Moderate losses at the end
Strong week ends on US stock exchanges
06/16/2023, 10:59 p.m
The fact that interest rate peaks are at least in sight seems to have boosted the stock markets in the past few days. Moderate losses were recorded today. But experts know: A weak day after a strong week is nothing unusual.
A strong stock market week in New York ended on Friday – but Wall Street was not quite able to build on the momentum of the past few days at the end of the week. On a weekly basis, however, there is still a big plus in front of the indices; the S&P 500 has even had its longest winning streak since November 2021 with five weekly gains. True, S&P 500 marched like Nasdaq Composite to fresh 14-month highs early in the course, but then the air started to get thinner – especially on the big expiration day, which usually features heightened volatility.
The Dow Jones Index fell 0.3 percent to 34,299 points. The S&P 500 was down 0.4 percent and the Nasdaq Composite was down 0.7 percent. The 1,169 (Thursday: 2,192) winners on the Nyse faced 1,792 (791) losers. 82 (82) shares closed unchanged.
A weak day is nothing unusual after a strong week, they said. What is more surprising is how well the markets have held up. Because traders are finding it increasingly difficult to explain the recent winning streak. At least the uncertainty about the future interest rate path in the USA and the euro zone has given way, and the respective interest rate peaks are now becoming clearer. Nevertheless, the forthcoming interest rate hikes should not necessarily encourage people to buy shares. Because both the US Federal Reserve and the European Central Bank had made hawkish statements about the future interest rate path.
Will China bring momentum?
Meanwhile, China was repeatedly cited as an argument in favor of equities. Because the interest rates that have been lowered there so far point very clearly in the direction of stimulating the economy. This was underpinned by media reports that the Chinese government was planning an economic stimulus package and was already considering concrete steps to finance it. “China could become the economic engine again,” said a voice in the trade.
On the bond market, the quotations came back after the previous day’s increase, so the yields – especially at the short end of the market – rose. In view of the hawkish statements made by the central bankers on both sides of the Atlantic, traders gave the market a little more realism. The market’s skepticism about monetary policy with interest rates continuing to rise is exaggerated, and the Fed is said to be unlikely to rethink interest rate cuts in the short and medium term. Richmond Fed President Tom Barkin recently recalled this, emphasizing that further rate hikes are needed to combat inflation.
Dollar stabilizes again
Stabilized on the foreign exchange market dollar following the previous day’s slide after the ECB’s rate signals fueled the euro. Investors are now turning their attention to the Fed’s pending rate hikes. However, the common currency stayed well above the $1.09 mark at the elevated level. The yen came under pressure against the greenback following the confirmation of ultra-loose monetary policy in Japan.
The oil prices advanced in late trade. Here, the participants were again more optimistic about global demand. Among other things, they referred to the latest monthly report from the IEA, which expects strong growth in the second half of the year. The measures apparently planned by Beijing to stimulate the economy were also mentioned. At gold meanwhile, little was happening.
Advances in AI are driving
Among the individual shares drew Adobe by 0.9 percent. The software maker posted better-than-expected results in the second quarter. The result was supported by strong software demand driven by advances in artificial intelligence (AI). Adobe expects further growth for the current quarter.
walt Disney fell 1.7 percent. The entertainment company loses Christine McCarthy, at least temporarily, as senior executive vice president and CFO for family reasons. Kevin Lansberry, Disney Parks, Experiences and Products executive vice president and CFO, will serve as interim CFO effective July 1.
Virgin Galactic made a price jump of 16.7 percent. The company plans to begin offering space tourism flights later this month. Enovix advanced 10.9 percent. The battery maker hit its quarterly production target ahead of schedule.
Squarespace gained 4.3 percent. The provider of digital tools for creating websites has signed a definitive agreement with Alphabet subsidiary Google to acquire about 10 million domains from the search giant. A price for the transaction was not mentioned.
Clene plummeted 18.8 percent. The biopharmaceutical company plans to raise fresh capital by issuing common stock and related warrants. The specialty chemicals company Cabot has cashed in on its profit forecast, the course is down by 10 percent.