A Flourishing Zins Dream and Wall Street's Continued Uptrend
Stock Market Persists in Bullish Trend
As US President Trump continues to gnaw at the chair of the Fed chief, hopes for an interest rate cut as early as July are swelling on Wall Street. Investors are leaving Middle East worries behind and are actively snatching up stocks.
US markets showed a positive trend on Thursday. After a tentative start, purchases took charge during trading hours, resulting in an upward trend on three of the previous four trading days. The Dow Jones Index climbed by 0.9 percent to 43,387 points. The S&P-500 and Nasdaq indices improved by up to 1.0 percent. While the Nasdaq Composite and the S&P-500 Index are still just below their record highs, the Nasdaq-100 Index has already smashed a record high. According to initial counts, there were 2,203 (854) gainers and 568 (1,910) losers on the NYSE. 53 (52) titles remained unchanged.
While the Middle East drama took a backseat, market participants focused more on other topics such as monetary policy and interest rate prospects. Lately, chatter has emerged that interest rates could be lowered as early as the next monetary policy meeting in July. The implied probability at the futures market was just over 20 percent, compared to about 13 percent a week ago.
The Fed and the Darling of Wall Street
Despite the plans of US central bankers under their chief Jerome Powell to proceed patiently and cautiously due to the uncertain impact of trade policy on inflation, US President Donald Trump continues to demand lower interest rates. Now, it seems he wants to crank up the pressure by expediting the appointment of Powell's successor. During Powell's remaining 11-month term, the successor could then influence expectations regarding monetary policy with appropriate comments.
A series of fresh or revised economic indicators showed a rather robust performance. Orders for durable US goods shot up significantly and more than expected in May. The number of weekly initial claims for unemployment benefits plummeted more than expected. However, the revision of US GDP growth in the first quarter was revised down to 0.5 percent from 0.2 percent in the third reading.
The Buck Keeps on Buckling
The persistent interest rate cut fantasy and worries about the independence of the US central bank kept the dollar under check. The euro burst through the 1.17 mark, last trading at 1.1701 dollars. The Dollar Index tumbled by 0.4 percent. US Treasury yields fell again, with the 10-year yield tumbling 3 basis points to 4.26 percent.
Oil prices were supported by the significantly lower weekly US oil inventories published the previous day, but could not hold their daily highs. US oil of the WTI variety rose by 0.7 percent. Gold remained sluggish.
Making a Splash in the Tech Sector
Micron Technology significantly exceeded expectations with its third-quarter results and outlook for the current quarter. However, its stock dipped by 1.0 percent. Analysts attribute this reaction to previously high expectations. Micron has indeed gained around 50 percent since the beginning of the year.
Nvidia, which reached a new all-time high the previous day, continued to climb by 0.5 percent. With a market capitalization of approximately $3.8 trillion, Nvidia has surpassed Microsoft as the most valuable company. Apple lagged behind with a 0.3 percent decline following a downgrade in its price target by JP Morgan, albeit still above the current level. Meta Platforms closed the day 2.5 percent higher. In its pursuit of advancing its AI activities, Meta CEO Zuckerberg has poached three top experts from OpenAI.
Tesla shares fell by 0.6 percent after reports that Tesla and a key ally of CEO Elon Musk have parted ways. Omead Afshar, who was responsible for sales and production in North America and Europe, has left the company, according to people familiar with the matter.
H.B. Fuller surged by 10.8 percent after raising its full-year outlook following strong quarterly results. Kratos Defense & Security Solutions shares fell by 2.4 percent on plans for a capital raise. Worthington Steel reported increased profits despite declining revenues, with its stock climbing over 20 percent. Conversely, Jefferies reported lower quarterly revenues and profits, missing estimates, but its stock rose by 0.3 percent. Walgreens Boots Alliance improved by 0.6 percent after reporting increased sales in the quarter.
For more on today's market activity, please see here.
Wall Street | Fed | Jerome Powell | Monetary Policy
Community policy discussions rose as the potential for an interest rate cut in July attracted investors on Wall Street. Given the improving market trends and increased industry optimism, it might be necessary for businesses to review and align their employment policies accordingly. On the financial front, investing is more enticing now that the Fed's monetary policy might lead to more favorable interest rates, potentially boosting the business sector's growth and performance.
