(Bloomberg) — The world’s largest technology companies led stocks to reach new all-time highs, as traders continued to bet on Federal Reserve rate cuts despite Jerome Powell’s remarks to Congress. The S&P 500 surpassed 5,600 for the first time ever, driven by a surge in megacap stocks like Nvidia Corp. and Apple Inc. Treasuries remained steady after a successful $39 billion sale of 10-year bonds. Swaps are indicating expectations of two Fed cuts in 2024, with a higher likelihood of the first one happening in September.
Wall Street was preparing for the consumer-price index release, with Powell stating that the Fed is open to cutting rates even if inflation remains above 2%. He noted a cooling labor market and emphasized the need for further work on the balance-sheet runoff. Despite Powell’s cautious tone, traders are anticipating a rate cut in September based on the Fed’s evolving assessment of risks.
The S&P 500 extended its winning streak to seven days, reaching a record high for the 37th time this year. Gold and silver mining stocks surged on expectations of Fed easing, while banks lagged behind. Alphabet Inc., Google’s parent company, reportedly abandoned its acquisition plans for HubSpot Inc.
US 10-year yields dropped slightly to 4.28%, with uncertainty surrounding the timing of a rate cut by the Bank of England. Oil prices rose due to increased demand during a US holiday.
Market participants remained calm despite significant data releases, including Powell’s testimony and upcoming CPI/PPI reports. The core CPI is expected to show modest growth in June, which could support the case for rate cuts in September.
Survey results suggest that investors are optimistic about the market’s reaction to the CPI release, with a majority expecting a “risk-on” outcome. Some trading desks are warning of potential volatility ahead, citing political uncertainties, Fed chair comments, and the start of the earnings season.
Corporate highlights:
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Microsoft Corp. avoids EU antitrust probe
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Intuit Inc. cuts 1,800 employees
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Advanced Micro Devices Inc. acquires Silo AI
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Archer-Daniels-Midland Co. appoints new finance executive
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FTC prepares lawsuit against drug middlemen
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Honeywell International Inc. buys Air Products and Chemicals Inc.’s LNG business
Key events this week:
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US CPI and initial jobless claims
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Fed speakers Bostic and Musalem
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China trade data
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University of Michigan consumer sentiment and US PPI
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Earnings reports from Citigroup, JPMorgan, and Wells Fargo
Market movements:
Stocks:
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S&P 500 rose 1%
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Nasdaq 100 rose 1.1%
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Dow Jones Industrial Average rose 1.1%
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MSCI World Index rose 1%
Currencies:
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Bloomberg Dollar Spot Index fell 0.1%
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Euro rose 0.1% to $1.0829
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British pound rose 0.5% to $1.2846
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Japanese yen fell 0.3% to 161.74 per dollar
Cryptocurrencies:
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Bitcoin fell 0.9% to $57,424.76
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Ether rose 1.2% to $3,108.05
Bonds:
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10-year Treasury yield declined two basis points to 4.28%
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Germany’s 10-year yield declined five basis points to 2.53%
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Britain’s 10-year yield declined three basis points to 4.13%
Commodities:
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West Texas Intermediate crude rose 1.2% to $82.40 a barrel
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Spot gold rose 0.3% to $2,372.14 an ounce
This article was created with the assistance of Bloomberg Automation.
–With assistance from Cecile Gutscher, Richard Henderson, Joel Leon, and Jessica Menton.
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