U.S. Stocks See Gains Amid Broader Market Movements
Stocks showed moderate gains over a shortened trading week with markets closed on Wednesday for the Juneteenth holiday These gains helped push the S&P 500 Index to new all-time highs The week also indicated a broadening and rotation within the market as value stocks outperformed growth stocks and most major benchmarks outperformed the tech-heavy Nasdaq Composite On Friday known as triple-witching day approximately $5.5 trillion in options related to indexes individual stocks and exchange-traded funds expired according to Bloomberg and options platform SpotGamma
Retail Sales and Manufacturing Insights
Early in the week signs of consumer caution emerged due to easing labor demand and decreasing savings The Commerce Department reported a 0.1 percent increase in retail sales for May following a downwardly revised 0.2 percent decrease in April Sales at bars and restaurants fell 0.4 percent indicating reduced discretionary spending while grocery store sales also dropped 0.4 percent likely due to price cuts in certain food categories
Contrasting this trend manufacturing showed strength with the Federal Reserve announcing a 0.9 percent increase in industrial production for May surpassing expectations and marking the fastest pace in nearly a year Factories operated at 78.7 percent capacity slightly above expectations and reaching the highest level since last November
Economic Data and Market Reactions
Later in the week data suggested a stronger economy than retail sales data implied S&P Global's composite index of business activity rose to 54.6 in June its highest level in over two years with significant improvements in the services sector Payrolls in this sector increased at the best pace in five months rebounding from two months of declines while selling price pressures were among the lowest recorded since the pandemic began
Bond Market Activity
The weak retail sales data initially pushed longer-term Treasury yields lower but stronger S&P Global readings on Friday brought them back up ending the week slightly higher Tax-exempt municipal bond yields remained steady with light secondary trading volumes despite a heavy issuance calendar In the investment-grade corporate bond market issuance surpassed expectations early in the week bolstered by improved investor sentiment and equity gains High yield bonds also performed well supported by signs of a slowing economy and optimistic comments from Federal Reserve officials regarding potential rate cuts later in the year
Market Index Performance (Weekly Close)
DJIA: 39,150.33 (+561.17, 3.88%)
S&P 500: 5,464.62 (+33.02, 14.57% YTD)
Nasdaq Composite: 17,689.36 (+0.48, 17.84% YTD)
S&P MidCap 400: 2,931.86 (+36.55, 5.40% YTD)
Russell 2000: 2,022.03 (+15.87, -0.25% YTD)
These figures are for illustrative purposes only and do not guarantee future performance
Europe
European stocks rebounded with the pan-European STOXX Europe 600 Index rising 0.79 percent as concerns about political uncertainty diminished and the outlook for monetary policy easing improved Major stock indexes saw gains with Germany's DAX up 0.90 percent France's CAC 40 Index increasing 1.67 percent and Italy's FTSE MIB climbing 1.97 percent The UK's FTSE 100 Index added 1.12 percent
Bank of England and Other Central Banks
The Bank of England (BoE) kept its key interest rate at a 16-year high of 5.25 percent with most Monetary Policy Committee members voting to maintain rates The headline inflation rate dropped to the BoE's 2 percent target in May while core inflation eased to 3.5 percent
The Swiss National Bank cut rates by a quarter of a percentage point reducing its policy rate to 1.25 percent citing decreased inflation pressure Meanwhile Norway's central bank Norges Bank held its rate steady at 4.5 percent indicating that the policy rate would likely remain at this level for the rest of the year before gradually decreasing
Eurozone Business Activity
In the eurozone private sector business activity unexpectedly slowed in June with the HCOB Composite PMI falling to 50.8 from 52.2 in May Germany saw a slight increase in overall business activity while France experienced a second month of output contraction due to a decline in new orders
Japan
Japanese stock markets saw negative returns with the Nikkei 225 Index down 0.6 percent and the broader TOPIX Index falling 0.8 percent driven by uncertainty regarding the Bank of Japan's monetary policy The yield on the 10-year Japanese government bond rose to 0.97 percent influenced by data showing accelerating inflation in May The yen weakened to around JPY 158.8 against the USD near 34-year lows despite Japanese authorities' readiness to intervene in the forex markets
China
Chinese stocks declined with the Shanghai Composite Index falling 1.14 percent and the blue-chip CSI 300 down 1.3 percent as mixed economic data weighed on investor sentiment Industrial production growth slowed in May while fixed asset investment and retail sales showed mixed results The People's Bank of China injected RMB 182 billion into the banking system resulting in a net withdrawal of RMB 55 billion due to expiring loans
Other Key Markets
Hungary: The National Bank of Hungary (NBH) reduced its main policy rate from 7.25 percent to 7.00 percent noting improved short-term inflation outlook and growing household consumption despite economic growth concerns and global financial market volatility
Turkey: Following local elections President Recep Tayyip Erdogan appears to be seeking political normalization and reducing domestic political tensions which could benefit Turkey's democratic processes and economic stability
Market Movers
US Indices reached new all-time highs with some volatility in AI tech and momentum stocks Quad-Witching saw approximately $5.1 trillion in options expire leading to high-volume trading Commodities saw gold prices rise by 1.1 percent and oil prices reach their highest levels since April
Economic Events for Next Week
US: Consumer Confidence GDP PCE Deflator U of Mich Sentiment New Home Sales Global: UK GDP ECB Inflation Expectations Tokyo CPI Australia CPI Canada GDP Mexico Trade Balance Brazil Unemployment
Key Market Developments
Silicon Frenzy saw major semiconductor firms experience volatility amid growing demand Data Leaks in the auto dealership software sector highlighted cybersecurity concerns
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