On May 15th, Beijing time, U.S. stocks opened lower on Thursday. The U.S. Producer Price Index (PPI) for April fell by 0.5%, while retail sales in April rose to 724.1 billion USD. International oil prices plummeted by nearly 4%. Federal Reserve Chairman Powell stated that the agency is adjusting its overall policy-making framework.
On May 15th, Beijing time, the three major U.S. stock indexes opened lower and fluctuated. As of the time of writing, $Dow Jones Industrial Average (.DJI.US)$down 0.34%, $Nasdaq Composite Index (.IXIC.US)$ it has decreased by 0.75%, $S&P 500 Index (.SPX.US)$ it has decreased by 0.32%.
On Wednesday, U.S. stocks closed mixed, with the S&P 500 Index rising by 0.1%, marking the third consecutive trading day of gains. The Nasdaq Composite Index increased by 0.7%, achieving six consecutive days of gains. The Dow Jones Industrial Average slightly declined by 0.2%.
Technology giants performed strongly this week: NVIDIA and Tesla both rose over 16%, Meta Platforms accumulated an 11.3% increase, while Amazon and Alphabet each saw increases exceeding 8%.
The Nasdaq Composite Index rose a total of 6.8% this week, the S&P 500 Index increased by 4.11%, and the Dow Jones Industrial Average rose by 1.9%.
The results of the recent high-level talks on U.S.-China trade over the weekend boosted the market's confidence in the short-term outlook for U.S. stocks, as investors seem to believe that the mutual tariff reduction agreement reached by both sides can prevent a short-term decline in U.S. economic activity and worsening inflation.
Earlier this week, investors were buoyed by several bullish developments, including the reaching of a 'ceasefire' agreement in the trade war and a series of investment agreements signed during Trump's trip to the Middle East, which injected vitality into U.S. stocks that had suffered significant blows previously. However, by Thursday, much of the optimism had faded.
IG market analyst Tony Sycamore described it as: 'We just finished a big party, and now everyone is recovering from a hangover, waiting for the next party to begin.'
Although the trade agreement has eased concerns in the market, the lack of clarity regarding Trump's overall trade policy still leaves the market uneasy about the global economic outlook.
On Thursday, during the trading session, sneaker retailer Foot Locker's stock surged after the company announced it would merge with Dick's Sporting Goods for $2.4 billion.
Shares of UnitedHealth Group fell after sources reported that the U.S. Department of Justice is investigating the insurance company. A spokesperson for UnitedHealth later stated that no notice has been received regarding the 'rumored' investigation.
International oil prices plummeted.
International oil prices saw a significant drop, reversing the upward trend of the previous trading days. Brent crude oil fell more than $2, dropping below $64 per barrel.
U.S. President Trump, visiting the Middle East, stated that he is 'very close' to reaching an agreement with Iran and indicated that Tehran has 'somewhat' agreed to the terms of the agreement.
Paul Hollingsworth, an economist at BNP Paribas, stated that the decline in oil prices has exacerbated the deflationary pressures already present in regions like Europe, especially against the backdrop of persistent concerns over U.S. tariffs. He said, 'It is now difficult for everyone to find direction amidst various spontaneous statements.'
The crash in crude oil also dragged down the dollar and benchmark bond yields—two indicators that typically reflect the cost of borrowing for a country. The U.S. 10-Year Treasury Notes Yield fell to 4.5%. U.S. Treasury yield is also at a one-month high, slightly above 4.5%. Part of the reason is the concern over Trump's budget plan, which would increase U.S. debt by trillions of dollars.
Speech by the Federal Reserve Chairman.
Federal Reserve Chairman Powell stated in a speech on Thursday that the Federal Reserve is adjusting its overall policy-making framework to respond to significant changes in inflation and interest rate outlook following the pandemic in 2020.
Powell stated: "Since 2020, there have been significant changes in the economic environment, and our assessment will reflect our evaluation of these changes." The Federal Reserve adopted the current framework five years ago and began evaluating it this year. The assessment is unlikely to affect how the Federal Reserve sets interest rates currently.
Powell previously stated that the Federal Reserve might complete this process and announce the results before August or September. Powell noted that after the pandemic in 2020, the inflation-adjusted "real" interest rates increased, which could affect the elements of the Federal Reserve's current framework.
He stated, "Higher real rates may reflect the possibility that inflation could be more volatile in the future than during the crisis periods of the 2010s. We might be entering a period where supply shocks are more frequent and possibly more persistent—this poses a significant challenge for the economy and the central bank."
Powell called for a reconsideration of the terminology surrounding labor market slack and average inflation rates.
Powell indicated that they believe it is appropriate to reconsider the terminology of "labor market slack" so that the Federal Reserve would not consider a low unemployment rate itself as a signal of inflation risk.
Powell stated, "At last week's meeting, we had a similar view on the average inflation target. We will ensure that our new consensus statement is robust in a broad economic environment and developments."
His remarks suggest that the Federal Reserve may significantly modify a strategy that was initially viewed as a major shift for the Federal Reserve, namely a willingness to take on more risks to bolster the labor market and tolerate higher inflation after experiencing a period of weakness.
Powell did not address current monetary policy or the economic outlook, although he did indicate that he expects the personal consumption expenditure price inflation to fall to 2.2% in April—this is a moderate figure, but it may not reflect the impending price increases driven by tariffs. Nevertheless, this still reflects "historically unusual outcomes" of anti-inflation occurring under the Federal Reserve's current strategy without causing significant harm to the economy.soft landing”。
Before Powell's speech, San Francisco Fed President Daly stated that the Fed is not in a hurry to cut interest rates.
Daly indicated that the strong performance of the U.S. economy allows Fed policymakers to remain patient, waiting for more evidence on how the new round of fiscal policies led by the Trump administration will affect U.S. businesses and households.
Daly's latest remarks resonate with Fed Chair Powell's hawkish comments from last week, when Powell emphasized at the post-rate meeting press conference that the Fed does not need to rush to adjust the benchmark interest rate, noting that the U.S. economy continues to show resilience, the current policy is moderately restrictive, and the costs of further observation are quite low, also stating that President Trump's call for interest rate cuts would not influence the Fed's work.
Economic Data
On Thursday, in economic data, the U.S. Department of Labor reported that the number of first-time unemployment claims last week was steady at 0.229 million, estimated to be 0.228 million. The prediction range from 42 surveyed economists was 0.215 million to 0.245 million. The four-week moving average of initial unemployment claims was 0.2305 million.
For the week ending May 3, the number of continuing unemployment claims increased by 9,000, bringing the total to 1.881 million.
In April, producer prices in the USA unexpectedly fell, marking the largest decline in five years, mainly reflecting shrinking profit margins, indicating that companies are absorbing some of the impacts from tariff increases.
Data released by the U.S. Bureau of Labor Statistics on Thursday showed that the Producer Price Index (PPI) decreased by 0.5%, while in March it remained unchanged. The median forecast by economists was an increase of 0.2%. Excluding food and energy, the PPI fell by 0.4%.
Retail sales in the USA in April, excluding Autos, increased by 0.1% from the previous month, with a forecast of 0.3%. The estimated range by 66 economists was from -0.7% to 0.6%.
Retail sales in April rose to $724.1 billion. Retail sales in April, excluding Car Dealers/auto Retailers, building materials, and gas stations, increased by 0.1% from the previous month. The 'control group' of U.S. retail sales, which excludes food services, Car Dealers/auto Retailers, building materials, and gas station sales data, decreased by 0.2% compared to the previous month.
Sales by Car Dealers/auto Retailers rose by $12 billion year-on-year to $130.3 billion.
Focus Stocks
Most Growth Tech stocks have fallen, $Tesla (TSLA.US)$ falling nearly 3%, $Amazon (AMZN.US)$ Fell over 2%, $NVIDIA (NVDA.US)$ 、 $Meta Platforms (META.US)$ 、 $Advanced Micro Devices (AMD.US)$ down over 1%.
Most China Concept Stocks fell. $Alibaba (BABA.US)$ Dropped 7% after earnings. $JD.com (JD.US)$Fell 4%. $PDD Holdings (PDD.US)$ falling nearly 3%, $KE Holdings (BEKE.US)$ Dropped over 5%.
Cryptos concept stocks are in correction, $Coinbase (COIN.US)$ down over 5%, $Strategy (MSTR.US)$ Dropped more than 2%.
U.S. defense aviation stocks are strong. $Lockheed Martin (LMT.US)$ Increased by over 2%, $RTX Corp (RTX.US)$ 、 $Heico (HEI.US)$、 $Boeing (BA.US)$ Increased by more than 1%. Trump signs a $142 billion Weapon agreement, Saudi Arabia is expected to procure U.S. F-35.
$Tesla (TSLA.US)$ Fell over 2%, Reuters reported that the company claimed to recycle leased cars for conversion into Robotaxis, but in fact, they are selling them.
$Apple (AAPL.US)$ Fell nearly 1%, U.S. President Trump hopes Apple will stop moving iPhone production to India.
$Walmart (WMT.US)$ Fell 3%, Q1 revenue fell short of expectations, adjusted EPS exceeded expectations.
$Cisco (CSCO.US)$ Rose over 5%, Q3 performance exceeded expectations, raising full-year revenue guidance.
$UnitedHealth (UNH.US)$ A decline of over 16%, the group is undergoing a criminal investigation by the U.S. Department of Justice.
$Alibaba (BABA.US)$ A decline of 7%, the revenue for the fourth quarter is 236.454 billion yuan, a year-on-year increase of 7%.
$NetEase (NTES.US)$ An increase of 13%, the revenue for the first quarter increased by 7.4% year-on-year, exceeding expectations.
$Gaotu Techedu (GOTU.US)$ An increase of 17%, the revenue for the first quarter surged by approximately 58% year-on-year, turning a profit after losses.
Editor/Rocky
