 per tonne. In the first half of the year, LME tin rose more than 29%, LME copper rose more than 12%, and LME zinc rose more than 10%.

Macro news

Fed policymakers evaluate the latest inflation data: monetary policy is working and it is too early to determine a rate cut. On Friday (June 28th) local time, San Francisco Fed Chairman Daly said, "It's hard to imagine that monetary policy doesn't work anywhere, our economic growth is slowing down, spending is slowing down, the labor market is slowing down, and inflation is falling, which is the role of monetary policy." Daly pointed out that the Fed will continue to make decisions based on economic data, and if the pace of inflation declines slower than expected, the decision makers will have to maintain high interest rates for a longer period of time. Data show that the US May PCE price index was flat month-on-month, with a year-on-year increase of 2.6%, both in line with market expectations; excluding volatile factors such as food and energy, the US May core PCE price index increased by 0.1% month-on-month, with an increase of 2.6% year-on-year, both in line with market expectations.

Barclays strategist: Buy inflation-protected assets to prepare for Trump's election. Barclays strategists Michael Pond and Jonathan Hill wrote in a report that with the increasing likelihood that former US President Donald Trump will replace current President Joe Biden in the November 5th election, the market should "consider significant risks of higher-than-targeted inflation rates in the coming years." This simple trade is betting that 5-year TIPS will outperform conventional 5-year treasuries, leading to an expansion of the yield spread between the two. Barclays predicts that the break-even rate, which represents the implied expected average inflation rate for the bond term, will widen from the current level of around 2.25% to 2.5%.

Goldman Sachs and Morgan Stanley are bearish on US stocks. Scott Rubner of Goldman Sachs said that although the S&P 500 index in the first half of July usually performs strongly in history, reduced liquidity in August, the impact of the back-to-school season, and the pullback trend before the election may push down US stocks. He said: "From now until July 17, we are in the final stage of the rising market, and I will seek to reduce exposure after July 4." He predicts that the stock market will experience a "preelection pullback" as fund managers are forced to sell long positions and hedge election risks. Marko Kolanovic of JPMorgan believes that under the influence of unfavorable factors such as economic slowdown and profit downgrade, the S&P 500 index will fall to 4,200 points before the end of the year, a drop of about 23% from Thursday's closing price.

Deutsche Bank strategist: The Fed and the ECB may usher in a rate cut window in September. Morgan Stanley strategist said that as key data further shows that inflation in the United States and the eurozone is cooling down, the Fed and the ECB may take interest rate-cutting action in September. Sheets said that it is understandable for central banks not to make commitments in advance. They don't want the outside world to think that they are too confident about inflation risks, "but we believe that the European Central Bank will see data showing continued slowdown in inflation in September, and the Fed will also observe that inflation continues to decline."

[Individual stock news]

Nike's stock price hits its biggest drop since 2001, and full-year guidance falls short of expectations. Nike's stock price fell nearly 20%, marking its biggest drop since 2001. The full-year performance outlook released by the company was lower than expected, adding to investors' worries about declining demand for its sports shoes and apparel. Wall Street banks have downgraded the stock. JPMorgan downgraded Nike to "neutral", and analyst Matthew Boss warned that "we believe that in the transition period of franchise product life cycle, Nike's schedule for revenue growth will be extended, and the global macro background (especially the adverse factors in Greater China, Europe, the Middle East, and Africa) will make the path forward more complex."

Microsoft-OpenAI combination raises EU vigilance, antitrust officials confirm investigation has begun. The EU is preparing for further antitrust investigations into Microsoft's $13 billion investment in OpenAI. In January of this year, the EU announced that it would review Microsoft's investment in OpenAI under the EU Merger Regulation, but the two companies claimed to maintain their independence. The EU now believes that Microsoft is indeed not developing towards controlling OpenAI, so this review will not continue. However, the EU stated that it is currently exploring the possibility of conducting a traditional antitrust investigation to determine whether the cooperation between the two giants has harmed the competition of the rapidly growing market. The European Commission revealed that it is also investigating AI-related agreements between Google and Samsung.

US large banks have announced an increase in dividends one after another, all of which have passed the Fed's stress tests. Post-market trading for US stocks, large banks such as JPMorgan and Bank of America have announced an increase in dividends. Just two days ago, the evaluation results of the regulatory agencies showed that all 31 banks participating in the test could maintain sufficient capital and withstand the test scenarios of economic recession. Other banks that have increased dividends include Citigroup, Wells Fargo, and Morgan Stanley. JPMorgan and Morgan Stanley also approved share buyback plans worth hundreds of billions of dollars.