The US stock market saw mixed signals yesterday. Trade optimism initially boosted sentiment. However, economic data and new tariff threats created volatility. The Dow Jones Industrial Average led the gains, showing remarkable strength.
The Dow Jones Industrial Average surged 1%, adding 432 points. It closed at 43,819.27, bringing its year-to-date gain to 3%. This index has shown less overheating compared to others.
The S&P 500 reached a new all-time high. It advanced by 0.52%, closing at 6,173.07. Despite this, its Relative Strength Index (RSI) hit 70. This indicates the market is in an overbought condition.
The Nasdaq Composite also rose 0.52%. It finished the day at 20,273.46. The Nasdaq has climbed 3.99% this week. It too shows signs of being in an overheated state.
Conversely, the Russell 2000 experienced a slight decline. It rose 0.019% to 2,172.53. Small-cap stocks continued their recent underperformance. Year-to-date, the Russell 2000 is down 2.73%.
The VIX Index, a measure of market volatility, dropped. It decreased by 0.27 to 16.32. This suggests reduced market uncertainty and lower investor fear.
Initial market gains stemmed from trade optimism. Commerce Secretary Lutnick announced progress. Specific details of trade agreements with China were finalized. Additionally, agreements with ten other nations were nearing completion.
However, volatility emerged due to tariff threats. President Trump indicated future tariffs on Canada. This immediately caused a market dip. General Motors and Canadian Goose shares fell sharply. The Canadian dollar also depreciated significantly. Yet, later reports offered some relief. Treasury Secretary Scavacenter suggested delaying tariffs. This indicated potential for continued negotiations.
Economic data presented a mixed picture. Personal income and consumption data were concerning. May’s personal income fell 0.4%, and consumption dropped 0.1%. These figures fueled fears of an economic slowdown. Furthermore, core inflation rose 0.2%. This pushed the annual rate to 2.7%, higher than expected. Consequently, stagflation concerns began to surface.
Despite initial worries, the market found support. The University of Michigan Consumer Sentiment Index provided positive news. It unexpectedly rose to 60.7. Consumer inflation expectations also declined. The one-year outlook dropped to 5.0%. The five-year outlook fell to 4.0%. This positive sentiment helped offset earlier negative economic reports. Thus, the market recovered, continuing its upward trend.
US Treasury yields saw a modest increase. This was partly due to trade concerns. The 10-year yield rose to 4.27%. The 30-year yield climbed to 4.84%. The 2-year yield also moved up to 3.74%. Rising bond yields generally suggest falling bond prices.
The US Dollar Index gained 0.20%. It reached 96.95. This appreciation was influenced by the weaker Canadian dollar. Trade concerns played a role in currency movements.
Crude oil prices experienced a decline. Brent crude fell 0.33% to $66.47 per barrel. A stronger dollar often pressures oil prices.
Gold prices also decreased. Gold fell 1.90% to $3,284 per ounce. This typically happens when the dollar strengthens.
Overall, Dow-component value stocks performed well. This indicated a rotation into less overheated sectors.
In Consumer Staples, companies like Walmart, Costco, and P&G rose. Coca-Cola, AT&T, and Verizon also saw gains. These defensive stocks often perform well during uncertainty.
Technology stocks showed varied performance. While Eli Lilly, Microsoft, Apple, and Tesla dipped. However, Nvidia, Amazon, Google, and Meta all posted gains.
The automotive sector had mixed results. Ford and General Motors advanced. Yet, electric vehicle manufacturers like Tesla, Rivian, and Lucid declined.
Tesla initially fell sharply due to Canadian tariff concerns. However, it recovered following a tweet from Elon Musk. He announced the first Model Y deliveries to customers. This included videos of vehicles driving from the factory. Benchmark raised Tesla’s price target to $475. They cited the potential for robotaxis. Tesla’s Supercharger network reached 70,000 global stations. The company also hired a key autonomous driving expert. This individual came from GM’s Cruise division.
In semiconductors, the Philadelphia Semiconductor Index dipped slightly. Still, Nvidia surged 1.76%. This boosted the SMH ETF. TSMC, ARM, and Intel also saw gains. Nvidia announced the acquisition of CNTML. This is a Canadian AI software company. Nvidia’s market capitalization reached $3.84 trillion. This surpassed Microsoft, making it the world’s most valuable company. Microsoft’s market cap stood at $3.68 trillion. Apple remained at $3 trillion.
Meta Platforms saw a small gain. However, reports surfaced about Meta potentially discontinuing its open-source Llama LLM. There were also discussions about a potential €234 million fine. This fine relates to its “pay-or-consent” model in Europe.
Amazon received positive analyst commentary. JP Morgan suggested higher subscription fees could boost revenue. They projected an additional $3 billion if Amazon Prime fees increased. This would move from $139 to $159 annually.
Nike was the standout performer. Its shares soared 17% yesterday. The CEO’s optimistic outlook drove investor confidence. Despite a $1 billion tariff impact, Nike’s revenue rose 14%. Earnings per share also exceeded expectations. Other retail stocks benefited. Peloton gained 6%. Crocs rose 3%. Macy’s and Lululemon also posted gains.
The restaurant sector also performed well. Chipotle, Starbucks, and Papa John’s all saw increases. McDonald’s also gained 2%, closing above $280.
In healthcare, defensive stocks performed solidly. UnitedHealth, Novo Nordisk, and Johnson & Johnson were up.
The fintech sector saw gains. Visa, Mastercard, Goldman Sachs, and SoFi all advanced.
Airline stocks recorded increases. Boeing, United Airlines, and American Airlines all moved higher.
Notable declines included Palantir, which fell nearly 9% due to profit-taking. IonQ dropped 2%. SMC also saw a dip.
President Trump is considering an executive order. This order would enhance energy supply for AI development. This could potentially lead to more nuclear power plant construction.
China plans a significant investment. They are allocating $50 billion to domestic AI semiconductor production. This aims to reduce reliance on foreign technology.
Several countries are banning deepfake apps. Germany has reportedly banned such apps from Apple and Google stores. This is a move to protect personal information.
Nvidia has now seen five consecutive days of gains. This highlights the immense demand for AI-related technologies.
Disclaimer: This content is for informational purposes only and does not constitute financial advice. Consult a qualified financial advisor before making investment decisions.
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