After the US stock market's post-market trading on Thursday, Biden and Trump will have their first presidential debate. The economy is an important topic. Before this, many newly released data indicate that the US economy is weakening, causing US bond yields and the US dollar to decline.
The number of initial jobless claims in the United States fell last week, but the number of continuing claims rose to the highest level in two and a half years. The core durable goods orders fell 0.6% in May, the largest decline this year, indicating that business spending on equipment is weak. The final value of US real GDP in the first quarter was 1.4%, which is in line with expectations but is lower than the preliminary value of 1.6%. Core PCE inflation in the quarter grew by 3.7%, higher than the expected and previous value of 3.6%. Personal spending growth is weak, representing a loss of economic momentum. High interest rates also caused the index of existing US home sales in May to unexpectedly decrease to a record low.
This year, the voting member and Atlanta Fed President Bostic praised the cooling trend of inflation exhibited by May's CPI, reiterated the expectation that the Federal Reserve will lower interest rates once in 2024, estimated to occur in the fourth quarter, and may lower interest rates four times next year. However, Federal Reserve Board member Bowman has once again expressed a hawkish tone, reiterating that the timing of interest rate cuts is not yet mature and is willing to support rate hikes when inflation rebounds.
The market is focusing on the US Federal Reserve, which values inflation indicators more. The PCE price index for personal consumption expenditures in May is expected to grow by 2.6% year-on-year, weaker than the previous value of 2.8%. Futures traders are still betting that there is a 70% chance that the US Federal Reserve will start cutting interest rates in September. The most likely scenario is that interest rates will be cut twice this year, and the market's loose expectations have always been greater than the Federal Reserve's outlook.
After cutting interest rates in May, the Swedish central bank kept interest rates unchanged, but raised its expected number of rate cuts this year from two to 'at most three', citing improved inflation prospects. The market generally expects the European Central Bank to cut interest rates twice this year, but some commission members have emphasized that they may only cut interest rates once this year.
The Bank of Japan conducted a survey of bond market participants on its bond reduction plan, causing the yield on the 30-year Japanese government bond to rise to its highest level in 13 years. The yen rose slightly against the US dollar but was still below the 160 level, close to a 38-year low of 160.88 touched on Wednesday.
The S&P and Nasdaq have risen for three consecutive days, approaching their highest levels. Technology and AI stocks rose together, but Nvidia fell nearly 2%, and Amazon, Google, and Microsoft hit new highs.
On Thursday, June 27th, the S&P 500 and Nasdaq rose after approaching the opening level. Within two hours of opening, the S&P wiped out its 0.2% increase and turned negative. The Nasdaq, which rose 0.5%, also turned negative, and the Dow Jones opened low and rose more than 120 points at one point. The S&P and Dow fluctuated during the trading day but finished slightly higher, while the Russell small-cap stocks, closely related to the economic cycle, rose 1% to lead.
At the beginning of trading, Network Stock Index ETF and Global Technology Stock Index ETF rose the most, but most semiconductor and Chinese concept stocks fell. The S&P real estate sector led the gains, while essential consumer goods did poorly. During trading, the Global X Cybersecurity ETF rose 3%, the best since November last year, with BlackBerry rising 14% to its best single-day performance since August last year.
As trading closed, the S&P and Nasdaq rose for three consecutive days to a new high of one week and approached the historic high set last Tuesday, and the Dow Jones rose for two consecutive trading days from a low of one week. Russell 2000 small-cap stocks fell for two consecutive days to a two-week low.
The S&P 500 rose 4.97 points, an increase of 0.09%, to 5482.87 points. The Dow Jones rose 36.26 points, an increase of 0.09%, to 39164.06 points. The Nasdaq rose 53.53 points, an increase of 0.30%, to 17858.68 points.
NASDAQ 100 rose 0.2%, and the Nasdaq technology market capitalization-weighted index (NDXTMC), which measures the performance of Nasdaq 100 technology stocks, remained stable. The Russell 2000 small-cap stocks rose by 1%, and the 'panic index' VIX fell for the second consecutive day by more than 2% to 12.24.
Growth tech rises. The 'Metaverse' Meta increases by 1.3% and approaches its historical high, Amazon increases by 2.2% and sets a new historical high, with a market cap close to $2 trillion. Tesla rebounds by 0.5% to hit a new high in nearly four months, Netflix rises by about 1% and approaches its highest level, Google A rises by 0.8% and returns to a new high. Apple rose by 0.4% and has risen for four consecutive days, with a market cap of $3.22 trillion, ranking second in the U.S. stock market; Microsoft rose by 0.2% and hit a new high for three consecutive days, with a market cap of $3.36 trillion, the largest in the U.S. stock market.
Chip stocks continue to fall. After the Philadelphia Semiconductor Index fell more than 1% and closed down 0.6%, it reached a two-week low of below 5,400 points, and the industry ETF SOXX fell 0.5%. Nvidia fell nearly 2%, stopping the two-day consecutive increase. It rose 6.8% on Tuesday and fell 6.7% on Monday, the largest drop in two months. Its market cap of 3.04 trillion US dollars ranks third in US stocks, and Nvidia's double-long ETF fell 4%; Broadcom fell 0.3% to a two-week low; Qualcomm fell more than 1% to a more than five-week low, while ARM rose more than 1%. Taiwan Semiconductor rose 2% in the US stock market and then slightly fell. Lam Research was close to wiping out a gain of 2.7%, and Applied Materials was close to wiping out a gain of 2.4%. Micron Technology fell more than 7%, and it has hit a new high last week. Intel turned up 0.2%, but AMD rose more than 1%.
AI concept stocks rose together. CrowdStrike rose nearly 2%, approaching a new high; Oracle rose 1.4%, stopping a five-day decline away from the new high; SoundHound.ai rose 0.3%; BigBear.ai rose more than 7%; C3.ai rose more than 3%; Snowflake rose nearly 4% again, further away from the lowest level in 17 months; Palantir rose 4.7%; Adobe rose more than 3%; Dell rose nearly 1%; Super Micro Computer rose more than 7%, but IBM turned down 0.6%.
On the news, OpenAI signed a multi-year content usage agreement with Time magazine, and it was reported that OpenAI's annual revenue from model access was approximately US$1 billion. Micron Technology's third-quarter performance exceeded expectations, but the guidance for the next quarter was not attractive enough. It was reported that Apple will adopt new battery technology in iPhone 16. Wells Fargo & Co stated that the prosperity of artificial intelligence will benefit industrial and raw material stocks.
Chinese concept stocks fell more deeply. The KraneShares CSI China Internet ETF (KWEB) fell 2.8%, the Invesco China Technology ETF (CQQQ) fell 2.3%, and the Nasdaq Golden Dragon China Index (HXC) fell 2.2%, approaching below 5,800 points, the seventh day of decline in nine trading days to the lowest level in four and a half months.
In popular stocks, JD.com fell 4.5%, Baidu fell 1.3%, and PDD Holdings fell 4.6%. Alibaba fell 2.4%, Tencent ADR fell 1.8%, Bilibili fell 2.9%, NIO Inc. fell more than 5%, XPeng fell 6.7%, and Li Auto Inc fell more than 3%. However, Hu Yifan of UBS is bullish on the potential of China's Internet platforms in AI.
Other stocks with significant changes include:
Jeans manufacturer Levi Strauss & Co. fell more than 15% to a 11-week low, and quarterly revenue fell short of expectations.
Walgreens, the retail pharmacy that was removed from the Dow Jones Component Index in February, fell more than 22% to a 27-year low, its worst performance in more than 50 years. It lowered its full-year profit forecast and said the US consumer environment is challenging.
Pet e-commerce company Chewy rose more than 34% and closed down 0.3%, completely wiping out the surge brought by the post of cartoon dog image by "individual holders leading the elder brother yelling little cats", and Ryan Cohen, co-founder of Chewy, is now the CEO of GameStop.
The 31 largest banks in the United States passed the Federal Reserve's stress test, and they are expected to announce their share buyback plans after Friday's market close. Goldman Sachs fell more than 2%, but JPMorgan rose 0.9%. The company rarely stated that the Federal Reserve overestimated a key income indicator, which may delay the announcement of the plan to pay back shareholders.
After passing the Federal Reserve's stress test, Goldman Sachs fell more than 2%, but JPMorgan rose 0.9%.
European stocks generally fell except for German stocks, with French and Italian stock indices both falling 1%. The Pan-European Stoxx 600 index closed down 0.43%, declining for three consecutive days to a one-week low, and oil and gas stocks led the gains, while retail stocks fell more than 1%. French stock L'Oréal fell more than 5% to the deepest in five months, lowering its expectations for the growth rate of the beauty market; H&M's European and American stocks both fell by about 13%, and the profit growth rate in the second quarter was lower than expected, or it may not be able to achieve the full-year profit margin target.
Economic data pressed down US Treasury yields, and the 10-year yield moved away from a two-week high. The yield on 10-year German government bonds fluctuated slightly at the closing, hovering around 2.45%, and the yield on two-year bonds fell nearly 2 basis points. The yield on France's 10-year government bonds rose by about 4 basis points on the eve of the parliamentary election TV debate, driving the yield on Italian bonds up by more than 3 basis points. The safe-haven sentiment made the yield spread of French/German government bonds rise to 83 basis points at one time, the widest since 2012.
Awaiting the heavy inflation data on Friday, the latest US economic data is soft, which has lowered US Treasury yields.
The two-year Treasury bond yield, which is more sensitive to monetary policy, fell by the deepest 5 basis points to 4.7%, moving away from a one-week high. The 10-year basic bond yield once fell by 4 basis points to 4.27%, moving away from a two-week high. It had fallen to the lowest level in ten weeks since early April more than a week ago.
The 10-year German benchmark bond yield fell slightly at the end, hovering around 2.45%, and the yield on the two-year bond fell by nearly 2 basis points. The yield on France's 10-year government bonds rose by about 4 basis points on the eve of the parliamentary election TV debate, driving the yield on Italian bonds up by more than 3 basis points. The yield spread of French/German government bonds, a 12-year most wide, was 83 basis points.
Oil prices rose more than 1% to the highest level in nine weeks since the end of April, rising over $1 in intraday trading, with US oil briefly breaking through $82.
WTI crude oil futures for August closed up $0.84, or about 1.04%, at $81.74 a barrel, approaching the closing level of $82.35 on April 26. Brent crude oil futures for August rose $1.14, or about 1.34%, to $86.39 a barrel, nearing the closing level of $86.42 on April 29.
US oil WTI rose as high as $1.13 or 1.4%, breaking through the $82 integer mark and recovering nearly half of last week's decline. The front-month contract hit its highest level since April 30 for three consecutive trading days last week. The more active international Brent crude oil futures for September rose as much as $1.11 or 1.3% and returned above $85, breaking away from last week's low.
Some analysts said that the escalation of the Middle East tension between Israel and Lebanon, coupled with concerns about supply disturbance, has overshadowed anxiety about weak US demand. Oil prices are expected to record monthly gains for the first time since March, and it is not ruled out that they will break through $90 a barrel again in April.
Last week, US EIA crude oil and gasoline inventories rose instead of falling. JPMorgan noted that gasoline consumption fell below 9 million barrels per day for the first time in three weeks due to serious flooding in coastal areas caused by a tropical storm.
The benchmark TTF Dutch natural gas futures in Europe rose as much as 2.7% and broke away from a two-week low, while ICE UK futures rose more than 2%. The August contract for US natural gas fell more than 2%, falling below the three-week low of $2.70 in turnover, with this year's gain narrowing to nearly 8%. US gasoline futures widened their gain for the year to 21%.
The US dollar index fell away from an eight-week high, and the yen traded at 160.80, hovering around the lowest level since 1986. The offshore renminbi was less than 7.30 yuan.
The DXY, which measures the dollar against six major currencies, fell sharply by 0.3% and re-went below the 106 mark, leaving an eight-week high since May 1. In June, the dollar has risen by more than 1%, and it has risen by about 4.6% since 2024.
The euro rose 0.4% against the US dollar and returned to above 1.07, leaving its lowest level since May 1, but the cumulative decline in June was about 1.4%, dragging down by the political turmoil caused by France's early parliamentary elections this weekend.
The pound rose 0.4% against the US dollar, leaving a six-week low since mid-May, and is expected to record weekly gains for the first time in a month. The currency has only slightly fallen against the US dollar this year, making it one of the best-performing currencies. Analysts say that if the UK usher in a rule of the Labor Party or improve its relationship with the European Union.
The yen slightly turned up, but it was still below the 160 mark, trading at 160.80, approaching the lowest level since 1986 it hit on Wednesday at 160.88. Japan's finance minister reiterated that intervention in the foreign exchange market may be necessary, but the market believes that the unchanged gap in the yield gap between Japan and the United States Treasury bonds is unlikely to reverse the downtrend of the yen. In June, the yen fell by about 2%, and has fallen by 12% this year. Offshore renminbi against the US dollar fell slightly and was less than 7.30 yuan.
Major cryptocurrencies have rebounded collectively. The largest leader Bitcoin, with the largest market value, rose 1.6%, still below $62,000. On Monday, it fell below the psychological integer level of $60,000 for the first time since May 3, and once fell below $59,000, hitting the lowest level in nearly eight weeks since May 1. The second largest Ethereum rose more than 2% and re-rose above $3,400 after hitting a five-week low since mid-May.
Spot gold rose more than 1% to exceed $2,330, and silver rose 1.7% at first, but then significantly narrowed its gains, while London copper created a ten-week low again.
A fall in the US dollar and US bond yields is positive for precious metal prices. COMEX August gold futures closed up 0.9% at $2,334.30 an ounce, but COMEX July silver futures closed down 0.2% at $29.185 an ounce.
Spot gold rose more than $32, or 1.4%, to exceed the psychological integer level of $2,300, approaching $2,330, leaving a three-week low since June 7. It hit a two-week high near $2,370 last week and fell 5% from its all-time high of about $2,450 on May 20. Spot silver rose 1.7% at its highest and once returned to $29, still hovering around a six-week low.
Some analysts believe that if the US May core PCE data released on Friday disappoints the financial market about the timing of the Fed's first rate cut, the gold price may fall back to around $2270. The current gold price is caught in a tug-of-war between the Fed's less dovish stance and the escalating geopolitical tensions, but in the long run, as the global economy recovers from 2025, increasing risk appetite will pressure down gold prices.
London industrial metals were mixed. Dr. Copper, the economic indicator, fell $24 or 0.3%, approaching the integer level of $9500 and hitting the lowest level in ten weeks since mid-April. London aluminum fell 0.8%, fluctuating around its two-month low. Yesterday's 2.4% rise in London zinc turned into a 0.4% fall, while London lead fell another 0.6%. However, London nickel closed slightly higher and hovered at a twelve-week low since early April, while London tin rose 0.6%. Citigroup said that investors were looking to buy after the copper price fell, and $9500 per ton would be a good entry point.
In September, US wheat futures fell to a two-month low on Wednesday, rebounding 3.6% on Thursday, but falling more than 17% cumulatively in June, potentially the worst single-month performance in the past two years since June 2022, and have fallen 11% cumulatively this year.
Edited by Jeffrey