U.S. stocks close: The S&P and NASDAQ hit nine-and-a-half-month highs, and the China Composite Index rose 4% to outperform strongly
With broad bipartisan support, the U.S. House of Representatives voted to pass the debt ceiling bill on Wednesday night, "breaking through" the Democratic-controlled Senate as soon as Thursday. Risk appetite rose rapidly, with U.S. stocks rising to daily highs after midday, the Dow rising more than 200 points and the NASDAQ rising more than 1%.
A number of data show that it is difficult for employment in the United States to cool down, and ADP private sector employment added 278,000 in May, far exceeding expectations of 180,000 and only slightly lower than the previous value. Last week, 232,000 initial jobless claims and 1.795 million renewed claims were smaller than expected.
Markets await Friday's release of U.S. non-farm payrolls for May, which is expected to add 190,000 people, cooling from 253,000 in the previous month. At the same time, the final value of non-farm labor costs in the United States increased by 4.2% in the first quarter, well below expectations of 6%, showing signs of cooling inflation.
The ISM manufacturing index in the United States was 46.9 in May, weaker than expected and the previous reading, and fell into contraction for seven consecutive months, the longest cycle since 2009. New orders contracted faster to the second-worst reading in three years, and the price payments index fell the most in nearly a year. In addition, the final Markit manufacturing PMI in the United States for May was 48.4, lower than expected and the lowest since February, and the new orders index fell into contraction territory.
This year, Philadelphia Fed President Harker reiterated that the Fed is close to the point where it is pausing interest rate hikes, "more willing to observe other economic data other than the headline inflation rate, there is no need to keep raising interest rates." Bullard, the 2025 voting committee and the "eagle king" St. Louis Fed President, said that after several rate hikes, monetary policy has improved, and the prospect of further downward inflation looks good, but it is not fully guaranteed.
The futures market lowered the Fed's interest rate hike expectations, believing that the probability of a 25 basis point rate hike in June was less than 24%, and it was as high as 67% a day ago, and the probability of suspending the rate hike was 76%; The probability of a rate hike in July is about 4/5, while the probability that the tightening cycle is now completely over is 1/5.
Eurozone harmonized CPI inflation slowed more than expected in May, rising 6.1% year-on-year, the lowest since the Russia-Ukraine conflict in February last year. The dovish speech of the head of the Bank of France said that the rest of the ECB's interest rate hikes will be relatively small. But ECB President Christine Lagarde said there was no clear evidence that core inflation had peaked and that further tightening was necessary, and the minutes of the May meeting also called the trend of core inflation worrying.
The U.S. Treasury issued a three-day cash management note on Thursday in response to fiscal disbursement arrangements before the debt ceiling agreement went into effect, with a bid rate of up to 6.150%, while also delaying next week's three- and six-month Treasury bill sales plan, which plans to increase the auction size of six-month Treasury bills from $56 billion to $58 billion.
The S&P and NASDAQ rose 1% to their nine-and-a-half-month highs, Apple was near record highs, and the China Composite Index was up 4% to outperform
Thursday, June 1 was the first trading day of June, and only the Dow fell at the opening of the three major indexes of U.S. stocks. The Dow fell more than 200 points at the beginning of the session, dragged down by the poor earnings component Salesforce, which fell nearly 8% at one point.
After midday, U.S. stock gains expanded rapidly and continued to update daily highs, with the Dow rising as high as nearly 260 points or 0.8%, regaining 33,000 points, the S&P 500 rising as high as 1.3% and regaining 4,200 points, and the Nasdaq up as much as 1.6% and regaining 13,000 points.
By the close, the S&P market was back at its nine-and-a-half-month high since August 19, with Dow and Russell small-cap stocks close to recovering losses since Friday, with the Nasdaq hitting its highest since August 16 and the Nasdaq 100 hitting its highest nearly 16-month high since early April:
The S&P 500 closed up 41.19 points, or 0.99%, at 4,221.02. The Dow closed up 1,530.30 points, or 0.47 percent, at 33,061.57. The Nasdaq closed up 165.70 points, or 1.28%, at 13,100.98, marking the first six-week winning streak since January 2020. The NASDAQ 100 rose 1.3% and Russell 2000 small-cap stocks rose 1.05%.
Most of the 11 S&P sectors closed higher, with information technology/technology up 1.3%, industrials, raw materials, energy, optional consumption, telecommunications services, and financials up 1.26%-1.09%, consumer goods down 0.09%, and utilities down 0.78%.
U.S. stock gains quickly extended to daily highs after midday, with the Nasdaq rising for six consecutive weeks the longest since the beginning of 2020
Star tech stocks rose. "Meta-universe" Meta rose 3% and Netflix rose 2%, both refreshing 16-month highs. Apple rose 1.6 percent, approaching an all-time high set in January. Amazon rose nearly 2 percent, another eight-and-a-half-month high. Microsoft turned up more than 1%, approaching its highest level since late 2021. Google A rose 0.7%; Tesla fell more than 2% before turning 1.8% higher and updating a two-month high.
Chip stocks also rose. The Philadelphia Semiconductor Index rose 1.6% to re-enter 3,500 points to break off a one-week low. AMD rose 1% to a more than 16-month high. Nvidia, which fell nearly 6% yesterday, rose more than 5%, approaching an all-time high. Intel turned 1% lower and TSMC U.S. shares rose 0.3%.
AI concept stocks continue to pullback. The C3.ai market fell more than 24% at the beginning of the market and closed down more than 13%, and SoundHound fell nearly 4% .ai, both basically erasing the gains since Friday. BigBear.ai fell more than 5% and returned to a two-month low.
C3.ai fell more than 24% at the beginning of the market and closed down more than 13%
On the news, Meta rushed to launch the latest Quest 3 virtual reality headset before next week's Apple WWDC developer conference, which will be released this fall, with an initial price of $499 and an estimated Apple headset cost of at least $3,000. Nvidia CEO Jensen Huang plans to travel to China this month to meet with executives from Tencent, ByteDance and other companies, saying that the H100 is exclusively manufactured by TSMC and will not consider adding a second foundry. C3.ai fourth-quarter loss was lower than expected but poor guidance for the next quarter and fiscal year 2024.
Popular China outperformed strongly. China ETF KWEB rose nearly 5%, CQQQ rose nearly 4%, and Nasdaq Golden Dragon China Index (HXC) rose 4%, off a half-year low. Among the four components of the Nasdaq 100, JD.com, Pinduoduo and Baidu all rose about 6%, and NetEase rose nearly 1%. Among other stocks, Alibaba and Tencent ADR rose more than 4%, Station B fell nearly 8% and turned up more than 1%, and the "three fools of car manufacturing" all turned up at the end of the day.
On the news, the report card of new energy vehicle companies in May was announced: BYD rode the dust, Aion hit a record high, and NIO and Xiaopeng fell behind. Alibaba Cloud Tongyi Listening has started the public beta, and users can experience all AI functions during the public beta period (June 1-30, 2023). Station B's first-quarter revenue increased by 0.3% year-on-year, and its net loss narrowed by 72% year-on-year.
Indexes of bank stocks rebounded from fresh two-week lows. The Philadelphia Stock Exchange KBW Bank Index (BKX) rose 1.6 percent, hitting its lowest since October 2020 on May 4. KBW Nasdaq Regional Banking Index (KRX) rose 2.5%, its lowest since November 2020 on May 11; The SPDR S&P Regional Bank ETF (KRE) rose 2%, hitting its lowest since October 2020 on May 4.
Bank stock index rebounds about 2% from two-week low
The "Big Four" rose about 1 percent, while Goldman Sachs, which plans further layoffs as the economy became tougher, fell as much as 3 percent. Among the key regional banks, PacWest Bancorp rose more than 4 percent, Keycorp rose 3 percent and Western Alliance Bancorp and Zions Bancorporation rose more than 1 percent.
Other stocks with large movements include:
Enterprise SaaS software giant Salesforce closed down 4.7 percent with its slowest first-quarter revenue growth in thirteen years and higher-than-expected capital spending, warning of lower customer demand for advisory deals despite beating expectations in the first quarter and raising full-year profit guidance.
Macy's turned more than 1% higher after falling nearly 6%, off a more than two-year low since January 2021, with first-quarter earnings beating expectations but poor revenue, saying demand trends for consumer discretionary weakened significantly after March and sharply cutting full-year earnings and revenue guidance.
High-end fashion department store Nordstrom rose nearly 5 percent on an unexpected 7 cent per share in the first quarter, compared with market expectations of a loss of 10 cents per share and revenue that beat expectations, but also predicted a tougher retail consumption environment in the future.
Dollar General fell nearly 20 percent, at least its biggest drop since March 2020 and fell to a three-year low, with first-quarter revenue and earnings beating expectations, lowering its full-year outlook and saying the economic environment was more challenging than previously expected.
Target second-largest retailer in the U.S. turned higher after falling more than 3 percent, still not far from its August 2020 low, with JPMorgan downgrading its rating to "neutral" from "overweight," citing weak consumer spending, lost market share and deflationary concerns in the miscellaneous sector.
Underwear retailer Victoria's Secret fell nearly 15 percent to a record low at one point, lowering its full-year revenue growth guidance to a lower single-digit range. Pet supplies e-commerce Chewy rose more than 21% to its biggest gain in a year, reaching a two-month high, with positive earnings and improved full-year guidance.
Luxury electric car maker Lucid Group fell more than 16 percent to a five-month low on plans to raise $3 billion through a private placement offering, with Saudi Arabia's sovereign wealth fund investing $1.8 billion as a major player, which already owns about 60 percent of the company.
Cloud software company Okta fell as deep as 23 percent, its biggest drop in nine months, closing down nearly 18 percent to its lowest in a month, with a positive quarter, but slower subscription revenue growth and a deteriorating macro environment led to a smaller deal. Cybersecurity software developer CrowdStrike's losses narrowed sharply after falling more than 11 percent, with first-quarter revenue and earnings beating expectations, but analysts worried about slowing annual recurring revenue growth.
Morgan Stanley, which called enterprise flash leader Pure Storage an "evolving AI opportunity," jumped 19 percent to its highest in nearly 16 months, citing the company's agreements with more than 10 leaders in self-driving car development and its penetration into new industries.
Dell Computer unexpectedly released its earnings report in advance, and its first-quarter revenue and earnings exceeded expectations, and its stock price rose 6% at the end of the day. Fashion sports brand Lululemon's first-quarter revenue rose 24% year-on-year and raised its full-year revenue guidance, rising more than 12% after hours.
European stocks rose, with the pan-European Stoxx 600 index closing up 0.78%, halting a three-day losing streak and coming off a two-month low, with gains in almost all sectors, led by mining and media stocks rising about 2%. The German stock index rose more than 1%, and the Italian stock index rose more than 2%. Swedish commercial real estate company Nordic Samhalls Construction Group closed down 1 percent, falling nearly 28 percent yesterday, its biggest drop in history, as it looks to find investors to save its life.
Two-year U.S. Treasury yields fell as much as 10 basis points to a one-week low, falling for four consecutive days from a two-and-a-half-month high
U.S. Treasury yields widened short-term losses following the release of ADP's "small non-farms" employment and manufacturing data, with two-year yields more sensitive to monetary policy falling as much as 9 basis points to 4.31%. U.S. stocks opened an hour after U.S. Treasury yields narrowed their declines, with two-year yields falling less than 3 basis points to 4.36% and 10-year yields falling 4 basis points to 3.60%.
U.S. Treasury yields extended their losses again after midday. Two-year yields fell as deep as more than 10 basis points and briefly lost 4.30%, erasing half of the gains since last Wednesday; The 10-year yield fell as much as 7 basis points to 3.57%, both falling for four consecutive days from their highs since March 10, and the 10-year yield erased more than half of its gains since May 18, hitting a two-week low.
U.S. Treasury yields deepened their losses after midday, with two-year yields falling as much as 10 basis points
European sovereign bond prices generally rose after the release of data that inflation cooled more than expected. The benchmark 10-year German bond yield fell more than 3 basis points in late trading and near daily lows, while Spanish and Greek 10-year yields fell nearly 5 basis points. The yield on the 10-year note fell nearly 7 basis points and fell to the 4% mark, while the yield on the two-year note fell more than 4 basis points.
Oil prices rose about 4% intraday, U.S. oil jumped nearly $3 and regained the $70 mark, and European natural gas fell 9%
Lower-denominated currency dollars and media findings suggesting OPEC oil production fell by 500,000 b/d in May, pushing oil prices higher.
WTI crude for July delivery closed up $2.01, or 2.95 percent, at $70.10 a barrel. Brent July futures closed up $1.62, or 2.23 percent, at $74.28 a barrel.
U.S. oil WTI rose as high as nearly $3 or 4.4%, returned above the $70 mark and once rose above $71, Brent rose as high as $2.65 or 3.7%, once stood at $75, both stopped falling for two days and got out of the four-week low.
Oil prices rose about 4% intraday, and U.S. oil briefly rose above $71
On the news, Goldman Sachs and sources from within the alliance of oil producers said that OPEC+ may not announce additional production cuts over the weekend, but keep crude oil production unchanged. U.S. EIA oil inventories rose nearly 4.5 million barrels more than expected last week, while gasoline inventories continued to decline by nearly 210,000 barrels.
ICE UK gas futures fell more than 14% in late trading, while European benchmark TTF Dutch Natural fell 9%, halting a two-day winning streak and hitting a two-year low since May 2021. U.S. natural gas futures fell as much as 5.6% in July, falling for four straight days to the lowest in nearly four weeks.
The dollar index fell below 104 to break a two-and-a-half-month high, commodity currencies rose more than 1%, and the offshore yuan broke off a half-year low
Rising expectations that the Federal Reserve would not raise interest rates in June, combined with a receding tide of safe-haven demand related to the debt ceiling, led DXY, a basket of six major currencies, fell 0.8 percent and fell below the 104 mark, out of a two-and-a-half-month high and erasing all gains since Wednesday.
The dollar posted its biggest monthly decline since January
The euro rose 0.8% against the dollar and regained 1.07, coming out of a two-month low, with money markets pricing in an 85% chance of a 25 basis point rate hike by the ECB on June 15. The yen rose above 139 against the dollar, basically recovering its losses since Wednesday and coming out of a half-year low.
Commodity currencies Canadian dollar and Australian dollar both rose more than 1% against the dollar, the offshore yuan briefly pushed down a six-month low of 7.14 yuan against the dollar, and U.S. stocks turned higher and rose above 7.11 yuan during the session. Both the onshore and offshore renminbi fell nearly 3% against the dollar in May.
Mainstream cryptocurrencies are mixed. Bitcoin, the largest leader by market capitalization, fell nearly 1% and hovered at $27,000, essentially erasing the gains since Saturday, while Ethereum, the second-largest company, turned slightly higher and rose above $1,870, erasing nearly half of its gains since Saturday.
Bitcoin fell nearly 1% and hovered at $27,000
Spot gold rose as much as 1% to a near two-week high, with industrial metals mostly turning higher, with London copper up nearly 2% and London nickel up 3.5%
A combination of lower dollar and Treasury yields, as well as rising market expectations of a pause in interest rate hikes in June, boosted gold prices. COMEX gold futures for June ended up 0.72% at $1978.00 an ounce; August futures closed up 0.67% at $1995.5 an ounce.
Spot gold rose as much as 1% or $20, standing at $1,970 and briefly above $1,980, rising from a more than two-month low for four consecutive days to a nearly two-week high. May fell more than 1 percent on expectations of a rate hike, the first monthly decline in three months.
Gold futures briefly rose above the $2,000 mark
London industrial base metals mostly turned higher:
London copper rose 1.9%, rising above the $8,100 and $8,200 levels in succession, and fell below the $8,000 psychological barrier last Wednesday, falling for five weeks to a six-month low, and fell more than 6% in May, mainly due to concerns about the global economic trend and industrial demand outlook.
Lun Aluminum, which rose 1% yesterday, rose another 1.6%, off from the lowest since October last year, set last Wednesday. Lunzinc rose 0.8%, off the lowest since July 2020 set on Thursday. London nickel rose 3.5 percent and regained $21,000, off a nine-month low. Lunxi and Lunhe lead fell slightly.