Source: Wall Street News Author: Fang Jiayao, Du Yu
Federal Reserve Chairman Powell praised the "significant progress" made in inflation, although he reiterated that he was not ready to cut interest rates. However, this was interpreted by the market as dovish. Citigroup and other major banks predicted that interest rates would be cut three times this year. US stocks opened low and rose high, and the S&P 500 index closed above 5,500 points for the first time in history. The Nasdaq closed above 18,000 points for the first time, while the Nasdaq 100 closed above 20,000 points for the first time. Of the "Tech Seven Sisters" of the US stock market, only Nvidia performed poorly, while Tesla rose for six consecutive days, with a cumulative increase of more than 26.6%. Eli Lilly and Co.'s new drug to delay Alzheimer's disease was approved, but Biden called for a reduction in the price of weight-loss drugs. The stock fell 3.9% before closing down less than 1%.
The China concept stocks index turned upward, breaking away from the lows of the past five months. Alibaba, NIO, and Li Auto rose by about 2%. The core inflation rate in the Eurozone remains high. Le Pen said that even if there is no absolute majority, she will seek to form a French government. European stocks reversed the downward trend. Powell's dovish remarks suppressed the US dollar and US bond yields. Spot gold rose to a new daily high during Powell's speech. The euro hit a two-week high, and offshore Renminbi approached 7.31 while the Japanese yen hit its lowest level since 1986 at one point. Oil prices fell but remained near two-month highs since the end of April. US crude oil broke through $84 during the day, and Brent oil rose above $87.
US job vacancies data surged unexpectedly. In May, the number of job vacancies in the United States was 8.14 million, higher than the expected 7.95 million. Detailed data showed that the US labor market is still tight, and progress in deflation may have stalled briefly; however, Powell's dovish speech significantly boosted the market's confidence. At the central bank forum held by the European Central Bank, he stated that the Federal Reserve has made considerable progress in inflation and hopes to see more progress before confidently cutting interest rates.
Commentators believe that Powell is satisfied with the progress in inflation, which adds hope for a Fed rate cut this year; this indicates that the Fed may be able to cut interest rates later this summer. However, Powell has remained cautious and optimistic, refraining from discussing the timing of the first interest rate cut and how many times interest rates will be cut this year, because an early rate cut may rekindle inflation. The CME FedWatch Tool shows that the probability of a 25 basis point rate cut in September has increased from 60% to 63%, and investors still expect the Fed to cut interest rates at least once this year.
After Powell's speech, the Nasdaq and S&P 500 turned upward, and US Treasury yields fell to a new daily low; the US dollar index fell to an intraday low, and spot gold rose in the short term. Although there was a slight reversal in the trend after the job vacancy data was released, the trend was difficult to change. US stock indexes resumed their upward trend and closed higher, while the US dollar closed at a low point.
In the foreign exchange market, the dollar against the yen rose to 161.75 during the day, setting a new high since 1986, and traders were closely watching the Japanese government's intervention comments. The latest commentary suggested that if the yen falls below the key psychological level of 165, the Japanese authorities may intervene.
Commodities rose and fell unevenly. The weak US dollar failed to support gold prices. The oil market gave up its gain during the day and closed at a low point, distancing itself from its two-month high set the day before. People are worried that the early arrival of the active hurricane season may disrupt oil refineries and oil production along the US Gulf Coast. However, the latest forecast shows that the hurricane is unlikely to have a significant impact on offshore oil production, reducing concerns about supply issues among traders.
However, geopolitical tensions have intensified. From the demand side, the American Automobile Association predicts that during this year's holiday period, the expected number of travelers will increase by 5.2% compared to last year, of which the expected number of car travelers will increase by 4.8%. As the US Independence Day holiday approaches, it is expected that US gasoline demand will peak this week. In addition, OPEC+ has decided to extend supply restrictions on oil production to 2025, which has also supported oil prices in the short term.
Looking ahead, the FOMC meeting minutes and a large amount of data (ADP employment report, initial jobless claims, ISM service index, and factory orders) will be released on Wednesday. The heavy non-farm payroll data for June in the United States will be released on Friday. US stocks and US bonds will close early on Wednesday and be closed all day on Thursday.
The S&P and Nasdaq hit new highs, with Tesla up 10.2%, Amazon, Apple and Microsoft all reaching new highs.
On Tuesday, July 2nd, the three major US stock indexes collectively opened low and then rose high, closing up across the board.
The three major U.S. stock indexes opened slighty lower collectively. The Dow Jones Industrial Average fell in a short line multiple times in early trading, but the Nasdaq, which is dominated by large-cap and technology stocks, rose all the way and hit a new daily high. The Russell 2000 Small Cap Index had refreshed its daily low at the midday of the US stock market and turned down, but followed the broader trend and rose to near the close. Among the major indexes, the Nasdaq had a relatively largest increase in gains.
At the close, the S&P 500 large-cap, Nasdaq, and Nasdaq 100 set new historic closing highs, with the Nasdaq 100, which is primarily made up of technology stocks, showing outstanding performance, rising 1.01%. The Russell 2000 Small Cap index was relatively lagging but still rose 0.19% and pulled away from its five-week lows.
The S&P 500 index rose 33.9 points, or 0.62%, to 5,509.01. The Dow rose 162.33 points, or 0.41%, to 39,331.85. The Nasdaq rose 149.46 points, or 0.84%, to 18,028.76.
The Nasdaq 100 rose 1.01% to a new high. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 technology components, rose by about 0.81% to a two-week high. The Russell 2000 Small Cap Index rose 0.19%, while the "Panic Index" VIX fell 1.55% to 12.03.
The S&P set a record close for the first time above 5500, the Nasdaq set a record close for the first time above 18,000, and the Nasdaq 100 set a record close for the first time above 20,000. All of them hit record closing highs and the Nasdaq hit new highs for two consecutive days and the Dow is approaching its historic high again.
11 S&P sectors closed higher, with all sectors except for the energy sector, the healthcare sector, and the photovoltaic sector gaining. The optional consumer sector led the gains as Tesla's second-quarter deliveries slightly exceeded expectations.
Citibank said the S&P 500 index still has room to rise in the second half of this year, but with rate cuts imminent, investors still need to be prepared for possible market volatility in the future. Scott Chronert, managing director of Citigroup, said the bank's economists predict that as expectations for three rate cuts begin in September, the second half of the year may see an economic recession. He stressed that the key issue now is whether the widespread weakness in economic activity will weaken the optimistic sentiment in the AI field, which has been the driving force behind the market's rise. Chronert advised investors to remain vigilant for greater volatility before the Fed policy changes.
Star tech stocks rose together. Tesla led the rise of the 'Seven Sisters' of US stocks, up 10.2% to $231.26 and up more than 26.66% cumulatively since the close on June 24, the longest consecutive increase in trading days since July 18, 2023. Apple and Amazon hit record highs, with Apple rising 1.62% and hitting a consecutive record high for two trading days. Amazon rose 1.42% and hit a consecutive record high after two days. Google A rose 1.23%, Meta rose 0.96%, and Microsoft rose 0.56%.
Chips rallied in late trading, with most of them rising. The Philadelphia Semiconductor Index rose 1.24%, and the SOXX industry ETF also rose 1.41%. Nvidia fell 1.31%, while Nvidia's two-fold long ETF fell 2.53%.
In addition, AMD rose 4.21%, Taiwan Semiconductor ADR rose 1.96%, ARM rose 2.92%, Applied Materials rose 1.45%, KLA Corp. rose 1.37%, Broadcom rose 1.02%, Micron Technology rose 0.81%, Intel rose 0.75%, and Qualcomm rose 0.06%.
AI concept stocks rose and fell differently. CrowdStrike fell 1.81%, C3.ai fell 1.82%, BigBear.ai fell 0.68%, Snowflake fell 0.6%, Palantir fell 0.19%, while Super Micro Computer rose 3.06%, SoundHound.ai rose 1.29%, Dell rose 0.46%, and Oracle rose 0.13%.
On the news front:
Tesla: Data showed that Tesla delivered 444,000 new cars in Q2, exceeding the market's expected 439,300 new cars. At the same time, Tesla deployed 9.4 GWh of energy storage products in the second quarter, the highest quarterly deployment to date.
Apple: According to sources in the supply chain, Apple expects to ship between 90 and 100 million units of the iPhone 16 series, and has raised its orders for the A18 series chips, thanks to the upgrades in generative AI and other areas.
Eli Lilly and Co: Eli Lilly and Co received approval from the US FDA for its drug Kisunla (Donanemab-Azbt), which is used to slow down the development of Alzheimer's disease. Kisunla is priced at $695.65 per bottle, with a six-month course cost of $12,522 and a first-year cost of $32,000. Eli Lilly and Co's decline narrowed to less than 1%, and the initial decline in the US stock market exceeded 3.9%; competitor BIIB's decline expanded to nearly 2.24%.
Volkswagen and Rivian: According to media reports, Volkswagen is discussing expanding its partnership with Rivian to the hardware field. The two sides are also discussing building a partnership in the product field.
US Stock: Bank of America customers rushed to withdraw from US stocks for the second consecutive week, and hedge funds led the outflow of funds, while institutions and retail investors were net buyers. Strategists such as Jill Carey Hall stated in a report to clients on Tuesday that clients sold $3.1 billion of US stocks in the five days leading up to June 28. Hedge funds were net sellers for the third consecutive week, while institutions and retail clients were net buyers.
Large-cap and medium-cap stocks saw inflows for the fourth consecutive week, while small-cap stocks saw outflows for the first time in five weeks. In terms of industries, technology stocks saw the most inflows, and communications services stocks saw the longest continuous buying period, up to 13 weeks. Non-essential consumer goods saw the largest outflow of funds. In the first half of 2024, institutional and hedge fund clients have been net sellers of stocks this year, while retail client funds have been close to neutral. Corporate clients’ buyback levels have reached the levels of the whole year of 2023.
Chinese concept stocks rose and fell. The ETF KWEB rose by 0.77%, CQQQ fell by 0.24%, and the NASDAQ Golden Dragon China Index (HXC) rose by 0.79%.
Among the popular stocks, JD.com rose by 1.16%, Baidu rose by 0.77% and PDD Holdings rose by 0.68%. Alibaba rose by 2.08%, while Tencent ADR fell by 0.13%, Netease fell by 2.59%. Among new automakers, NIO Inc. rose by 2.03%, Li Auto Inc. rose by 1.94%, while Xpeng fell by 1.04%, and Jike fell by 1.32%.
Retail investors held their positions in hot stocks. AMC Entertainment rose by 3.37%, GameStop rose by 2.79%, BlackBerry rose by 1.24%, while Koss Corp. fell by 5.01%.
Other stocks with significant changes include:
After Novo-Nordisk A/S fell by 4.4%, it fell by 1.7%. After Eli Lilly and Co fell by 3.9%, it fell by 0.8% and broke away from its all-time high. US President Biden and Senator Sanders called for the weight loss and diabetes "miracle drugs" of the two companies to be lowered in price. After that, competitors BIIB fell by 2.9% and then fell by 1.3%.
However, Eli Lilly's drug Donanemab, which delays senile dementia, has been approved by the US Food and Drug Administration (FDA), and Eli Lilly and Co (LLY) narrowed its decline to less than 1%, while competitor BIIB's decline expanded to 2.9% and then fell by 1.3%.
In the current French election, the far-right National Front leads in votes, and the tense situation in France continues. European stocks fell in unison:
The pan-European Stoxx 600 index fell 0.42% to 510.91 points. The Eurozone STOXX 50 index fell 0.48% to 4,906.33 points.
The German DAX 30 index fell 0.69%, the French CAC 40 index fell 0.30%, the Italian FTSE MIB index fell 0.70%, the FTSE Italia All-Share Banks index fell 1.35%, and the UK FTSE 100 index fell 0.56%.
Among the Euro Stoxx 600, ASML Holding rose more than 1.2%, and Novo-Nordisk fell by 1.1% as Biden called for a price cut in the weight loss drug.
Powell stated that progress has been made in combating inflation, and US bond yields have fallen across the board.
At the close, the two-year US bond yield, which is sensitive to interest rates, fell by 1.86 basis points to 4.7370%, and at one point hit a daily low of 4.7099%. The benchmark 10-year US bond yield fell by 3.56 basis points to 4.4257%. During Fed Chairman Powell's speech, it hit a daily low of 4.4099% and mostly fell throughout the day.
In addition, the 20-year US bond yield fell by 2.34 basis points, while the 30-year US bond yield fell by 2.61 basis points. The three-year US bond yield fell by 2.86 basis points, the five-year US bond yield fell by 3.53 basis points, and the seven-year US bond yield fell by 3.95 basis points.
As the Eurozone benchmark, the 10-year German bond yield fell 0.5 basis points to 2.603%. During Federal Reserve Chairman Powell and European Central Bank President Lagarde's speeches, it hit a daily low of 2.571% and showed a W-shaped trend throughout the day. The two-year German bond yield fell by 1.8 basis points to 2.906%, and hit a daily low of 2.881% during Lagarde's speech.
The yield spread of French and German bonds has continuously narrowed for three days. The yield of France's 10-year treasury notes fell by 3.2 basis points, the yield of Italy's 10-year treasury notes fell by 5.1 basis points, the yield of Spain's 10-year treasury notes fell by 2.9 basis points, and the yield of Greece's 10-year treasury notes fell by 5.9 basis points.
The yield of the 10-year UK bond fell by more than 3 basis points, hitting a daily low of 4.213% during Federal Reserve Chairman Powell and European Central Bank President Lagarde's speeches. The yield of the two-year UK bond briefly rose, with a daily high of 4.209%.
Expectations of a rate cut have increased, causing the US dollar to weaken.
The DXY, which measures the US dollar against six major currencies, fell by 0.19% to 105.695, with an intraday trading range of 106.054-105.681.
The Bloomberg Dollar Spot Index fell by 0.16% to 1268.99, with an intraday trading range of 1273.84-1268.85.
Offshore renminbi against the US dollar fell slightly and continued to approach the 7.31 yuan mark, reaching a low of eight months.
The yen against the US dollar fell to 161.77 during the European stock period, hitting the lowest level in 38 years since 1986, and traded at 161.56 during regular trading hours. Japan's finance minister said that the authorities are alert to the sharp fluctuations in the currency market, but did not give a clear warning of intervention.
The euro rose by 0.05% against the US dollar, the British pound rose by 0.24% against the US dollar, and the US dollar rose by 0.09% against the Swiss franc. Among commodity currencies, the Australian dollar against the US dollar rose by 0.09%, the New Zealand dollar against the US dollar rose by 0.03%, and the US dollar against the Canadian dollar fell by 0.43%.
Mainstream cryptocurrencies generally fell. CME Bitcoin futures main contract was reported at $62,250, down 2.27% from the New York closing on Monday. CME Ethereum futures DCR main contract was reported at $3,429.50, down 1.72% from Monday.
Hurricane concerns eased, and crude oil fell. WTI August crude oil futures closed down $0.57, a decline of more than 0.68%, at $82.81 per barrel. Brent September crude oil futures closed down $0.36, a drop of nearly 0.42%, at $86.24 per barrel.
During pre-market trading, WTI crude oil rose by up to $1 or 1.2% to hit a high of $84.38 per barrel, a new intraday high since April 26th, and international Brent rose by up to $0.86 or 1% to $87.46 per barrel, a new intraday high since April 30th. However, it later plunged sharply, with US oil at its lowest point down $0.62 or 0.74%, and Brent oil at its lowest point down $0.44 or 0.5%. Analysts pointed out that due to multiple factors such as Israel's Hezbollah dispute supported by Iran, Hurricane Beryl, and summer demand, oil prices have hovered at a two-month high. On Tuesday intraday, it initially continued its strong performance on Monday but ultimately turned lower, possibly because the market realized that Beryl was unlikely to cause a large-scale interruption of offshore oil production, and even if some production was affected, the impact on the platform would be minimal.
Before the US stock market opened, WTI oil rose to a new high of the day, with the highest increase of 1 USD or 1.2% to reach a high of 84.38 USD per barrel, a new intraday high since April 26th, and international Brent increased the most by 0.86 USD or 1% to reach 87.46 USD per barrel, a new intraday high since April 30th; it later plunged sharply, with US oil at its lowest point down 0.62 USD or 0.74%, and Brent oil at its lowest point down 0.44 USD or 0.5%.
Analysis shows that the fluctuation in oil prices is driven by geopolitical tensions and hurricane threats, but both are typical short-term rebounds. Rebecca Babin, a senior energy trader with private wealth management at Canadian Imperial Bank of Commerce, pointed out that the current rise in oil prices is driven by geopolitical tensions and hurricane threats, but both are typical short-term rebounds.
On the other hand, people are increasingly concerned that the Hezbollah militia supported by Israel and Iran may go to war. The exchange of fire between Israel and Hezbollah on the Lebanon border has lasted for months. However, as the two sides threatened to start a war in recent weeks, tensions have escalated. Analysts have warned that Israel's invasion of Lebanon to expel Hezbollah could lead to confrontation with OPEC member Iran.
In addition, data released by the American Petroleum Institute (API) on Tuesday showed that as of the week ending June 28, 2024, US crude oil inventories fell sharply by 9.163 million barrels, while the previous week increased by 914,000 barrels. This is the largest weekly decline in crude oil stocks since August 2023, far exceeding the market's expected 150,000 barrels decline.
Oil prices touched a two-month high and then fell slightly.
In August, US natural gas futures fell by about 1.74%, reporting $2.4350 per million British thermal units. NYMEX July gasoline futures closed at $2.5734 per gallon, and NYMEX July heating oil futures closed at $2.6297 per gallon.
Lowered interest rate expectations failed to support metals and gold prices dropped, with London nickel falling more than 2%.
COMEX August gold futures fell by about 0.27% to $2,332.5 per ounce, and COMEX July silver futures rose by about 0.16% to $29.66 per ounce.
Spot gold fell more than 0.5% or $12 before the pre-market trading session in the US, dropping below $2330. US stocks surged to a daily high of $5 or 0.2% in early trading before falling, erasing all gains. Spot silver rose as much as 1.26% on Tuesday.
The World Gold Council (WGC) stated in its mid-year outlook report that the market trend indicated that the price of gold would fluctuate in a range in the second half of the year.
London industrial metals prices were mixed:
Economic indicator "Dr. Copper" rose by $42 to $9,672 per ton. London aluminum rose by $7 to $2,522 per ton. London zinc fell by $6 to $2,922 per ton. London lead fell by $16 to $2,202 per ton. London nickel fell by more than 2.03% or $353, reporting $17,004 per ton. London tin rose by $22 to $32,922 per ton.
In addition, Shanghai nickel overnight fell by more than 0.9%, and Shanghai tin fell by more than 0.7%.
Editor/Lambor