S&P 500 and Nasdaq Scale New Highs After Powell Comments

Alexander Garcia
02 Jul, 2024
Miami

Benchmark indexes on Wall Street lacked direction as investors stayed on the sidelines in the absence of domestic catalysts. 

The S&P 500 index and the Nasdaq Composite hovered near the flatline amid a lack of domestic catalysts and valuation worries. 

Job openings edged slightly higher in May, but hovered near the three-year low reached in April. 

The number of job openings rose by 221,000 from the previous month to 8.14 million in May, following a downwardly revised 7.9 million in April, the U.S. Bureau of Labor Statistics reported Tuesday. 

The number of job openings is hovering near a three-year low, but openings are still above the pre-pandemic level of 7.2 million, indicating job market conditions are moderating but still tight. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.4% to 5,495.28, and the Nasdaq Composite rose 0.7% to 17,994.47. 

The yield on 2-year Treasury notes edged higher to 4.75%, 10-year Treasury notes increased to 4.43%, and 30-year Treasury bonds edged higher to 4.60%.

WTI crude oil increased $0.58 to $83.94 a barrel, and natural gas prices fell 3 cents to $2.46 a thermal unit.

Gold decreased by $3.21 to $2,328.79 an ounce, and silver rose 32 cents to $29.32. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.81.

 

U.S. Stock Movers

Tesla jumped 4.8% to $220.01 after the electric vehicle maker reported better-than-expected vehicle sales in the second quartet. 

The company said its worldwide global sales increased to 440,000 units and produced 411,000 units. 

Atlassin Corp. advanced 4.3% to $185.85 after Piper Sandler upgraded its stock ranking to "overweight," and analyst Rob Owen said the current price is attractive for investors to accumulate stock. 

Paramount Global Class B jumped 4% to $10.56 on a CNBC report that the company's streaming division is in merger talks with several potential partners. 

General Motors edged up  0.1% to $46.70 after the company's Board approved a new $6 billion stock repurchase plan. 

Polestar decreased 0.3% to $0.14 after the electric vehicle maker said first quarter loss widened to $274.3 million from $37.7 million a year ago. 

 

Election Uncertainties Weigh On European Trading Sentiment 

European markets traded down amid election uncertainty, a weak economic outlook, and ongoing tensions with Russia. 

Benchmark indexes in Paris and London fell ahead of parliamentary elections in the UK on July 4 and the second round of elections in France on July 7. 

Market sentiment was weak, and bond yields advanced in the currency union as investors feared that lawmakers in the soon-to-be-appointed new parliaments in France and the UK may struggle to cut spending and lower national debt. 

 

Eurozone Inflation Eased in June 

Consumer price inflation in the eurozone eased to 2.5% in June after edging higher to 2.6% in May, Eurostat, the statistical agency of the European Union, reported Tuesday. 

Prices for food, tobacco, and alcohol rose at a slower pace of 2.5% compared to 2.6% in the previous month and energy at 0.2% from 0.3%.

Meanwhile, inflation was steady for non-energy industrial goods at 0.7% and for services at 4.1%. 

Core inflation, which excludes food, energy, tobacco, and alcohol, was unchanged at 2.9%. 

Among the largest economies, inflation eased in Germany to 2.5% from 2.8%, in France to 2.5% from 2.6%, and in Spain to 3.5% from 3.8%, but rose in Italy to 0.9% from 0.8%. 

 

Eurozone Unemployment Rate Remained Steady in June

The jobless rate in the eurozone held steady at the record low of 6.4% in May, matching the rate in the previous month, Eurostat reported Tuesday. 

The number of unemployed people increased by 38,000 from the previous month to 11.1 million; however, the jobless rate among those younger than 25 was 14.1%, matching the revised rate in April. 

Among the four largest economies in the currency union, Spain recorded the highest rate of 11.7%, followed by France at 7.4%, Italy at 6.8%, and Germany at 3.3%. 

The unemployment rate in the eurozone was 6.5% a year ago in the corresponding month. 

 

Europe Indexes and Yields

The DAX index decreased by 1.0% to 18,113.82; the CAC-40 index fell by 0.8% to 7,499.98; and the FTSE 100 index fell by 0.4% to 8,136.02. 

The yield on 10-year German bonds edged higher to 2.60%; French bonds inched higher to 3.31%; the UK gilts edged higher to 4.25%; and Italian bonds increased to 4.13%.

The euro edged lower to $1.07; the British pound inched lower to $1.264; and the U.S. dollar advanced to 90.38 Swiss cents.

Brent crude increased $0.68 to $87.25 a barrel, and the Dutch TTF natural gas fell by €0.09 to €33.34 per MWh.

 

Europe Stock Movers

Ryanair Holdings declined 3% to €16.15, despite the budget airline reporting record passenger counts in June. 

Sodexo declined 4.4% to €81.90 after the food service provider and facilities management company reported weaker-than-expected revenue in the fiscal third quarter. 

J. Sainsbury declined 1.5% to 253.73 pence after the grocery chain operator said that adverse weather had negatively impacted recent volume growth.

Revenue, excluding fuel, in the sixteen-week period ending on June 22 increased by 2.6%, and comparable sales rose by 3.0%. 

The company reiterated its commitment to returning £250 million to shareholders after the sale of its core banking business to NatWest. 

Additionally, the company plans to complete its £200 million stock repurchase program in the current fiscal year. 

 

Japan's First Quarter GDP Contracted at a Faster Pace, Nikkei Extended Rally to Third Day 

The persistent weakness in the yen boosted stock market indexes for the third session in a row. 

The Nikkei and the Topix indexes jumped more than 1% in the hopes that export-heavy industries are likely to benefit from the falling yen. 

Currency traders prepared for another round of market intervention as the yen drifted to a new 38-year low of 161.63 against the U.S. dollar. 

The Finance Ministry and the Bank of Japan have signaled that the rapid decline in the yen is likely to invite market intervention. 

Despite the jawboning, the Bank of Japan has still lagged in adjusting its monetary policy and shrinking the wide interest rate differential with the U.S. bonds. 

Moreover, the central bank continues to fund elevated levels of government bond purchases, which adds to the already high government deficit. 

Investors also reassessed the economic growth outlook after Japan's economy shrank more than initially estimated. 

Japan revised its first quarter real economic growth contraction to an annual pace of 2.9% from the preliminary estimate of 1.8% decline, the Cabinet Office said in an unscheduled release on Monday. 

The GDP data revision reflected the weaker-than-previously estimated construction orders. 

The Cabinet Office also cut growth in the December quarter to an increase of 0.1% from the previous estimate of 0.4%. 

Investors overlooked inflation worries after crude oil prices jumped to a two-month high amid rising demand and supply cuts by the OPEC+. 

 

Japan Stock Movers 

The Nikkei 225 stock average jumped 1.1% to 40,074.69, and the Topix index advanced 1.2% to 2,856.62. 

Retailers were in focus for the second week in a row after J. Front reported better-than-expected net income.

Moreover, Japan is expecting record tourist arrivals this summer as foreigners take advantage of weak currency and increased mobility of Chinese tourists after the end of COVID-19 restrictions. 

J. Front rose 1.8% to ¥3,145.0, Takashimaya declined 2% to ¥2,948.0, Seven &I Holdings added 0.7% to ¥1,973.50, and Isetan Mitsukoshi gained 1.8% to ¥3,210.0. 

Dai-ichi Life, Daiwa Securities, T&D Holdings, and MS&AD gained between 3% and 4%. amid a rebound in financial services stocks. 

Dentsu Group declined 2.1% to ¥ 3,945.0, and Sumitomo Pharma dropped 2.2% to €2.14. 

 

China's Property Sales Decline Slowed and June Auto Sales Eased

Market indexes in Hong Kong rebounded after investors returned from a public holiday and reacted for the first time to the latest updates in manufacturing activities. 

The Hang Seng index jumped more than 0.5%, but the indexes in mainland China continued to drift lower. 

The Caixin manufacturing purchasing managers' index advanced to 51.8 in June from 51.7 in the previous month, S&P Global reported Monday. 

The private survey, which tracked a wider set of small and medium enterprises with significant activities, contrasted with the government data, which showed contraction for the second month in a row. 

The Hang Seng index has been under pressure after peaking on May 20 due to a weak policy response, a lack of progress in the revival of the property market, and a rising tide of capital flight. 

Moreover, Chinese policymakers are struggling to hold the yuan as the Bank of Japan lets the yen drift to a new 38-year low and avoids expensive market intervention. 

The weaker yen is putting additional pressure on the yuan as businesses keep foreign earnings overseas and more capital leaves China for the third year in a row. 

 

China Stock Movers 

The CSI 300 index decreased 0.03% to 3,476.93, and the Hang Seng index jumped 0.5% to 17,815.61. 

Li Auto jumped 5.3% to HK$74.0 after the leading electric vehicle maker reported a rise in sales in June. 

China's automobile sales contracted in June by 2.9% to 1.91 million units, the first monthly decline since January. 

However, sales in the first-half increased 2.5% to 9.65 million units, according to the data released by the CPCA. 

Chinese property developers edged higher after the decline in home sales eased in June. 

Top 100 developers reported home sales declined 16.7% to 438.9 billion yuan, or $60.4 billion, but advanced 36% from May, according to data released by CRIC. 

Property transactions improved the most in the top-tier cities of Beijing, Shanghai, Shenzhen, and Guangzhou. 

The average price of a new home increased by 0.2% in 100 large cities, slightly weaker than the 0.2% increase in May. 

China's new home sales at the top 100 real estate companies in the period between January and June plunged 41.6% from a year ago, the China Index Academy said in a report released on Monday.