Source: Wall Street See
Author: Fang Jiayao. The funds continue to rotate, and small cap index rose more than 2% at one point, leading the way strongly. The chip index opened high and fell low, Tesla opened high by about 7% and rose nearly 2% at the close, Nvidia fell by as much as 1.6%, and Amazon, Meta and Microsoft have all turned down in the intraday. Apple rose 1.7% to a new high. The European stock market fell by 1%, and Bentley fell by 16%, dragging down luxury goods stocks. The Chinese concept index fell by 3.6%, and JD, B Station, Nio, and Xpeng all fell by about 5%, while Baidu fell nearly 6%. Following the Trump trade, photovoltaic stocks plummeted by double digits during the trading hours, and bitcoin-related stocks jumped by double digits. Media under Trump rose more than 31%, the best in three and a half months, and energy stocks got a boost. In addition, the market bets on the Fed's interest rate cuts. As a result, yields on US short-term bonds fell, while those on long-term bonds rose. The 2/10-year yield curve was the steepest in January, and the 30-year yield exceeded the 2-year yield for the first time in half a year. Regional bank stocks rose for the sixth consecutive day, and Berkshire set new highs.
Recently, Wall Street has been betting heavily on Trump's trade, which assumes high inflation and high interest rates. Major U.S. stock indices have risen across the board, with continuous capital rotation and small-cap indices leading for four consecutive days, and creating new closing highs together with the Dow Jones Industrial Average.
Trump Media & Technology Group (DJT) rose 31.37%, and cryptocurrencies stocks rose, with cryptocurrencies rising more than 10%, with bitcoin reaching a high of 64210 USD. The US dollar strengthened, the long end of the yield curve performed poorly, and the yield curve steepened. The US dollar and US bond yields rose together to suppress commodities, with precious metals and international oil prices falling.
Furthermore, Charles Evans, the president of the Federal Reserve Bank of Chicago, said there would soon be reason to cut interest rates. Mary Daly, the president of the Federal Reserve Bank of San Francisco said that confidence in reaching our 2% inflation target is growing. It takes a lot more information to decide whether to adjust policy rates. We are closer to achieving our (inflation + employment) target, but have not yet achieved such a target.
Looking forward, the market focuses on the June US retail sales data to find more clues for interest rate cuts.
The Dow Jones Industrial Average and Small Cap stocks have risen for four consecutive days to new highs, while Apple hit a new high.
The S&P 500 index rose 15.87 points, or 0.28%, to 5,631.22. The Dow rose 210.82 points, or 0.53%, to 40,211.72. The Nasdaq rose 74.12 points, or 0.40%, to 18,472.57.
The Nasdaq 100 rose 0.27%; the Nasdaq Technology Market Value-Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology sector, rose 0.37%; the Russell 2000 small-cap index rose 1.80%; the VIX fear index closed up 5.30% to 13.12.
Major US stock indices rose, with small-cap stocks showing strong performance, led by tech stocks, the Nasdaq rose by over 1.3%, exceeding 18,600, near historical highs; the S&P 500 large-cap index rose nearly 1% to 5,666.94 points, hitting an intraday high; the Dow Jones Industrial Average, which brings together blue-chip stocks, rose by nearly 0.9% to 40,351.10 points, hitting an intraday high; the Russell 2000 small-cap stocks led the major indices again, rising over 2.3% at one point and refreshing the intraday high; Nasdaq-100 rose by over 1.2%.
At the close, all major US stock indices rose, but the gains were cut in half before the close. The Dow rose for four consecutive days to hit a historical high, and small-cap stocks rose 1.8%, which was relatively the largest gain among the major indices, and have risen for four consecutive days, while the regional bank index rose more than 3%:
The S&P 500 index rose 15.87 points, or 0.28%, to 5,631.22. The Dow Jones Industrial Average rose 210.82 points, or 0.53%, to 40,211.72. The Nasdaq rose 74.12 points, or 0.40%, to 18,472.57.
The Nasdaq-100 rose by 0.27%; the Nasdaq Technology Market Value-Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology sector, rose by 0.37%; the Russell 2000 small-cap index closed up by 1.80%; and the VIX fear index closed up 5.30% to 13.12.
The KBW bank index on the Philadelphia Stock Exchange rose 1.71% to 110.64. All 24 component stocks rose, with Goldman Sachs Group up 2.57%, Morgan Stanley up 2.49% after launching bond sales following the release of its earnings report, Wells Fargo & Co up 2.1%, and Citigroup up 0.96%. Bank of America rose 0.72%.
The Dow Jones KBW regional bank index rose 3.03% to 107.62. According to media data, NYCB, the New York Community Bancorp, was the only individual stock to fall among the 47 constituent stocks, falling 8.27%, while Bancolombia, Provident Financial, First Financial Bancorp, First Financial Bankshares, Community Financial System, Simmons First National Bancshares, Texas Capital Bancshares, and Pacific Premier Bancorp were among the top performers, rising 4.01% to 4.88%.
Of the 11 sectors in the S&P 500 index, the energy sector was up 1.56%, the financial sector was up over 1.4%, the information technology/technology sector was up over 0.4%, the telecommunications sector was up over 0.3%, and the utility sector was down 2.39%.
According to the latest report from Goldman Sachs' Prime Services desk, hedge funds have been selling information technology and telecommunications services stocks for the fourth consecutive week, while non-essential consumer goods have become a new favorite. In the past eight weeks, hedge funds have netted seven weeks of sales. In the information technology sector, almost all sub-industries, except IT services, saw net sales, mainly involving software, technology hardware, and electronic equipment, while in the telecommunications service sector, the net selling volume of interactive media and services, entertainment, and diversified telecommunications services exceeded the net buying volume of the media industry.
Bank of America said that as interest rate pressures ease, the Fed will shift its focus from inflation to economic growth, and the market expects profits to expand beyond large technology companies, which is a bullish signal for cyclical stocks. Oh-sung Kwon, the bank's strategist, said in a report to customers on Monday that "it is the right time and place for the market to rotate to interest-rate sensitive cyclical stocks." With inflation under control, this means that the Fed can focus solely on growth, and the market expects to cut rates, and companies outside of the seven giants are breaking free from the profit downturn. Bank of America focuses on cyclical sectors such as industry, autos, energy, metals, and banks.
The "seven sisters of technology" rose and fell, giving up most of their gains in the afternoon. Tesla performed the best, with a gain of nearly 7% in the morning session before giving up more than half, closing up 1.78%, after Elon Musk publicly supported Donald Trump. Apple rose nearly 3% in the early going before cutting its gains in half to close up 1.68%, setting a new closing high for the second consecutive trading day, with a market cap of more than $3.59 trillion and continuing to hold the top spot. Microsoft rose nearly 0.6% before falling nearly 0.5%, closing up 0.09% and maintaining its position as the No. 2 market cap. Google A rose more than 1.7% before closing up 0.79%.
Meanwhile, Nvidia fell 0.62%, with a market cap of $3.16 trillion, ranking third in the US stock market. 'Metaverse' Meta closed down 0.54%, while Amazon fell 0.91%.
Chip stocks rose and fell, repeating last Friday's accelerated decline in the afternoon. The Philadelphia Semiconductor Index rose slightly by 0.04%, still approaching its historic high, and the industry ETF SOXX rose slightly by 0.11%. Nvidia's double long ETF fell 1.43%; Taiwan Semiconductor's ADR fell 1.14%, Micron Technology fell 2.01%, Intel fell 0.62%, AMD fell 0.99%, Arm Holdings fell 2.01%, while KLA Corp rose 0.05%, Applied Materials rose 0.88%, Qualcomm rose 2.84%, and Broadcom rose 0.8%.
The performance of AI concept stocks is differentiated, and many of them weakened in the closing session and closed at the daily low. SoundHound.ai fell 9.19%, but had risen by nearly 54.23% in the previous three days. Oracle fell 1.17%, BigBear.ai fell 3.11%, Snowflake fell 1.5%, and Dell fell 1.68%, while Palantir rose 2.14% and CrowdStrike rose 1.63%.
On the news front:
Nvidia and Taiwan Semiconductor: according to the Taiwan Economic Daily, insiders revealed that international giants such as Amazon, Dell, Google, Meta, and Microsoft will import Nvidia Blackwell architecture GPUs to build AI servers, with volume exceeding expectations. To this end, Nvidia has increased its order volume for TSMC by about 25%, and the shipment volume of GB200 NVL72 and GB200 NVL36 server cabinets has increased from 0.04 million units to 0.06 million units, an increase of up to 50%. In addition, there are reports that TSMC's 2nm process is rumored to begin trial production this week, and after Apple takes the first production capacity in 2025, the next generation of 3D advanced packaging platform SoIC (system integrated chips) is also planned to be introduced to M5 chips and mass produced. It is expected that the SoIC production capacity will increase several times by 2026.
Apple: "The upgrade cycle of Apple's iPhones has been underestimated", and Morgan Stanley predicts that iPhone shipments will exceed 0.5 billion in the next two years, nearly 70% of which will be new models, and Morgan Stanley has named Apple as a preferred stock, with a target price raised from $216 to $273. In addition, it is reported that Apple's annual revenue in India grew by 33% to nearly $8 billion, reaching a historical high. Loop Capital raised its rating on Apple to buy and set a target price of $300.
Goldman Sachs: Goldman Sachs' net revenue in the second quarter of the year was $12.73 billion, exceeding the market's expected $12.39 billion, and Goldman Sachs rose 2.57%.
Chinese concept stocks generally fell. The KWEB ETF, which tracks Chinese internet stocks, fell 3.4%; the CQQQ ETF, which tracks Chinese technology stocks, fell 2.72%; and the Nasdaq Golden Dragon China Index (HXC) fell 3.64%.
In the popular China concept stock market, Tal Education fell more than 6%, Baidu fell nearly 6%, Ke Holdings, JD.com, iQiyi, Bilibili fell more than 5%, Xpeng, NIO Inc, New Oriental fell over 4%, Li Auto Inc, PDD Holdings, H World Group fell over 3%.
Among the stocks with significant fluctuations, Trump Media and Technology Group (DJT) rose 31.37%.
"Trump trade" drives up U.S. bond yields across the board, causing the yield curve to steepen and European bond yields to fall across the board.
At the close, the yield on the benchmark 10-year U.S. Treasury bond rose 4.46 basis points to 4.2274%, trading between 4.1964% and 4.2469% during the day. The yield on the two-year U.S. bond, which is more sensitive to monetary policy, fell 0.45 basis points to 4.4469%, trading between 4.47% and 4.4154% during the day.
During the bond market session, as Powell discussed progress on inflation and confidence, the yield on 10-year U.S. bonds fell briefly to below 4.20% to hit a daily low, recovered from the short-term decline during the speech, and expanded its intraday gain to 4.6 basis points after the speech, standing above 4.23%. The yield on two-year U.S. bonds also briefly fell to a daily low of 4.4154%, before jumping and approaching 4.46% after Powell's speech.
As the market bet that Trump would win the U.S. presidential election and implement more expansionary fiscal policies, the long end of the yield curve performed poorly, and the yield curve became steeper. The 2-year and 10-year yield curves steepened by 4.537 basis points to -22.565 basis points, the highest since January. In addition, the U.S. 30-year Treasury bond yield was higher than the 2-year Treasury bond yield for the first time since January 31st.
At the close, the yield on the 10-year German benchmark bond fell 2.3 basis points to 2.472%. The yield on the two-year German bond fell 2.4 basis points to 2.799%.
The yield on the French 10-year bond fell 3.9 basis points, the yield on the Italian 10-year bond fell 4.6 basis points, the yield on the Spanish 10-year bond fell 2.7 basis points, and the yield on the Greek 10-year bond fell 5.0 basis points. The yield on the UK 10-year bond fell 0.8 basis points to 4.101%.
Swati Dhingra, a decision-maker at the Bank of England, urged Bank of England officials to initiate a rate cut to prevent high borrowing costs from squeezing living standards. Dhingra said that various indicators have always been very optimistic and played down concerns about wage growth and service price inflation. Now is the time to start normalization. Our standard of living is declining, and this is an unnecessary cost. The sharp drop in producer prices is a "harbinger" of consumer price trends. Dhingra said that once the Bank of England starts to relax policies, it can only cut rates at a slow pace, meaning that rates may take more than a year to fall to around 3.5-3.75%.
In addition, according to a media survey, when economists examine the interest rate guidance of the highest officials of the European Central Bank, Lagarde is not their first concern, and they pay more attention to the opinions of German official Isabel Schnabel and Chief Economist Philip Lane.
Under pressure from the "Trump trade", oil prices have fallen for two consecutive days, and US natural gas prices have plummeted 7%.
Oil prices ended four consecutive weeks of gains and fell for two consecutive days. WTI August crude oil futures fell 0.30 US dollars, down more than 0.36%, to 81.91 US dollars/barrel. Brent September crude oil futures fell 0.18 US dollars, down more than 0.21%, to 84.85 US dollars/barrel.
In pre-market trading, the US dollar strengthened, causing US oil and Brent oil to turn downward several times; in early trading, both US and Brent oil plummeted, refreshing the daily low. US oil fell to 81.47 US dollars/barrel, a drop of more than 0.9% during the day, Brent oil fell the deepest by more than 0.7% to 84.42 US dollars/barrel; before Powell's speech, international oil prices explored the bottom and then rebounded, and US oil almost wiped out all its losses during Powell's speech, while Brent oil microscopically turned up. However, oil prices plummeted again during and after Powell's speech.
Analysts believe that the assassination attempt on Trump has increased the probability of his re-election, supporting the strength of the US dollar and suppressing oil prices. At the same time, it has been reported that Israel and Hamas have reached a ceasefire framework on Friday, easing concerns about supply disruptions, but negotiations were interrupted, and on Saturday, Israel's attack on Hamas senior officials caused 90 deaths. The geopolitical risks have not been eliminated.
US natural gas futures for August fell by about 7.34%, to 2.1580 US dollars/million BTUs, the lowest level in two months; TTF Dutch natural gas futures, the benchmark in Europe, fell 1.10%, to 31.371 euros/megawatt-hour; ICE UK natural gas futures rose 2.21% at the close, to 80.76 pence/therm.
The main reasons are increased production, reduced natural gas supply to liquefied natural gas export facilities and oversupply. As of July, natural gas production in 48 states in the United States increased from the lowest level in 17 months of 99.5 billion cubic feet per day in May to 102.4 billion cubic feet per day. In addition, the natural gas flowing to major liquefied natural gas export facilities in the United States decreased from 12.8 billion cubic feet per day in June to 12.2 billion cubic feet per day, mainly due to the closure of the free port caused by Hurricane Berriel. At the same time, the Energy Information Administration report shows that utilities added 65 billion cubic feet of natural gas to storage in the week ending July 5, increasing inventory 18.7% above seasonal levels.
The US dollar index rose more than 0.1%, and the yen once rose to 158, while cryptocurrency futures rose more than 10%.
The basket US dollar index DXY, which measures against six major currencies, rose 0.15% to 104.252 points, with a trading range of 104.030-104.319 points during the day.
The Bloomberg US dollar index rose 0.21% to 1252.12 points, with a trading range of 1249.55-1252.78 points during the day.
Non-US currencies generally fell. The euro fell 0.08% against the US dollar, and the pound fell 0.12% against the US dollar.
Offshore renminbi (CNH) fell 23 points against the US dollar to 7.2746 yuan, and overall trading was within the range of 7.2681-7.2862 yuan during the day.
Among Asian currencies, the US dollar rose 0.12% against the yen, to 158.01 yen, and dove to 157.19 yen when Fed Chairman Powell mentioned progress in inflation and prospects for interest rate cuts.
Cryptocurrency futures rose more than 10% as investors anticipate that US regulators will approve Ethereum ETF trading starting next week. The largest market cap Bitcoin rose 10.61% to 63985.00 US dollars, the highest touch of 64210.00 US dollars during the day. The second largest Ethereum rose 10.50%, to 3447.00 US dollars, and touched the highest point during the day at 3464.00 US dollars.
Insiders said that spot Ethereum ETFs may start trading on July 23.
Although the "Trump trade" has lowered gold prices, Powell's dovish tone boosted expectations of interest rate cuts, supporting gold prices close to historic highs since May.
Gold continued its three-week rally and rose slightly on Monday. COMEX August gold futures rose 0.27% to $2427.2 per ounce at the close, while COMEX September silver futures fell 0.78% to $30.92 per ounce at the close.
After the assassination attempt on Trump, his chances of winning the election have increased, and the US dollar and treasury yields jointly press down precious metal prices. In early trading in Asia and Europe, spot gold weakened and hit a daily low, down more than 0.4%, almost breaking through the $2400 mark; in early US trading, gold prices continued to rise, and at 12:35 pm Eastern Time, Powell hinted at further rate cuts. The gold price in midday trading on US stocks rose to a high of $2439.75 per ounce, narrowing to a rise of 0.4% after Powell's speech ended, pushing it below $2420.
Spot gold widened its gains to a daily high of $2,439.75 per ounce early in Powell's speech, but narrowed to a 0.4% gain of just under $2,420 after the speech. It had risen by 1% and above the $2,430 integer mark before Powell's speech.
Spot silver has turned higher several times, but overall fell, with US stocks hitting a day's low of nearly a 0.87% decline, then hitting a day's high of nearly 1% and breaking through the $31 integer level, before diving again at the close.
Analysts said that gold is benefiting more from safe-haven demand as uncertainty about the election increases. At the same time, with Powell's speech still being dovish, investors are increasing their bets on interest rate cuts, and spot gold prices are approaching the historical high of $2449.89 per ounce set on May 20. Jim Wyckoff, senior market analyst at Kitco Metals, said that gold and silver prices are likely to continue their sideways or upward trend, and he would not be surprised to see new historical highs in the coming weeks or even earlier.
In addition, data shows that India imported $3.06 billion worth of gold in June. The media reported that India's platinum imports for the four weeks starting in mid-June exceeded the total for 2023. Media cited industry officials as saying that Indian gold traders are exploiting loopholes by registering alloys containing about 90% gold as platinum to avoid higher tariffs.
London's basic industrial metals rose and fell. The economic barometer "Dr. Copper" fell by about 0.72% to $9806 per tonne, London aluminum fell by more than 0.80%, London lead fell by more than 0.99%, London nickel fell by about 0.92% to $16701 per tonne, and London tin fell by more than 1.33% to $33246 per tonne, while London zinc rose by $12 to $2955 per tonne.
London Metal Exchange (LME) data showed copper inventories of 210,325 tonnes, an increase of 4100 tonnes. Aluminum stocks were 970,725 tonnes, a decrease of 6000 tonnes. Nickel inventories were 99,132 tonnes, an increase of 606 tonnes. Zinc inventories were 247,475 tonnes, a decrease of 3650 tonnes. Lead inventories were 211,475 tonnes, unchanged. Tin inventories were 4,440 tonnes, unchanged.
Editor/Jeffy