Blockbuster inflation indicators have reignited the market's enthusiasm for the Fed to cut interest rates. The year-on-year growth of US CPI and core CPI in April slowed down from March as economists expected, rising by 3.4% and 3.6% respectively, the lowest growth rate in three years; The month-on-month growth of CPI in April did not stabilize as expected in March, but slowed down to 0.3%, and the core CPI monthly growth slowed to 0.3% as expected, slowing down for the first time in half a year, and also cooling down after the growth rate was higher than expected for three consecutive months.
The commentary said that the CPI inflation measure is finally taking a small step in the direction that Fed officials are considering starting to cut interest rates, and while the data may bring some hope that inflation will resume its downward trend, Fed officials will want to see more data and gain confidence in rate cuts. The day before the CPI release, Fed Chair Jerome Powell had already said that the Fed needed to be patient and let restrictive policy work. Nick Timiraos, a reporter known as the "New Fed News Agency", said that Wednesday's data was not enough to change the Fed's expectations about whether and when to start cutting interest rates, and the Fed may still not act before September, and may need two CPI reports to boost the Fed's confidence.
After the CPI release, investors increased their bets on a rate cut in September, with intraday swap contract pricing showing that traders expected the probability of a 25 basis point rate cut by the Fed by September rising to more than 80%. U.S. Treasury bond prices jumped intraday, yields plunged more than 10 basis points from intraday highs, and the yield on the benchmark 10-year U.S. Treasury hit a new low since April 10, when the March CPI exceeded expectations. The U.S. dollar index accelerated its decline, also hitting a new low since April 10; U.S. stocks opened higher across the board, and the three major stock indexes all hit record highs in closing, however, the retail stocks that soared in the first two days "retreated", and many stocks such as Game Station and AMC fell by double digits in intraday.
As the U.S. dollar accelerated its decline, non-U.S. currencies rose, the yen rose more than 1% against the U.S. dollar intraday, and the offshore yuan reversed a three-day losing streak, and the euro and the pound erased the decline since the announcement of the U.S. March CPI. USDJPY is by far the most sensitive dollar cross to the U.S. fixed income market, and the pair could also be the most volatile if U.S. interest rate investors bring forward the expected Fed rate cuts, the commentary said. Cryptocurrencies also rose, with Bitcoin rising more than $5,000 intraday and breaking through the $66,000 mark for the first time in more than three weeks.
Among the commodities, after the CPI was announced, boosted by the expectation of interest rate cuts, the precious metal gold and silver rose rapidly, gold closed up more than 1%, rushing to the highest level since late April, silver rose more than 4% intraday, and silver futures closed at a new high since 2013; Industrial metals mostly continued to rise, with New York copper futures continuing to approach the all-time highs set at the beginning of the Russia-Ukraine conflict in 2022 after Tuesday's historic short-selling, but the rally pared, giving up most of its gains after rising nearly 5% intraday.
The International Energy Agency (IEA) monthly report lowered the global oil demand growth forecast for this year for the second consecutive month, hitting oil prices, but the international crude oil intraday dramatic reversal, thrilling out of the nine-week trough set on Tuesday, CPI after the announcement of the short-term turn up, the U.S. Department of Energy announced last week U.S. EIA crude oil inventories fell more than expected for the second consecutive week, and crude oil, which fell more than 1% intraday, flattened the decline and turned up.
The S&P Nasdaq rose more than 1%, Nvidia led the technology giants, the chip stock index rose for four consecutive years, and retail stocks fell by double digits intraday
The three major U.S. stock indexes generally opened higher. The Nasdaq Composite Index and the S&P 500 Index extended their gains to more than 1% at midday, and the Dow Jones Industrial Average rose nearly 380 points, up more than 0.9%, both hitting the highest intraday record, and finally closed up collectively for two consecutive days, both of which were the largest gains since the announcement of the non-farm payrolls to boost interest rate cuts on May 3.
The Nasdaq closed up 1.4% at 16,742.39 points, rising for three consecutive days and hitting a record closing record for two consecutive days. The S&P closed up 1.17% at 5,308.15, closing above 5,300 for the first time in history. The Dow closed up 349.89 points, or 0.88%, at 39,908.00, a record closing high set on March 28.
The tech-heavy Nasdaq 100 index closed up 1.49%, a new all-time high, and the Nasdaq Technology Market Cap Weighted Index (NDXTMC), which measures the performance of the technology constituents in the Nasdaq 100 index, closed up 2.31%, hitting a new closing high for two consecutive days, both rising for four consecutive days. The Russell 2000, a small-cap index dominated by value stocks, closed up 1.14%, rising for three consecutive days to its highest level since March 28.
Among the major sectors of the S&P 500, only Tesla's consumer discretionary did not close higher on Wednesday and closed roughly flat, led by IT where chip stocks such as Nvidia rose nearly 2.3%, and real estate, utilities and healthcare rose more than 1%.
Including Microsoft, Apple, Nvidia, Google's parent company Alphabet, Amazon, Facebook's parent company Meta, Tesla, including the technology giants "Seven Sisters" mostly closed up, Nvidia rose first, and Tesla, the best performer on Monday and Tuesday, fell back nearly 1.4% at the beginning of the session and then quickly turned down, falling 2.5% in early trading and closing down 2%, falling from the closing high since May 6, which rose for two consecutive days.
Among the six major technology stocks of FAANMG, Microsoft closed up nearly 1.8%, rising for two consecutive days to its highest level since April 11; Apple closed up 1.2%, rising for three consecutive days to close at its highest level since January 29; Alphabet closed up 1.1%, rising for three consecutive days and setting a new closing record high; Meta closed up nearly 2.1%, rising for two consecutive days, refreshing the high since April 24 set last Friday; Amazon, on the other hand, fell more than 2% in early trading and closed down nearly 0.6%, and will fall back to its lowest level since May 2; Netflix rose 1.7% in early trading and turned lower at the end of the morning session to close slightly lower, continuing to move away from the high since April 16 set by Monday's rally.
Chip stocks continued to rise overall, with the Philadelphia Semiconductor Index and the semiconductor industry ETF SOXX closing up about 2.9% and 2.8%, respectively, outperforming the broader market, rising for four consecutive days to close at their highest level since March 7. Among chip stocks, Nvidia closed up about 3.6% and will rise for four consecutive days to the highest closing level since March 25; At the close, Broadcom and AMD rose more than 4%, Applied Materials rose more than 3%, Micron Technology and TSMC rose more than 2%, Intel, which had fallen more than 1% in early trading, rose 0.7%, and Arm fell more than 2%.
AI概念股总体继续上涨且跑赢大盘。 到收盘，超微电脑（SMCI）涨15.8%，被摩根士丹利将目标价大幅上调近19%、看好其AI服务器强劲增长势头后，戴尔（DELL）涨11.2%；被称为“小英伟达”、出售数据中心互连芯片的Astera Labs（ALAB）涨逾7%，BigBear.ai（BBAI）涨5%，Adobe（ADBE）涨近2%，C3.ai（AI）和Palantir（PLTR）涨超1%，甲骨文（ORCL）涨0.6%，SoundHound.ai（SOUN）涨近0.4%。
Retail stocks, which had risen sharply in the previous two days, retreated. Game Station (GME), which closed up about 60% on Tuesday, fell 17.3% at the open, and fell about 35.4% in early trading, closing down nearly 20%; AMC Cinemas (AMC), which closed up 32% on Tuesday, fell 31.2% in early trading and closed down 20.2%; SunPower (SPWR), which closed up about 60% on Tuesday, fell 31.4% intraday to receive 29.2%, Koss (KOSS), which closed nearly 41% higher on Tuesday, fell 31.5% in early trading and closed down 19.2%, and BlackBerry (BB), which closed nearly 12% higher on Tuesday, fell more than 9% in early trading and closed down 6.4%; Reddit (RDDT), the forum where the U.S. stock Tieba is located, which benefited from the sharp rise in retail stocks, fell more than 9% in early trading and closed down nearly 4.4%, and the brokerage Robinhood (HOOD) turned up after falling nearly 2.5% in early trading, closing up nearly 2.8%.
Popular Chinese concept stocks rebounded overall. The Nasdaq Golden Dragon China Index (HXC) rose nearly 0.7% at the beginning of the session and then quickly turned lower, falling nearly 1.2% in early trading and rising in late trading, closing slightly up 0.03%, not continuing to fall from the closing high since September 2023 set by Monday's rally of more than 3.7%. Chinese ETFs KWEB and CQQQ turned lower in early trading, closing up about 1.2% and 0.6%, respectively. Most of the new car-making forces continued to fall, at the close, NIO fell nearly 8%, Zeekr and Xpeng fell 3.5%, Li Auto fell 1.8%, and Xiaomi powder rose more than 1%. Among other stocks, at the close, Alibaba, which fell 6% after Tuesday's earnings report, rose nearly 1.9%, Pinduoduo also rose nearly 1.9%, Baidu, Station B rose more than 1%, JD.com rose 0.8%, and Tencent powder, which rose nearly 5% after Tuesday's earnings report, turned down about 1% in early trading, rose about 0.2% after the end of the session, and NetEase rose more than 0.1%.
The bank stock index rose for two days. The overall banking sector indicator, the KBW Bank Index (BKX), closed up about 1%, continuing to refresh its highest level since March 2023; The KBW Nasdaq Regional Banking Index (KRX) closed up 0.3%, and the SPDR S&P Regional Banking ETF (KRE) closed up nearly 0.4%, both continuing to renew their highs since January 30.
Among the volatile stocks, Warren Buffett's Berkshire Hathaway disclosed that it bought nearly 26 million shares in the first quarter and held its ninth largest position in the quarter, and Chubb (CB), a property and casualty insurance company, rose more than 6% after hours. Satellite communications service provider AST SpaceMobile (ASTS) rose more than 40% in after-hours after the first-quarter loss was lower than expected and it announced an agreement with AT&T to connect its space-based cellular broadband network to mobile phones. Cisco (CSCO), which closed up 1.5%, reported higher-than-expected third-quarter earnings and revenue after hours, and its stock price rose nearly 5% after hours; Chemical product maker Hawkins (HWKN) fell more than 6% in after-hours hours after warning of cautious optimism about the industrial business, saying economic and competitive pressures continue to market multiple customers and market demand.
In terms of European stocks, the pan-European stock index on interest rates rose for nine consecutive trading days. The Euro Stoxx 600 index hit a record closing high for the seventh consecutive day. The stock indexes of major European countries rose together, announcing that GDP growth in the first quarter was 0.7%, the first growth rate among the major economies in the euro area, and the growth rate was more than twice the growth rate of the euro area, the Spanish stock index rose more than 1%, leading the country, French stocks hit a record closing record for two consecutive days, and German stocks that fell for two consecutive days and British stocks that rose twice in a row both refreshed the closing record high set last Friday.
Among all sectors, European bond yields also fell due to rising expectations of interest rate cuts in the United States, led by interest-rate sensitive real estate closed up 3.6%, technology rose nearly 1.1%, and medical rose nearly 0.7%, thanks to the lower-than-expected decline in adjusted profits in the first quarter, German listed pharmaceutical company Merck closed up 4.8%. Among other stocks that reported financial reports, Commerzbank, whose quarterly profit exceeded expectations and hit a ten-year high, rose 5.1%; London-listed consumer credit reporting data firm Experian surged 8.1% to lead gains in the STOXX 600 with positive annual organic revenue growth guidance. Finnish biofuels producer Neste, which lowered its profit guidance for renewable products this year, fell 14.8 percent, the largest decline among Stoke constituents.
After the CPI, the yield on the 10-year Treasury note plunged more than 10 basis points to a new five-week low
European government bond prices rose, and yields followed the decline of US Treasuries intraday. By the end of the bond market, the yield on the UK's 10-year benchmark government bond was about 4.06%, down about 11 basis points in the day, and the US stock market fell below 4.06% in early trading, refreshing the low since April 10; The yield on the 2-year Treasury bond was around 4.23%, down about 7 basis points on the day; The yield on the benchmark 10-year German bunds was about 2.42%, down about 13 basis points during the day, and after the US CPI was released, it fell below 2.42%, refreshing the low since May 7; The yield on the 2-year German bond was around 2.89%, down about 9 basis points on the day.
The U.S. 10-year benchmark Treasury yield rose above 4.45% in early Asian trading to refresh the daily high, and the U.S. CPI quickly fell below 4.40% to 4.34% after the release, refreshing the low since April 10 set last Tuesday, falling below the 50-day moving average and the 100-day moving average, with an intraday decline of slightly more than 10 basis points, and about 4.34% by the end of the bond market, down about 10 basis points in the day.
The 2-year U.S. Treasury yield, which is more sensitive to the outlook for interest rates, tested 4.83% in early trading in the Asian market to refresh its daily high, and was at the 4.78% level before the CPI was announced, and quickly fell below 4.71% after the announcement, refreshing the low since April 5, falling below the 50-day moving average and the 200-day moving average, falling more than 11 basis points in the day, and about 4.72% at the end of the bond market, falling nearly 10 basis points in the day, and the yields on other maturities of U.S. bonds have fallen for three consecutive days.
The U.S. dollar index hit a five-week low, the yen rose more than 1% during the session, and Bitcoin rose $5,000 to break through the 66,000 mark
The ICE U.S. Dollar Index (DXY), which tracks a basket of six major currencies such as the U.S. dollar against the euro, was close to 105.10 at the beginning of the Asian market to refresh the daily high, and maintained a downward trend after turning down, the decline expanded rapidly after the US CPI was announced, falling below 104.50, and the decline narrowed in early trading, once regained 104.80, and then the decline expanded again, and the U.S. stock market fell below 104.30 after closing, down nearly 0.7% during the day, refreshing the low since the US March CPI was announced on April 10.
By the end of the foreign exchange market on Wednesday, the dollar index was at the 104.30 line, down nearly 0.7% during the day, falling for three consecutive days; The Bloomberg Dollar Spot Index, which tracks the greenback against 10 other currencies, fell about 0.6% during the day, falling for two consecutive days to its lowest level since April 9.
Among non-U.S. currencies, the yen rebounded sharply intraday after falling for three consecutive days, and the dollar fell below 154.80 against the yen in early U.S. trading, refreshing the low since May 7, falling nearly 1.1% during the day, and the U.S. stock closed slightly below 155.00, down about 1% during the day; The euro rose against the US dollar after the US CPI was announced, and the US stock market was close to 1.0890 after the close, refreshing the high since April 9, and rising more than 0.6% in the day; GBP/USD traded near 1.2690 after the U.S. stock market close, updating its highest level since April 10, rising nearly 0.8% on the day.
The offshore yuan (CNH) against the US dollar in the Asian market in the morning of the refresh day as low as 7.2422, after the morning turn to maintain the rally, the US CPI quickly rose to 7.2056 after the announcement, up 342 points in the day, since May 6 for the first time intraday rise above 7.21, refreshing the high since May 6, Beijing time on May 16, the offshore yuan against the US dollar reported 7.2179 yuan, up 219 points from Tuesday New York, rebounding after three consecutive days.
After the US CPI was announced, Bitcoin (BTC) quickly broke through $64,000, rose above $65,000 and $66,000 in early and midday trading respectively, and rose above $66,400 in late trading, breaking through the $66,000 mark for the first time since April 24, rising slightly more than $5,000 and more than 8% from the intraday low in early Asian trading, and the U.S. stock market closed above $66,000, rising more than 7% in the last 24 hours, and falling $66,000 after the close.
Crude oil fell more than 1% intraday before turning up from a nine-week low
International crude oil futures reversed in a V-shape after turning down intraday. When the Asian market refreshed its daily high, U.S. WTI crude oil rose above $78.70, up more than 0.9% during the day, and Brent crude oil was close to $83.10, up more than 0.8% during the day. When U.S. stocks refreshed their daily lows in early trading, U.S. oil fell to $76.70, down 1.7% on the day, and cloth oil fell below $81.10, down 1.6% on the day.
Eventually, crude oil rebounded after retreating on Tuesday. WTI crude oil futures for June delivery closed up $0.61, or 0.79%, at $78.63 a barrel; Brent crude oil futures for July delivery closed up $0.37, or 0.45%, at $82.75 a barrel, and U.S. oil both moved off Tuesday's refreshed front-month contract closing lows since March 12.
U.S. gasoline and natural gas futures rebounded. NYMEX June gasoline futures, which retreated on Tuesday to refresh their lowest level since Feb. 21, closed up 1.5% at $2.4968 a gallon; NYMEX June natural gas futures closed up 3.51% at $2.416/MMBtu, a nearly four-month high.
New Zealand copper continued to approach the all-time high nearly two years ago, gold rose more than 1% after CPI, and silver hit an 11-year high
London base metals futures continued mostly higher on Wednesday. London nickel, which led the rally, rose more than 2% and rebounded to its highest level since late April. London copper, which retreated on Tuesday, also rebounded, rising just over 1% to close above $10,200 for the first time in two years, hitting its highest since April 2022 on Monday. London aluminum closed up nearly 1.9%, approaching $2,600, a three-week high, and London Xi and London lead both rose for three consecutive days. London lead hit a new high since November last year for three consecutive days, and London Xi hit a new high since late April for three consecutive days. The London zinc fell to the highest level since March last year after rising for four consecutive days.
New York copper futures rose for five consecutive days, and COMEX July copper closed up 0.6% at $4.9245 per pound, hitting a two-year closing high for three consecutive days, and continuing to approach the closing record high set by copper on March 4, 2022, rising as high as $5.128 intraday, up nearly 4.8% on the day.
After the release of the U.S. CPI, gold futures in New York quickly rose to $2,385, and spot gold approached $2,379. U.S. stock gold futures rose above $2,396 at midday, up more than 1.5% during the day, and spot gold rose above $2,390, up nearly 1.4% during the day, both of which refreshed their highs since April 22.
By the close of U.S. stock gold futures at noon, COMEX June gold futures closed up 1.48%, the biggest increase since April 5, rising for two consecutive days at $2394.9 per ounce, refreshing the closing high since April 19 set last Friday. At the close of U.S. stocks, spot gold was above $2,387, up nearly 1.3% on the day.
New York silver futures rose for two consecutive days, COMEX July silver futures closed up about 3.6% at $29.73 an ounce, a new high since February 15, 2013 the main contract closed, after the close, silver futures rose further, rose to $29.98, up nearly 4.5% from Tuesday's close.
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