S&P 500 and Nasdaq Scale New Peaks as Market Rally Extends to Sixth Consecutive Week

Alexander Garcia
10 Jul, 2024
Miami

Optimism ruled stock markets on Wall Street as investors looked ahead to the start of earnings season amid positive economic backdrop. 

Stocks on Wall Street advanced on Wednesday as investors looked forward to inflation data and digested the latest comments from Fed Chair Powell. 

The S&P 500 index and the Nasdaq Composite advanced in the previous five consecutive weeks and extended their gains in the sixth week so far. 

The S&P 500 index advanced for the fifth session, and the Nasdaq Composite edged higher for the seventh session in a row amid expectations of weakening consumer price and producer price inflation. 

Consumer price inflation data is scheduled to be released on Thursday and producer price inflation on Friday. 

The Federal Reserve policymakers are struggling to bring down inflation to its 2% target rate after several indicators show consumer prices are still rising at closer to 3%, despite eleven rate hikes over 2022 and 2023. 

Moreover, interest rates are not restrictive enough to slow down the economy and moderate wage gains, which is also contributing to higher inflation. 

Fed Chair Powell reiterated, in a testimony to the U.S. Senate Banking Committee, the central bank's commitment to lower interest but said "more good data on inflation" is needed to determine that inflation is on the downward path. 

Chairman Powell is likely to reiterate his views to the U.S. House Financial Services Committee later today, but he is not expected to shed any light on the timeline for withdrawing the pandemic-era stimulus. 

The root cause of the latest bout of high inflation over the past three years is the Federal Reserve's reckless money printing during the COVID-19 pandemic, pumping more than four trillion dollars into the U.S. economy. 

On the earnings front, investors are anticipating positive quarterly results this week from JPMorgan Chase, PepsiCo, Morgan Stanley, Wells Fargo, Morgan Stanley, and Bank of New York Mellon. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.5% to 5,603.34, and the Nasdaq Composite rose 0.6% to 18,541.15.

The yield on 2-year Treasury notes edged higher to 4.62%, 10-year Treasury notes increased to 4.29%, and 30-year Treasury bonds edged lower to 4.48%.

WTI crude oil decreased $0.08 to $81.47 a barrel, and natural gas prices edged up 1 cent to $2.34 a thermal unit.

Gold decreased by $15.42 to $2,380.45 an ounce, and silver rose 20 cents to $31.20. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.05.

 

U.S. Stock Movers 

3M declined 0.2% to $99.55 after the company said its chief financial officer, Monish Patolawala, is leaving the company to "pursue other opportunities" effective July 31. 

Taiwan Semiconductor Manufacturing jumped 1.3% to $188.60, and the advanced semiconductor chip maker reported better-than-expected revenue in June. 

Consolidated revenue in June was approximately NT$207.87 billion, a decrease of 9.5% from May and an increase of 32.9% from June 2023.

Revenue in the first half of 2024 totaled NT$1,266.15 billion, an increase of 28% compared to the same period a year earlier.

LegalZoom.com plunged 28% to $5.66 after the company said its chief executive, Dan Wernikoff, has resigned from the office. 

The company also lowered its annual revenue outlook to between $675 million and $685 million from the previous guidance of between $700 million and $720 million. 

 

European Stocks Halted 3-Day Slump, Political Turmoil In France Deepens

European markets rebounded from a three-day slump, but political uncertainty loomed in France as lawmakers struggled to form an alliance after a heated snap election. 

Benchmark indexes in Paris, London, and Frankfurt jumped as much as 0.8% as investors overlooked the brewing political malaise in France and focused on the upcoming earnings season. 

French President Emmanuel Macron, breaking tradition, allowed ministers of the recently resigned government to hold positions and conduct daily activities after a change of majority in parliament. 

With a hung parliament, France's leading position in the European Union is diminished, allowing it to influence political outcomes and nudge policies in its favor. 

In addition, political disarray in Germany is also negatively impacting sentiment for the euro. 

On the economic front, investors are also looking forward to the release of inflation data from France, Italy, and Spain this week. 

 

Europe Indexes and Yields

The DAX index increased by 0.96% to 18,410.75; the CAC-40 index rose by 0.9% to 7,573.55; and the FTSE 100 index rose by 0.7% to 8,193.51. 

The yield on 10-year German bonds edged lower to 2.51%. French bonds inched lower to 3.15%; the UK gilts inched lower to 4.10%; and Italian bonds decreased to 3.85%.

The euro edged lower to $1.08; the British pound inched higher to $1.28; and the U.S. dollar weakened to 89.80 Swiss cents.

Brent crude increased $0.92 to $85.55 a barrel, and the Dutch TTF natural gas fell by €0.39 to €30.70 per MWh.

 

Europe Stock Movers

BMW increased 0.9% to €88.40, despite the German luxury automaker reporting weak vehicle sales in the second quarter. 

Volkswagen AG decreased 0.8% to €105.75 after the German automaker said it plans to close its facility in Brussels for Audi due to an ongoing decline in sales of electric vehicles. 

Evotec SE soared 4% to €9.76 after the company announced a collaboration with Pfizer to accelerate drug discovery efforts in France. 

Enagas gained 4.3% to €13.36 after the Spanish natural gas distribution grid operator said it agreed to sell its 30.2% stake in the Tallgrass to Blackstone for $1.1 billion. 

Enagas and Blackstone teamed up in 2019 to acquire a 10.93% initial stake in Tallgrass Energy, a US energy infrastructure company founded in 2012. 

It owns three inter-state gas pipelines regulated by the Federal Energy Regulatory Commission, with a total of 11,000 km of gas transmission pipelines, 2,400 km of gas gathering pipelines, and a 1,300 km oil pipeline.

Barratt Developments PLC declined 1.4% to 484.40 pence after the UK-based home builder said it is lowering its home sales estimate in the second half, citing elevated mortgage rates and challenging macroeconomic conditions. 

Travis Perkins jumped 6.5% to 853.0 pence after the construction materials maker appointed a new chief executive.

Travis Perkins appointed Pete Redfern as Director and Chief Executive Officer on September 16, succeeding Nick Roberts, who will resign from the office on the same day. 

 

Another High In Nikkei 225, Yen Drifts to a New 38-year Low 

Market indexes in Tokyo advanced to new record highs following the market gains in New York. 

The Nikkei 225 index and the Topix index gained to close at new record highs after the producer price index rose for the 41st month in a row. 

Producer price index increased at an annual pace of 2.9% in June, following the upwardly revised 2.6% gain in the previous month. 

Prices rose at the fastest pace since August 2023 as input costs and import costs continued to climb, and producer inflation was positive for the 41st month in a row. 

The acceleration in inflation supported the case for the Bank of Japan to adjust its benchmark rate higher after the next policy meeting at the end of July. 

The central bank is also scheduled to release its bond purchase tapering plan, which could increase confidence that policymakers are serious about narrowing the yield gap between the U.S. and Japan. 

The yen resumed its upward march and traded at 141.36 against the U.S. dollar amid the persistently wide yield differential between the U.S. and Japanese bonds. 

 

Japan Stock Movers 

The Nikkei 225 stock averages increased by 0.6% to 41,831.99, and the Topix index advanced by 0.5% to 2,909.20. 

Recruit Holdings jumped 3.6% to ¥9,484.0 after the company said it plans to buyback up to 5.7% of its outstanding shares over the next 12 months. 

Tech stocks were among the most active, and Tokyo Electron, Advantest, Disco Corp., and SoftBank hovered around the flatline. 

Tokio Marine jumped 4.8% to ¥6,596.0, MS&AD rose 4.2% to ¥3,930.0, and Mitsubishi Motors jumped 8.6% to ¥493.30. 

GS Yuasa declined 5.9% to ¥2,938.0 and Lasertec Corp. declined 2.6% to ¥33,610.0. 

 

China's Weak Consumer Inflation Highlights Broader Economic Malaise 

Stocks traded volatile in Shanghai and Hong Kong after sluggish inflation data signaled weak consumer demand. 

The Hang Seng index and the CSI 300 index declined as much as 0.5% after rallying in the morning hours in the hopes of additional market-supportive measures from policymakers. 

Consumer price inflation slowed to an annual pace of 0.2% in June from 0.3% in May, the National Bureau of Statistics reported on Wednesday. 

Consumer prices rose for the fifth month in a row, but the price increase slowed, suggesting weak consumer demand amid job market uncertainty and a protracted property market slump. 

Core consumer price inflation, which excludes food and energy prices, rose 0.6% from a year earlier. 

Consumer price inflation has stayed near zero since April last year, the longest period of deflation since the 2009 global financial crisis. 

Annual inflation is expected to hover between 0.5% and 0.6%, sharply lower than the 3.0% target set by the central government's policymakers. 

Producer prices declined 0.8% in June, and the measure of wholesale prices eased for the 21st month in a row as factory order growth remained weak, the statistical agency said in a separate report released on Wednesday. 

 

China Stock Movers 

The Hang Seng index decreased 0.05% to 17,516.64, and the CSI 300 index declined 0.2% to 3,432.29. 

Baidu jumped 11.4% to HK$96.35, and the company's driverless robotaxi won early popularity in Wuhan, Hubei. 

Additionally, Beijing city authorities are likely to permit the use of robots in ride-sharing services in the near future. 

Nongfu Spring soared 4% to HK $35.10 on a report suggesting that the founder, Zhong Shanshan, is looking to increase his stake in the company by purchasing HK $2 billion or $256 million worth of stocks over the next six months. 

Nongfu Spring is one of the largest bottled-water companies in China, and in the previous full-year, the company posted revenue of 42.6 billion yuan and net income of 12 billion yuan. 

Four companies started trading on Hong Kong and mainland exchanges today. 

Ruichang International, a maker of petroleum refining equipment, priced its initial public offering at HK $1.36 per share and raised HK $131.6 million. 

Chenqi Technology priced its initial public offering at HK $35 per share and raised HK $1.01 billion, but the stock dropped as much as 15% in early trading. 

Shanghai Voicecomm, the developer of conversational artificial intelligence technology, raised HK $572 million in its initial public offering and priced its stock at HK $152 per share. 

Jirfine Intelligence Equipment soared to 57.30 yuan; the maker of CNC machines listed its stock at 26.50 yuan per share on the Shenzhen Stock Exchange and raised 800 million yuan.