In the early morning of the 15th, Beijing time, U.S. stocks were mixed at midday on Tuesday. The US PPI data for April beat expectations, prompting the market to downgrade bets on the Federal Reserve to cut interest rates this year. Markets are focused on Wednesday's CPI data to further gauge the Fed's interest rate path. Powell said the Fed needs to be patient with inflation and is likely to keep its policy rate at its current level.
The Dow fell 2.22 points, or 0.01 percent, to 39,429.29, the Nasdaq added 46.63 points, or 0.28 percent, to 16,434.86 and the S&P 500 added 2.31 points, or 0.04 percent, to 5,223.73.
Fed Chair Jerome Powell's speech on Tuesday was watched. He said earlier this month that even though inflation data has soared in recent months, he expects the Fed's next move to be "unlikely" to raise interest rates.
"We don't expect this to be an easy road," Powell said. But these [inflation figures] were higher than anyone expected. So this tells us that we need to be patient and let the restrictive policies work. ”
"It may take longer than expected for restrictive policy to work in order to bring inflation down," Powell said. We need to bring inflation back to 2%. ”
Powell reiterated that he does not believe that the next step may be to raise interest rates, and is more likely to keep the policy rate at its current level.
The U.S. 10-year Treasury yield rose to its highest level since May 3 on Tuesday, and the 2-year yield rose to its highest level since May 2, after April PPI data exceeded expectations, suggesting that inflationary pressures remain elevated and prompting the market to cut interest rate cut expectations.
On Tuesday's economic data front, the U.S. Department of Labor reported that the U.S. producer price index (PPI) rose 0.5% month-on-month in April from the previous month's data and 2.2% year-on-year from the same period last year.
Economists polled by Dow Jones had expected the PPI to rise 0.3% month-on-month in April.
The PPI rose more than expected in April, raising concerns that inflation is still too stubborn for the Fed to begin easing policy. This prompted traders to cut their expectations for interest rate cuts. Swap contracts are currently expecting a rate cut by the end of the year at 40 basis points.
"What we are most concerned about at the moment is what the PPI means for the Fed's preferred PCE deflator to measure core consumer price inflation," Paul Ashworth, chief North America economist at Capital Economics, said in the note. ”
Several categories in the PPI report used to calculate the Fed's preferred personal consumption expenditures price index slipped in several categories.
Another data showed that in April, the U.S. small business confidence index improved for the first time this year, and the proportion of business owners planning to raise prices fell to a one-year low as sales expectations improved.
According to the National Federation of Independent Business (NFIB), the SME confidence index rose 1.2 points to 89.7 from its lowest level since 2012. While the index was higher than economists expected, it was still well below the long-term average of 98.
The closely watched Consumer Price Index (CPI) report will be released on Wednesday, with economists expecting the consumer price index to rise 0.4% month-on-month and 3.4% year-on-year in April.
Consumer inflation data is one of the most important data of the month. "Today is a warm-up, but people are waiting for tomorrow's U.S. CPI data," said Jan von Gerich, chief strategist at Nordea.
Economists expect core CPI to rise 0.3% month-on-month in April, down from a 0.4% increase in the previous month. Core CPI is expected to fall to 3.6% in April from 3.8% in March. Investors will be watching closely to see if some of the surprise growth in the first quarter is a flash in the pan or a worrying trend, the latter of which could force the Fed to keep interest rates unchanged throughout the year.
"I think expectations of higher inflation have risen, so it's hard to beat expectations," Gerich said. You've had three surprises in a row, so if the data is as expected, then interest rates will fall. ”
Brent Schutte, chief investment officer at Northwest Mutual Wealth Management, said: "It's not uncommon for Wall Street and the real economy to see the economy differently – different perspectives stem from different concerns. Stock market movements are based on expectations of future economic performance, not necessarily current conditions. ”
"But while these divergent views are not unusual, they highlight the potential risks for investors who are betting that a rate cut will falter the U.S. economy," he added. ”
Stocks in focus
Nvidia will release its financial results for the first quarter of 2024 on May 22. Ahead of its earnings release, Wall Street institutions have recently raised their share price targets. Goldman Sachs recently gave a 12-month price target of $1,100 (up to $875 in March) as institutions raised their EPS (earnings per share) forecasts for fiscal years 2025 to 2027 by an average of 8%, indicating continued strong demand and supply improvement for AI servers.
Renjie Zhu, director of manufacturing engineering at Tesla, announced his departure. It is understood that at the beginning of 2023, he will be transferred from Tesla's Shanghai Gigafactory to Austin, Texas, as the director of manufacturing engineering, responsible for the launch and production of Tesla's Cybertruck project.
It has also been reported that Tesla has begun to rehire some of its employees after laying off nearly 500 people in its Supercharger team late last month, including Max Dezegel, director of North American charging operations. It is not yet clear how many people will be rehired. After announcing the layoffs in the supercharging team, Musk promised last week to invest more than $500 million this year to expand the charging network and improve the quality and operation time of existing charging stations.
Apple's mixed reality headset Vision Pro recently passed the national 3C quality certification, which means that it will soon be available in China. According to official information, the product is named "wearable computer", the model number is A2117, and it is produced by Likai Precision OEM.
The nation's top auto safety regulator has opened an investigation into Waymo, Alphabet's self-driving car subsidiary, after 22 accidents involving the company's cars that collided or may have violated traffic laws. The National Highway Traffic Safety Administration's (NHTSA) Office of Deficiencies Investigations conducted an initial assessment after receiving reports of Waymo vehicles crashing into objects such as gates and parked vehicles. The agency also cited other examples of what the company's self-driving system appears to be violating traffic control devices.
Meta Platforms, the parent company of Facebook and Instagram, is testing new tools that will allow advertisers to create marketing materials, including images and messages, using generative AI prompts. If an advertiser uploads a photo of their product, Meta's AI tool can now generate new, different images for that product to use for marketing purposes. For some advertisers, this feature is already live. The company said Tuesday that in the coming months, marketers will also be able to use text prompts to create different versions of the original image.
On Tuesday, it was reported that Adam Selipsky, the chief executive of Amazon's cloud computing business, will resign next month. Amazon said Matt Garman, senior vice president of sales and marketing for Amazon Web Services, will take over his position after leaving the company on June 3.
In a memo to employees, Selipsky said he would be leaving Amazon AWS after about 14 years to spend more time with his family, and said the "future is bright" for the cloud business.
WSB concept stocks such as Game Station and AMC rose sharply.
Novavax Pharma is in the spotlight, with the stock surging nearly 200% in the first two trading days.
Vodafone announced organic Adjusted EBITD growth of 2.2% for fiscal 2024, in line with expectations.
German air car manufacturer Lilium has announced that it will invest in a new plant in France with Swiss nickel refining company KL1.
Sony's fourth-quarter results beat expectations, announcing a buyback plan of up to 250 billion yen.
Paysafe's Q1 results beat expectations, reiterating full-year guidance.
Coinbase has previously suffered a system-wide outage.
Automakers Stellantis Group and Leapmotor announced that the two companies have passed all necessary approvals for the establishment of Leapmotor International, and the Stellantis Group-led Leapmotor International has been officially established.
It is understood that Leapmotor International is 51% and 49% owned by Stellantis Group and Leapmotor respectively, headquartered in Amsterdam, the Netherlands, and Xin Tianshu from the management team of Stellantis Group China serves as the CEO of Leaprun International.
Alibaba's fourth-quarter revenue was 221.87 billion yuan, up 6.6% year-on-year.
Zhihu attracted attention, and Alibaba opened a position in Zhihu in the first quarter.