4-Day Rally Lifts S&P 500 and Nasdaq to 2023 Highs

Barry Adams
13 Jul, 2023
New York City

Stocks advanced on the hopes that inflation is inching closer to the Fed's target level stoking expectation that the Federal Reserve may back off from its hawkish stance. 

Two inflation reports in as many days lifted market sentiment and the yield on Treasuries edged lower after wholesale and consumer price inflation continued their downward path. 

The S&P 500 and the Nasdaq Composite indexes closed at their 2023's highs and extended weekly gains after the producer price index eased. 

The measure of the wholesale price index decreased 0.1% in June. following an upwardly revised 0.4% increase in May, the U.S. Bureau of Labor Statistics reported Thursday. 

Core wholesale price inflation, which strips out volatile food and energy prices, also declined 0.1% in June. 

On a year basis, producer price index rose at a slower pace of 0.1% in June after rising 0.9% in May, 

In overseas economic news, the UK's GDP in May shrank less than expected and inflation in France eased in June. 

The annual retail price inflation eased to 4.5% in June from 5.1% May, but remained well above the central bank's target rate of 2%, France's statistical agency INSEE reported Thursday. 

The ongoing decline in petroleum products by 17.2% compared to 9.7% in April, drove energy prices by 3% compared to 2% in May. 

In other economic news, the UK economy contracted less than expected in May. 

Real GDP declined 0.1% in May, reversing 0.2% rise in April, the Office for National Statistics reported Thursday. 

China's exports declined 12.4% to $285.3 billion in June, worse than the 7.5% fall in May, General Administration of Customs reported Thursday. 

Imports fell 6.9% in the month to $214.7 billion. 

Exports to the U.S. declined 23.7% to $42.7 billion, to the EU fell 12.9% and to the ASEAN region dropped 16.9% to $43.3 billion from a year ago. But exports to Russia soared 90.9%  from a year ago. 

Exports to the U.S. fell for the eleventh month in a row on the ongoing political tensions between two largest economies oof the world. 

In the first half, exports declined 3.2% from a year ago in 2022. 

China's trade surplus declined to $70.6 billion in June from $65.7 billion in May.  

 

U.S. Indexes & Yields 

The S&P 500 index futures traded higher 0.9% to 4,510.07 and the Nasdaq Composite edged higher 1.5% to 14,138.57.

The yield on 2-year Treasury notes decreased to 4.62%, 10-year Treasury notes inched lower to 3.73% and 30-year Treasury bonds edged down to 3.90%. 

Crude oil decreased $1.39 to $77.14 a barrel and natural gas prices decreased 6 cents to $2.55 a thermal unit. 

 

Stock Movers 

Delta Air Lines rose 3.5% to $49.75 after the international air carrier reported record  quarterly earnings and sales and also lifted its 2023 earnings estimate. 

MillerKnoll Inc increased 1.1% to $16.65 after the furniture maker reported better-than-expected earnings. 

The company reported earnings of 41 cents a share and revenue of $957 million. 

PepsiCo increased 1.1% to $185.22 after the food and beverage company reported better-than-expected revenue of $22.32 billion and adjusted net income of $1.96 a share.  

 

European Markets Extend Weekly Gains 

European markets extended weekly gains and investors reviewed industrial output data in the Euro Area. 

Major averages in Frankfurt, Paris and London advanced on hopes that the European Central Bank may be nearing its rate hike cycle following the easing of inflation. 

The annual retail price inflation eased to 4.5% in June from 5.1% May, but remained well above the central bank's target rate of 2%, France's statistical agency INSEE reported Thursday. 

The ongoing decline in petroleum products by 17.2% compared to 9.7% in April, drove energy prices by 3% compared to 2% in May. 

In other economic news, the UK economy contracted less than expected in May. 

Real GDP declined 0.1% in May, reversing 0.2% rise in April, the Office for National Statistics reported Thursday. 

 

Euro Area Industrial Output Slowed In May 

Industrial production in the Euro Area eased to 0.2% increase in May from 1.0% rise in April, Eurostat reported Thursday. 

On a yearly basis, industrial production declined 2.2% in May after rising 0.2% in April. 

Capital goods production increased 1.0% in May following a 14.7% surge in April, and intermediate goods output rose 0.5%, rebounding from a 0.9% decline in the previous month. 

Durable goods output rose 0.5% compared to a decline of 2.8% in the previous month and non-durable  consumer goods  output rebounded 0.3% from a decline of 3.6%. 

 

Europe Indexes & Yields

The DAX index increased 0.7% to 16,141.09, the CAC-40 index advanced 0.5% to 7,369.80 and the FTSE 100 index advanced 0.3% to 7,440.21.  

The yield on 10-year German Bunds inched higher to 2.45%, French bonds traded lower to 2.99%, the UK gilts edged up to 4.45% and Italian bonds increased to 4.13%.

The euro edged higher to $1.117, the British pound to $1.304 and the U.S. dollar fetched 90.04 Swiss cents

Brent crude increased $1.57 to $81.68 a barrel and the Dutch TTF natural gas increased €0.03 to €26.61 per MWh.

 

Europe Stock Movers

Enel SpA rose 1.4% to €6.32 after the Italian energy generator and electricity grid operator said its subsidiary Enel Green Power SpA has agreed to sell 50% stake in its two subsidiaries Enel Green Power Australia Pty Ltd and Enel Green Power Australia Trust. 

The company agreed to sell stakes to Inpex Corporation for €400 million.  

Homebuilders in London traded lower after Barratt Developments after the company warned of a challenging market environment and further slowdown in demand.

Barratt Developments PLC dropped 2.5% to 407.70 pence, Persimmons declined Persimmon Plc declined 0.6% to 1,044 pence and Taylor Wimpey Plc declined 1.7% to 103.10 pence. 

Casino Guichard Perrachon SA declined 5.2% to €3.15 after the estimated comparable sales in the second quarter fell 6.6% because of price cuts reflecting a tough market environment.