Source: Wall Street See
Authors: Fang Jiayao, Du Yu.
S&P 500 index rose on the fifth day of the six days, Nasdaq and Nasdaq 100 continued to reach new highs for six consecutive days, Dow Jones stopped falling for four consecutive days and pulled away from nearly two weeks low, Russell small-cap stock index stopped falling for two consecutive days and pulled away from a six-week low.
The market bets on 100% probability of the Fed's rate cut in September. The Dow and Russell small-cap stocks have both risen for five consecutive days, with the Dow hitting two new highs in two days and the S&P large cap index rising for three consecutive days hitting a new high. The fund rotation continues, and small-cap stocks have risen over 1% for five consecutive days, the fifth time since 1979, with a cumulative increase of over 11% during this period, the best since April 2020. The Nasdaq 100 fell all day and closed slightly up, with small-cap stocks outperforming the Nasdaq 100 for the past four trading days to the greatest extent since 2011. The good news of the financial report has driven Goldman Sachs up over 2% to a new high, and industrial giant Caterpillar up over 4%, with UnitedHealth, a medical insurance leader in the lead of blue-chip stocks, which rose over 6%. The SPDR regional bank ETF rose for seven consecutive days to the highest level in over a year. European stocks fell again, while Chinese stocks rebounded, and Nvidia fell 1.6%. "Rate cut trading" and "Trump trading" worked together, and spot gold rose by about 2% to push up to 2470 US dollars, hitting a new high, while US bond yields hit a four-month low.
US retail sales data for June was better than Wall Street expected, which is bearish for the Fed's rate cut expectations. Especially the MoM core retail sales in June increased by 0.9%, far exceeding the expected 0.2% and the previous value of 0.4%, even higher than the most optimistic analyst expectation of 0.5% on Wall Street.
Commentators said this indicates that consumers still have purchasing power at the end of the second quarter, which runs counter to the trend of gradually slowing consumer growth for the past few months, showing that the main driving force of the economy remains resilient in the face of inflation shrinking and the Fed approaching to cut interests.
After the data was released, the US bond yields temporarily rose, the US dollar briefly strengthened by over 10 points, and spot gold briefly fell by about $4. However, both the US dollar and US bond prices rebounded ultimately, and the spot gold price hit a record high, breaking through $2460 per ounce. Affected by the strong US dollar and weak demand for oil, international oil prices fell more than 1.3%, but the decline narrowed at the end of the session.
The CME FedWatch Tool showed that traders predicted a 100% chance of a Fed rate cut in September, with a 93.3% probability of a 25 basis point cut to the range of 5.00%-5.25% and a 6.7% chance of a 50 basis point cut.
International traders predict that the Bank of England will cut interest rates twice this year by 25 basis points each time.
The Dow and S&P hit historic highs, with small-cap stocks up 3.5%, Apple hitting a new high and Chinese stocks rising.
The market is no longer limited to technology stocks, and the fund rotation continues. On Tuesday, July 16, the Nasdaq, which is dominated by technology stocks, rose nearly 0.6% early on to approach its historic high, but fell nearly 0.5% at noon; the S&P 500 hit a new high, and the Dow, which was concentrated in blue-chip stocks, rose all the way up, up nearly 2% or 777 points, approaching 41000 points, achieving the best single-day performance in more than a year, hitting a new intraday high and a new closing high; the Russell 2000 small-cap index once again outperformed major indices, accelerating upward and closing at a daily high, while the Nasdaq 100 rose slightly by 0.06%.
As of the close, major US stock indices all closed up, with the Dow and S&P 500 hitting historic highs. The Dow rose for five consecutive days, and small-cap stocks rose 3.5%, the highest in two and a half years since January 2022, with a cumulative increase of 12% over the past five consecutive days. The regional bank index rose more than 4.5% and rose for six consecutive days to the highest level in more than five months:
The S&P 500 index rose 35.98 points, or 0.64%, to 5667.20. The Dow Jones rose 742.76 points, or 1.85%, to 40954.48. The Nasdaq rose 36.77 points, or 0.20%, to 18509.34.
The Nasdaq 100 index rose 0.06%; the Nasdaq Technology Market Cap Index (NDXTMC), which measures the performance of Nasdaq 100 technology stocks, fell 0.56%; the fear index VIX rose 0.53% to 13.19.
The Russell 2000 small-cap index rose 3.50%. In the past four trading days, the Russell 2000 index has outperformed the Nasdaq 100 index by 11%, the largest since 2011. Among the Russell 2000 constituent stocks, California Pacific Biosciences PACB rose 34.26%, Caribou Biosciences rose 28.17%, ANGO, EB, PRPL, EIGHT, PAYS rose at least 26.64% -20.55%, Funko fell 7.66% has second lowest performance, and ASPI fell 8.88%.
The KBW Bank Index on the Philadelphia Stock Exchange closed up 3.02% at 113.98, hitting a new closing high since February 2023. Among the components, State Street Bank rose by 7.45%, Wells Fargo & Co. rose by 4.35%, Citigroup rose by 3.27%, JPMorgan rose by 1.7%, and Morgan Stanley rose by 0.91%, while Goldman Sachs was the fifth from the bottom, with a gain of 2.19%.
The Dow Jones KBW Regional Bank Index closed up 4.54% at 112.51 points. Bloomberg data shows that all 47 component stocks rose, with WSFS Financial Corp. leading the way with a 7.13% gain, while Commerce Bancshares was the worst performer with a 2.84% gain.
Among the 11 sectors of the S&P 500 Index, the S&P Industrial sector rose 2.54%, while the Materials, Consumer Discretionary, Health Care, Financials, and Real Estate sectors rose 1.96%-1.03%, and the Energy sector had the smallest increase of 0.35%. The Information Technology/Technology sector fell 0.38%, while the Telecommunications sector fell 0.64%.
Analysis points out that the entire market continues to show a very obvious rotation, in which small-cap stocks are better than large-cap stocks/low-momentum stocks are better than high-momentum stocks/growth stocks are better than cyclical stocks/popular shorted stocks are better than longed stocks. Goldman Sachs pointed out that the current market trading volume is higher than the average level of the past 20 days, indicating active trading activities. ETFs account for 28% of trading volume in the market, indicating that investors use ETFs for trading in large quantities. Goldman Sachs's trading desk observed a slight bias towards buying in the market, especially under the guidance of limit orders, with a buy preference 6% higher than the sell preference. The demand is mainly concentrated in the financial and medical care sectors, while the technology and non-essential consumer goods sectors have more selling pressure.
More than half of the "Tech Seven Sisters" fell, and several stocks fell to new lows at midday. Tesla performed the best, with its share price rising nearly 2.4% at the end of the trading day after falling more than 2.7% in early trading, and eventually rose 1.55%, while Apple initially rose nearly 0.8%, fell nearly 0.9% at midday, rebounded in the afternoon and rose, eventually rising 0.18% to a new record closing high with a market value of $3.6 trillion, maintaining the first place. Amazon rose more than 2% before falling all the way, eventually rising 0.16%.
Nvidia rose more than 0.4% in early trading before diving, eventually falling 1.62%, with a market value of $3.11 trillion ranking third in US stocks, and Microsoft fell nearly 1.5%, eventually falling 0.98%, while "Metaverse" Meta rose nearly 1.6% before falling again, with a 1.28% drop; Google A rose more than 1.1% before falling, eventually falling 1.4%.
Chip stocks rose and fell unevenly. The Philadelphia Semiconductor Index fell nearly 1.1% in early trading before rising 0.46% at the end, approaching its historic high; and the industry ETF SOXX rose 0.62%. The 2X long Nvidia ETF fell 3.32%; Qualcomm rose 0.7%, Taiwan Semiconductor ADR rose 0.44%, Broadcom fell 1.19%, AMD fell 1.27%, Super Micro Computer fell 2.31%, and Micron Technology fell 2.58%.
AI concept stocks showed divergent trends. SoundHound.ai rose 3.55%, BigBear.ai rose 6.41%, and Snowflake rose 1.86%, while Oracle fell 0.32%, Dell fell 2.16%, and CrowdStrike fell 2.2%.
On the news front:
After announcing a large-scale layoff last week, Tesla has begun to recruit extensively. Tesla plans to recruit nearly 800 new employees, just three months after CEO Musk hastily ordered the largest layoff in the company's history. According to analysis, positions have been appearing on Tesla's job board in recent weeks, from AI experts to more mundane service positions. The stock has risen every trading day during this time, except for one day when it was reported that Tesla had decided to delay the release of Robotaxi. Musk confirmed on Monday that he had requested a redesign, and the relevant team had been given extra time.
According to LatePost, Tesla will not launch any new models for sale this year, but there may be new batteries. Tesla's battery division will focus on increasing production yield and efficiency and expanding capacity.
Bank of America's net interest income, one of the bank's largest revenue sources, fell to $13.7 billion in the three months ending in June. The bank said earlier this year that net interest income in the second quarter could be the low point for the year. The company's presentation on Tuesday indicated that fully taxable net interest income (NII) in the fourth quarter could climb to approximately $14.5 billion.
Most China concept stocks increased in value. The KraneShares CSI China Internet ETF (KWEB) fell 0.32%; The KraneShares China Tech Innovation ETF (K-TECH ETF) rose 1.43%; The Nasdaq Golden Dragon China Index (HXC) rose 0.74%.
Among popular China concept stocks, new car manufacturers saw a large increase, with Xpeng up 6.55%, NIO up 5.83%, Li Auto up over 1.4%, and JinkoSolar up 3.32%. JD.com rose more than 2%, Bilibili rose more than 1.5%, Baidu rose 0.62%, Alibaba rose 0.47%, Canadian Solar rose 9.25%, Daqo New Energy rose about 8.6%, JinkoSolar rose 7.3%, while Ctrip fell more than 0.4%, Pinduoduo fell 1.56%, Netease fell 0.82%, TAL Education fell about 1.5%, YADU fell about 2%, Kanzhun/Boss Zhipin fell more than 2.7%, and Miniso fell 3.89%.
Among stocks with significant volatility:
Blockchain concept shares generally increased in value, with Stronghold up 16.2%, Riot Platforms up more than 10.6%, and ProShares Ultra Bitcoin ETF up over 5.6%, while ProShares UltraShort Bitcoin ETF fell more than 5.3%.
Class B shares of Berkshire Hathaway rose 1.03%, and Class A shares rose 1.13%, both hitting record closing highs.
Charles Schwab shares fell 10%, marking the worst single-day performance since March 2023.
European stock markets fell for two consecutive days:
The pan-European Stoxx 600 index fell 0.28% to 517.30 points. The eurozone STOXX 50 index fell 0.71% to 4947.83 points. Among the blue chip stocks (the constituent stocks of the eurozone STOXX 50 index), SoftBank Group performed the worst, falling 3.1%.
The DAX 30 index in Germany fell 0.39%; The CAC 40 index in France fell 0.69%; The FTSE MIB index in Italy fell 0.02%; The FTSE 100 index in the United Kingdom fell 0.22%; The AEX index in the Netherlands fell 0.43%; The IBEX 35 index in Spain fell 0.96%.
Of the stocks with greater volatility, German luxury brand Hugo Boss fell 7.57% after the company significantly lowered its full-year profit outlook citing weak markets such as the UK. Burberry in the UK fell 5.3%, with a recent earnings report showing the replacement of its CEO and a warning about profits, leading to a rethink of its high-end luxury strategy. French insurance company Scor SE fell 24.56%.
Against the background of sluggish global consumption, the luxury goods industry is clouded. According to media reports, with the slowdown in the market, Bernard Arnault, founder of LVMH, lost his position as the world's richest man, and the fortunes of the world's top five luxury goods bosses evaporated by $17 billion.
US bond yields fell across the board, with the 10-year Treasury yield falling by about 7 basis points, losing the 4.16% level; the 2-year UK bond yield fell for the first time this year below the psychological threshold of 4%.
In the afternoon, the 2-year U.S. Treasury yield, which is more sensitive to monetary policy, fell 3.18 basis points to 4.4256%, traded in the range of 4.4698% to 4.4046% during the day. The benchmark 10-year U.S. government bond yield fell 6.99 basis points, hitting a daily low of 4.1595%.
The benchmark 10-year German bond yield fell 4.5 basis points to 2.427% at the close, hitting a daily low of 2.417% before the announcement of U.S. June retail sales data. The 2-year German bond yield fell 3.6 basis points to 2.763%, previously hitting a daily low of 2.745%.
French 10-year government bond yields fell 3.1 basis points, Italian 10-year government bond yields fell 4.8 basis points, Spanish 10-year government bond yields fell 3.9 basis points, Greek 10-year government bond yields fell 3.6 basis points. The 10-year UK government bond yield fell 5.2 basis points to 4.049%.
As the market expectation of the Bank of England's imminent interest rate cut continues to rise, the two-year UK government bond yield fell below the psychological threshold of 4% for the first time this year, dropping 8.0 basis points to 3.984%. Traders expect the Bank of England to cut interest rates by 51 basis points by the end of 2024, their first full digestion of the expectation of two 25 basis point interest rate cuts since June 21.
Germany's July ZEW economic sentiment index fell to 41.8, slightly higher than the expected value of 41, and was 47.5 in June. Due to the failure of the industry to keep pace with the gradual recovery of other industries, investors' confidence in the German economy deteriorated for the first time in a year. Achim Wambach, president of ZEW, said in a statement: "Economic prospects are deteriorating, Germany's exports in May fell more than expected, French political uncertainty, and a lack of clarity in the future monetary policy of the European Central Bank. These real factors have led to this trend."
The strength of the dollar and weak demand have depressed oil prices, with US crude falling more than 1.4% to below $81 a barrel, its largest single-day decline in over three weeks.
The strength of the dollar for two consecutive days has pushed down oil prices, which have fallen for three consecutive days and have fallen to a more-than-three-week low. WTI August crude oil futures fell by $1.15, or more than 1.40%, to $80.76 a barrel. Brent September crude oil futures fell by $1.12, or about 1.32%, to $83.73 a barrel.
In pre-market trading, US crude oil and Brent oil fell all the way to refresh daily lows, with US crude falling to $80.22 a barrel, down more than 2% during the day, and Brent oil falling the deepest to $83.30 a barrel, down more than 1.8%. Later, US crude oil and Brent oil hit bottom and rebounded, erasing some of the declines.
Analysis shows that on the one hand, Trump's unsuccessful assassination led to the decline of oil prices due to the appreciation of the US dollar. On the other hand, the decline in China's crude oil imports has led to a downturn in oil demand, putting pressure on oil prices.
US natural gas futures for August rose 1.39% to $2.1880 per million British thermal units; TTF Dutch natural gas futures, the European benchmark, rose 4.55% to EUR 32.797 per megawatt-hour; at the end of the day,ICE UK natural gas futures rose 2.21% to 80.76 pence per thousand British thermal units.
The dollar has given up the gains from US retail sales data, and the yen has fallen below 159.
The DXY index, which measures against six major currencies, rose 0.04% to 104.234 points, with a intraday trading range of 104.197-104.510 points. After the release of US retail sales data, it rose from near the daily low to the daily high.
The Bloomberg Dollar Index fell 0.03% to 1,251.76 points, with an intraday trading range of 1,255.12-1,251.61 points.
Non-US currencies generally fell. After the V-shaped reversal of the euro against the US dollar, it remained roughly flat, and the pound against the US dollar remained roughly unchanged after a V-shaped reversal.
Offshore renminbi (CNH) fell 145 points against the US dollar, to 7.2891 yuan, with overall trading at 7.2730-7.2925 yuan during the day.
Among Asian currencies, the US dollar rose 0.18% against the Japanese yen to 158.34 yen. After the release of US retail sales data, it refreshed a daily high of 158.86 yen. The euro rose 0.39% against the yen to 172.59 yen; the pound rose 0.20% against the yen to 205.443 yen.
Compared with the Bank of Japan's current account data and currency broker valuations, Japan may have intervened in the market on Friday to support the yen exchange rate. Comparatively, the scale of intervention may be around 2.14 trillion yen ($13.5 billion). The Bank of Japan expects its current account to fall by about 2.74 trillion yen due to government fiscal factors on Wednesday; privately held currency brokers such as Central Tanshi and Ueda Yagi Tanshi predict an average decrease of 600 billion yen.
Mainstream cryptocurrencies generally rose. The largest market cap leader, Bitcoin, rose 1.98% to $64,960.00. The second largest, Ethereum, rose 0.51% to $3,463.00.
The US Securities and Exchange Commission (SEC) has informed many asset management companies that the US Ethereum ETF may be launched on July 23 (next Tuesday). The spot Ethereum ETF may start trading from next week.
Boosted by both "rate cut trading" and "Trump trading", the gold price hits a new historical high, rising above $2,460 per ounce.
COMEX August gold futures rose 1.71% to $2,470.4 per ounce at the close, while COMEX September silver futures rose 1.95% to $31.54 per ounce at the close.
The decline in US bond yields supports precious metal prices. In pre-market trading, spot gold continues to rise, approaching the day's high and hitting a new high at the end of the day, with the highest price rising more than 1.8% to $2,466.61 per ounce, breaking the previous high of $2,450.07 per ounce set on May 20; spot silver in pre-market trading hit a new low and fell more than 0.6%, but then accelerated upward, hitting a new high and rising nearly 2.4% to rise above $31.40.
Analysts say weak US data and dovish expectations of the US Federal Reserve have supported the rise in gold prices, while the attempted assassination of former US President Trump has increased political uncertainty, as well as increasing geopolitical risks globally (such as the eurozone crisis, financial crisis, and Middle East geopolitical conflicts), further boosting demand for safe-haven assets like precious metals, with central banks around the world increasing their demand for gold for many years. UBS said last month that central banks' purchases of gold had reached their highest level since the late 1960s. Some analysts believe that as the gold price is slightly above the psychological threshold of $2,400, the risk bias is towards the upside, but positions are still low and investors still have room to increase their holdings in gold.
Basic industrial metals in London fell across the board. The "Dr. Copper" economic barometer fell nearly 1.45% to $9,664 per tonne. Aluminum in London fell more than 2.27% to $2,406 per tonne. London lead fell $4 to $2,184 per tonne. London zinc fell about 2.37% to $2,885 per tonne. London nickel fell $107 to $16,594 per tonne. London tin fell $75 to $33,171 per tonne.
Editor/Jeffy