Comprehensive cooling of US inflation, September rate cut betting pushing US stocks rotation, S&P and Nasdaq ended seven-day consecutive gains and moved away from their highs, Tesla plummeted 8.4%, the worst in nearly half a year and stopped 11-day consecutive gains, Nvidia fell 5.6%, and the chip index fell 3.5%. The Russell 2000 small-cap stocks rose 3.6%, the best since November last year and the highest in two and a half years, and the worst-performing real estate sector this year had the largest increase in the year. US bond yields fell sharply across the board, with the US dollar falling the deepest in two months. The yen rose by 2.6% at one point, the biggest gain since the end of 2022, and anonymous officials confirmed that the government intervened to rescue the currency.
In June, US inflation cooled unexpectedly across the board, with overall CPI growth rate turning negative for the first time in four years and core YoY growth rate hitting a new three-year low. The currency market now fully expects a 25-basis-point rate cut in September and possibly three rate cuts during the year.
After the release of data, US bonds, the US dollar, and gold all experienced violent fluctuations. The Nasdaq and Nasdaq 100 plummeted, diverging from the S&P 500, while the Russell 2000 small-cap stock index surged. The US dollar index fell from its high of 104.99 to a low of 104. The pound sterling hit a new one-year high against the US dollar. The range of yields on US bonds from two to thirty years dropped over 10 basis points, leading to an abrupt steepening of the yield curve. Spot gold rose over 2% above the $2,400/ounce level for the first time since May 22.
The Japanese yen surged suddenly, rising more than 3% from 161.58 to 157.44 within just over half an hour. Reports suggest that the Japanese Ministry of Finance intervened to save the foreign exchange market, but some analysts believe that the rise in the yen was not caused by the Japanese government's intervention in the currency market but by reshuffling portfolios as a result of speculations of a US interest rate cut.
Both the Chicago and St. Louis Fed presidents, who will both be FOMC voters next year, stated that the latest CPI data shows more encouraging progress towards inflation. Mary Daly, the San Francisco Fed president and a voting member of the Federal Open Market Committee, said earlier this year that the latest data suggests that the Fed may need to make interest rate adjustments, which only confirms expectations of an imminent rate cut by the market.
Traders are focusing on the second-quarter earnings season that kicked off with large banking stocks on Friday, with prospects for whether they can continue to outperform the market being key.
Expected US interest rate cuts have surged to their highest level since April (61 basis points), with expectations already reflecting four rate cuts by 2025.
Rate cut bets have led to rotation in US stocks, with investor outflow marking the largest decline in the technology sector since 2022.
On Thursday, July 11, the S&P 500, Nasdaq, and Nasdaq 100 hit new highs at the open and then plummeted, while the Dow, which is closely related to the economy, turned up and US small-cap stocks continued to rise strongly.
As a result of the unexpected MoM decline in US CPI consumer inflation in June and the fact that core data has also hit its lowest level in over three years, the futures market has fully priced in the possibility of a rate cut by the Fed in September. The S&P 500, Nasdaq, which are dominated by large-cap and technology stocks, opened at new highs, while the Dow opened slightly lower.
Ten minutes after the open, both the S&P large-cap and Nasdaq started to decline, and their losses continued to expand. Meanwhile, blue-chip stock gathering Dow turned up, with gains of almost 0.4% or over 150 points. Small, micro and mid-cap stocks rose against the trend, the Russell 2000 small-cap stock index accelerated upward, and closed up 3.6%, marking its best single-day performance since November last year.
Towards the end of the trading session, the Nasdaq was closest to the day's lows, almost approaching 18,200, and fell by nearly 2.2%, ending its seven-day record of consecutive new highs in closing. The S&P 500 also fell by more than 1%, ending its six-day run of new highs.
Some analysts believe that the scale of the outflow of funds from technology's magnificent seven is the largest since 2022, preventing the S&P and Nasdaq from setting new records for at least six days. It is related to the market's expectation of an interest rate cut and the US economy realizing a soft landing, with real estate-related stocks such as Home Depot and D.R. Horton surging, as low interest rates may reignite the real estate market.
At the close, both the S&P large-cap and Nasdaq stopped their seven-day climbs, while the S&P and Nasdaq 100 stopped their six-day run of new highs. The Nasdaq stopped its seven-day run of new highs. The Dow continued to rise for two days to a seven-week high since May 21, and the Russell 2000 Index rose 3.6%, marking its best single-day performance since November 2023; regional bank stocks rose over 4%.
The S&P 500 fell 49.37 points, or 0.88%, to 5584.54. The Dow rose 32.39 points, or 0.08%, to 39,753.75. The Nasdaq fell 364.04 points, or 1.95%, to 18,283.41.
The Nasdaq 100 fell by 464.02 points, or 2.24%, to 20,211.36. The Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of technology stocks in the Nasdaq 100, fell by 2.98%. The Russell 2000 small-cap stock index rose 3.57%, marking its best single-day performance since November 2023. The fear gauge VIX rose 0.54% to 12.92.
Due to the impact of technology stocks, the Nasdaq fell nearly 2%, the S&P 500 fell nearly 1%, while small-cap stocks rose, and the Dow turned slightly up.
Among the 11 sectors of the S&P 500 index, the real estate sector rose by 2.66%, utilities, materials, industry, and energy sectors rose 1.83%-1.05%, the financial sector rose more than 0.8%, the consumer discretionary sector fell 1.47%, the telecommunications sector fell 2.56%, and the information technology/technology sector fell 2.74%.
The seven technology sisters stocks plummeted and closed at the daily low. Tesla fell 8.44%, the largest single-day drop since January 25th, and performed the worst among the U.S. tech titans, ending its eleven-day rally, giving back all its gains since July 3rd. Nvidia fell 5.57%, ranking third in market cap among U.S. stocks. Apple plunged 2.32%, ending its seven-day winning streak but maintained its number one market cap. Microsoft fell 2.5%, second in market cap. Google A fell 2.9% and fell short of yesterday's historic high. Meta fell 4.11% and Amazon fell 2.37%.
Tesla's stock price fell sharply due to the delayed release of robot taxis.
Chip stocks were all in the red. The Philadelphia Semiconductor Index fell 3.47%, falling below 5,700 points, departing from its all-time high, and the industry ETF SOXX fell 3.29%. Nvidia's double-leveraged ETF plummeted 11.09%; Taiwan Semiconductor's ADR fell 3.43%; KLA Corporation fell 4.42%; Applied Materials fell 5.38%; Arm Holdings fell 7.12%, Lam Research fell by about 6%, and these five stocks were all departing from their historic highs. AMD fell 1.1%, Micron Technology fell 4.52%, Qualcomm fell 4.29%, Broadcom fell 2.22%, and Intel fell 3.93%.
AI concept stocks had mixed performance. SoundHound.ai once rose more than 22.1%, but then gave back most of its gains, closing up 5.92%. BigBear.ai rose 3.23%, Snowflake rose 0.49%, Oracle rose 0.77%, while Dell fell 3.46%, Palantir fell 2.74%, bidding farewell to its historic high, and CrowdStrike fell 1.07%.
On the news front, it was reported that Tesla plans to postpone the RoboTaxi release from August to October, and the stock price fell to a daily low. Nvidia's rival and AI chip dark horse Groq received a $300 million investment from BlackRock, with a latest valuation of $2.2 billion. Apple and the EU reached a settlement on the antitrust investigation against its tap-and-pay technology. Guo Mingji said that in the next few years, the iPhone will continue to use a prism glass design. Bank of America raised its target price for Apple to $256, saying that the generative AI function will help promote the iPhone replacement cycle.
Chinese concept stocks outperformed the U.S. large caps. The KraneShares CSI China Internet Index ETF (KWEB) rose 2.4%, the KraneShares China Technology Index ETF (KQQQ) rose 1.8%, and the Nasdaq Golden Dragon China Index (HXC) rose 3.4% and closed up 2.2%, breaking through the 6,100 mark to near its four-week high.
In popular individual stocks, new car makers performed strongly, with XPeng up 7.68%, Li Auto up 3.42%, Nio up 1.3%, and Extreme Tech up 4.64%; JD.com up 6.99%, Baidu up 2.79%, Alibaba up 3.3%, Tencent Holdings (ADR) up 1.77%, Pinduoduo up 0.85%, and Bilibili up 3.89%.
Other stocks with large fluctuations include:
Gold and silver mining stocks rose across the board. Hecla Mining rose 7.3%, Coeur Mining rose 6%, Pan American Silver rose 5.5%, Gold ETF GDX rose 2.3%, and Silver ETF SLV rose 2.6%.
PV concept stocks generally rose. Maxeon Solar rose 14.23%, Risen Energy and Array Technology rose by about 9.3%, Canadian Solar rose over 7.9%, JinkoSolar rose 3.9%, Canadian Solar rose about 3.6%, Daqo New Energy rose about 3.3%, and First Solar rose over 2.1% but performed poorly. SolarEdge rose more than 0.9%.
Low ticket prices hit profits, and most US aviation stocks fell. Delta Air Lines opened down 10% and closed down nearly 4%. Although its second-quarter revenue reached a new high, its net income fell by 30%, and its third-quarter sales growth and EPS guidance were not good. American Airlines fell nearly 4%, and United Airlines fell over 3%.
Pfizer opened up more than 3% and closed up 1% at a one-month high. Before the market, it rose nearly 6%, driven by the "exciting" data of the early trial to regain fat loss pill Danuglipron's development, which will conduct dose-optimization research in the second half of the year.
MicroStrategy, the largest holder of Bitcoin, opened up nearly 10% and closed up 4%. Four months after Bitcoin reached its historic peak, it announced a 10-for-1 stock split, citing convenience for investors and employees to purchase shares, but still fell 32% from its historical high in March.
Snack and beverage giant PepsiCo wiped out a 3.4% initial loss at the close, with second-quarter revenue slightly lower than expected but EPS exceeding expectations. North American sales declined and the full-year revenue growth forecast was lowered. Costco, for the first time since 2017, raised its membership fee, and the stock price fell more than 4%.
U.S. inflation cools, with traders betting heavily on interest rate cuts in Europe and the UK, and European stocks have risen for two consecutive days. The pan-European Stoxx 600 Index closed up 0.60% to a four-week high since June 12th, with debt-laden utility stocks rising 1.8% to lead the way and the UK mid-cap stock index rising more than 1.2%. Among the "Eleven Arhats" of European stocks, chip stock ASML Holding rose briefly and then fell by about 1.3%, and luxury goods stock LVMH Moet Hennessy Louis Vuitton rose by about 1.8%.
The European STOXX 600 index closed up 0.60% at 519.51. The EURO STOXX 50 index closed up 0.35% at 4976.13.
Germany's DAX 30 index rose 0.69%, France's CAC 40 index rose 0.71%, Italy's FTSE MIB index rose 0.03%, the UK's FTSE 100 index rose 0.36%, the Netherlands' AEX index fell 0.38%, and Spain's IBEX 35 index rose 0.89%.
US bond yields plummeted across the board, with two-year and ten-year yields trading at their lowest levels in four months.
At the close, the two-year US Treasury yield, which is more sensitive to monetary policy, fell by 10.70 basis points to 4.5109%, with trading in the range of 4.6409%-4.4858% during the day. After the release of CPI data, it plunged from around 4.63% to around 4.50%. The benchmark 10-year US Treasury yield fell by 7.59 basis points to 4.2082%, plunging from around 4.28% near the day's high to below 4.18% when US CPI data was released, with trading range of 4.2958%-4.1656%.
Expectations of interest rate cuts boosted gold prices while the US dollar fell and bond yields plummeted (led by short-term bonds).
The eurozone's benchmark 10-year German bond yield fell 7.1 basis points to a daily low of 2.462%, and fell 10.6 basis points to a daily low of 2.790% for the first time, from around 2.55% to below 2.48% when US CPI data was released. The French 10-year bond yield fell 6.3 basis points, the Italian 10-year bond yield fell 7.0 basis points, the Spanish 10-year bond yield fell 6.4 basis points, and the Greek 10-year bond yield fell 7.6 basis points. The UK's 10-year bond yield fell 5.1 basis points to 4.074%, plunging from around 4.171% near the day's high to around 4.090% when US CPI data was released.
The French 10-year bond yield fell by 6.3 basis points, the Italian 10-year bond yield fell by 7.0 basis points, the Spanish 10-year bond yield fell by 6.4 basis points, and the Greek 10-year bond yield fell by 7.6 basis points. The UK's 10-year bond yield fell by 5.1 basis points to 4.074%, plunging from around 4.171% near the day's high to around 4.090% when US CPI data was released.
Expectations of interest rate cuts are bullish for demand prospects, despite the IEA cutting expectations for oil demand growth this year and next.
The rise in oil prices boosted demand for oil denominated in US dollars, with WTI August crude futures up $0.52, or more than 0.63%, to $82.62 per barrel. Brent September crude futures rose $0.32, or more than 0.37%, to $85.40 per barrel.
Asian morning refreshes the daily high, and Brent crude rises to $85.89 per barrel, up nearly 1% on the day; after the CPI data is released, WTI crude oil falls deepest by 0.57%, while Brent crude falls deepest by 0.5%. Approaching the end of the session, WTI crude oil refreshes the daily high, up nearly 1.2%, breaking through the integer level of $83, and hit its highest level since April 19 on Friday, with intraday highs recorded at $84.53. Brent crude offset all its losses and closed at a daily high. Last Friday, intraday highs were reached since April 30 and pushed up to nearly $88. Analysts pointed out that rate cuts usually boost economic growth, thereby boosting crude oil demand. JPMorgan said summer driving is bullish for crude oil demand. The International Energy Agency (IEA) and OPEC differ on the issue of oil demand growth, and inflation and interest rate prospects overshadow mixed signals of oil demand this year. The IEA previously predicted that global oil demand growth this year and next year will slow to less than 1 million barrels per day, while OPEC maintains its global oil demand growth forecast unchanged, at 2.25 million barrels per day this year and 1.85 million barrels per day next year.
Oil prices rose, with US oil rebounding to $83 a barrel for a time.
Analysis shows that interest rate cuts usually stimulate economic growth, thereby boosting crude oil demand. JPMorgan said summer road travel is good for crude oil demand. However, there are differences between the International Energy Agency and OPEC about oil demand growth. The IEA predicts that global oil demand growth will slow to less than 1 million barrels per day this year and next, while OPEC maintains its global oil demand growth forecast, at 2.25 million barrels per day this year and 1.85 million barrels per day next year.
The EIA natural gas inventory increased more than expected, and US August natural gas futures fell by more than 2.6%, while the TTF Dutch natural gas futures, the European benchmark, rose by 2.7%, and ICE UK futures rose by about 2.2% at the end of the session.
The US dollar fell the most in two months, the pound hit a one-year high, the yen surged 3%, and offshore renminbi rose 344 points to break through 7.26.
The DXY, which measures the US dollar against six major currencies, fell by 0.56% to 104.46 points. When US CPI inflation data was released, it plunged from the first line of 104.86 points to the first line of 104.40 points, and further fell, hitting a daily low of 104.077 points before the US stock market opened, approaching the 104 point mark and the June 7 bottom of 103.999 points. Throughout the day, it was in a downward trend, breaking through the 100-day moving average and the 200-day moving average (which are currently at 104.795 points and 104.449 points, respectively).
The Bloomberg Dollar Index fell 0.47% to 1253.92 points, with trading range of 1259.76-1249.85 points during the day.
Non-US currencies rose across the board. The euro against the US dollar rose as much as 0.6% and approached 1.09, hitting a one-month high. The pound against the US dollar rose by up to 100 basis points or 0.8% to a one-year high of 1.295, breaking through the 1.29 mark.
The US dollar suffered a heavy blow and fell to a low before the release of non-farm employment data in June.
Offshore renminbi (CNH) rose 247 points against the US dollar to 7.2677 yuan, with overall trading between 7.2924-7.2580 yuan. After the release of US CPI data and before the US stock market opened, offshore renminbi rose above 7.26 yuan for the first time since June 13, and rose above the 50-day moving average (currently at 7.2653 yuan).
Among Asian currencies, the US dollar against the yen fell by 1.73% to 158.88 yen, with overall trading range of 161.76-157.44 yen during the day. The euro against the yen fell 1.34% to 172.68 yen, hitting a low of 171.58 yen, but had risen to a historic high of 175.43 yen at 20:15 Beijing time. The pound against the yen fell by 1.24% to 205.116 yen.
It is reported that the Bank of Japan has intervened in the foreign exchange market to support the yen.
The prices of mainstream cryptocurrencies rose and fell. The largest market capitalization leader, bitcoin, rose 0.22% to $57,750.00, with trading in the range of $57,235.00-$59,895.00 during the day. Ethereum, the second-largest cryptocurrency, was trading at $3,121.00, roughly unchanged from Wednesday.
US CPI data boosts rate cut expectations, with gold rising more than 1% to return to the $2400 mark and silver surging by 3%.
The significant rise in precious metals was supported by the substantial decline in US bond yields and the US dollar. COMEX August gold futures rose 1.67% to $2,419.5 per ounce, and COMEX September silver futures rose 2.24% to $31.71 per ounce.
Before the release of June CPI inflation data in the USA, spot gold and spot silver only rose slightly. After the data was released, gold and silver rose sharply and refreshed the daily high. Spot gold rose more than 2.2% and broke through the $2,400 mark, while spot silver rose more than 3% and returned above $31.7. Near the end of the session, both gold and silver fell slightly.
Overall, spot gold rose above $2,400 to a seven-week high. It is the first time it has risen above this level since May 22, approaching the historical high of $2,449.89 per ounce set on May 20. Spot silver rose above $31.7 for the first time since May 30 to a six-week high.
Gold prices surged to near historical highs, with spot prices once again breaking through $2,400.
Analysis shows that affected by US inflation data, the US dollar fell to a more than one-month low and the US 10-year Treasury notes yield fell to a four-month low, enhancing the attractiveness of gold.
Other precious metals such as platinum and palladium rose more than 1%.
Industrial metals in London generally fell. The economic indicator 'Doctor Copper' fell by 1.2%, breaking through two integer levels of $9,900 and $9,800, wiping out gains since last Wednesday. London aluminum fell by 0.2% to a near three-month low. London zinc fell slightly, but London lead rose by 0.8%. London nickel fell slightly to refresh a low point of three and a half months, while London tin fell by about 1%, dropping from a mid-April high.