A recent surge in stock prices faltered as Wall Street analyzed mixed economic data to predict possible moves by the Federal Reserve. The S&P 500 approached 5,500, raising concerns about a possibly overvalued market. Declines in major technology stocks weighed on trading, while Treasury yields rose slightly. Market expectations currently predict less than two Fed rate cuts this year.
In May, US industrial production rose, driven by a broad increase in factory output. However, retail sales showed minimal growth and figures for previous months were revised downwards, indicating financial difficulties for consumers.
“The economy can achieve a soft landing if the Federal Reserve quickly adjusts its policies in response to changing conditions,” said Jeffrey Roach of LPL Financial.
John Williams, president of the Federal Reserve Bank of New York, mentioned on Fox Business that the US economy is “heading in the right direction,” but did not specify when he would support a rate cut. Williams is among several officials scheduled to speak Tuesday.
The S&P 500 held around 5,480, while 10-year Treasury yields fell three basis points to 4.25%. Traders also braced for a $13 billion 20-year bond sale, with about 10 companies planning new bond sales in the high-quality market ahead of Wednesday’s U.S. holiday.
A survey by Bank of America Corp. suggested that global investors are likely to continue investing in stock markets at record levels. When asked which asset class would benefit most from reallocating money market funds, 32% chose U.S. stocks, 19% opted for global stocks, and 25% indicated they would buy government bonds.
Despite enthusiasm for the rally in U.S. stocks fueled by some big tech stocks, some investors are looking for ways to diversify their risks. The top seven technology companies have contributed more than 60% of the S&P 500’s gains this year.
The market is considered overbought, but the rise in share prices is limited: only 46% of stocks are trading above their 50-day moving averages. The Relative Strength Index (RSI) spread between the market cap and the equally weighted S&P 500 is the widest since at least 1990.
Corporate news:
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Nvidia Corp. insiders have sold more than $700 million worth of shares this year amid strong demand for its chips.
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Fisker Inc. filed for bankruptcy after stopping production of its troubled Ocean SUV.
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A Boeing Co. inspector said the company mishandled and lost track of hundreds of defective parts, some of which could have been installed on new 737 Max planes.
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Lennar Corp. reported higher-than-expected orders but missed its forecast for the current quarter.
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Philip Morris International Inc. halted online sales of its Zyn brand of nicotine pouches in the U.S. following a citation related to flavored products banned in Washington, D.C.
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NextEra Energy Inc. plans to raise $2 billion through equity sales to finance new energy projects and reduce short-term debt.
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Best Buy Co. is preparing for a major launch of computers with artificial intelligence.
This week’s key events:
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UK CPI, Wednesday
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US Juneteenth Holiday, Wednesday
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China’s preferential lending rates, Thursday
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Eurozone consumer confidence, Thursday
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UK Bank of England Rate Decision Thursday
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US Home Construction Starts and Initial Jobless Claims, Thursday
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Eurozone S&P Global Manufacturing PMI and S&P Global Services PMI, Friday
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U.S. Existing Home Sales and Conference Board Leading Index, Friday
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Federal Reserve’s Thomas Barkin speaks on Friday
Market movements:
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The S&P 500 was flat at 10:57 a.m. in New York.
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The Nasdaq 100 fell 0.2%.
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The Dow Jones Industrial Average fell 0.1%.
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The Stoxx Europe 600 rose 0.6%.
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The MSCI World index rose 0.2%.
Coins:
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The Bloomberg Dollar Spot Index declined 0.1%.
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The euro was stable at $1.0739.
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The pound fell 0.1% to $1.2692.
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The Japanese yen fell 0.1% to 157.95 per dollar.
Cryptocurrencies:
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Bitcoin fell 2.5% to $64,696.38.
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Ether fell 3% to $3,408.42.
Captivity:
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The 10-year Treasury yield fell three basis points to 4.25%.
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The 10-year German bond yield remained stable at 2.41%.
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The UK 10-year yield fell five basis points to 4.07%.
Basic products:
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West Texas Intermediate crude rose 1.2% to $81.30 a barrel.
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Spot gold rose 0.2% to $2,323.69 an ounce.
Also read: Global stocks under pressure on French election risks and rate cut delays