Despite the typical volatility at the start of the second half of the year, the Nasdaq Composite reached a record high, driven by strong performances in technology stocks and continued enthusiasm for artificial intelligence. The S&P 500 and Dow Jones Industrial Average also posted gains, reflecting a broadly positive sentiment on Wall Street. Investors are
Despite the typical volatility at the start of the second half of the year, the Nasdaq Composite reached a record high, driven by strong performances in technology stocks and continued enthusiasm for artificial intelligence. The S&P 500 and Dow Jones Industrial Average also posted gains, reflecting a broadly positive sentiment on Wall Street. Investors are digesting a mix of robust tech sector earnings and critical economic data, including rising US Treasury yields and inflation figures from Europe and Asia. As the market adjusts to these dynamics, the resilience of key indices underscores the cautious optimism among investors, even amidst external pressures such as natural disasters and geopolitical uncertainties.
Key Takeaways:
Nasdaq Closes at Record High Amid AI Enthusiasm: The Nasdaq Composite surged 0.83% to close at 17,879.30, marking a new all-time high for the index. The tech-heavy index was pushed by significant gains in major technology stocks, with Microsoft Apple and Nvidia all advancing in value.
S&P 500 and Dow Jones Post Gains: The S&P 500 added 0.27%, closing at 5,475.09, while the Dow Jones Industrial Average increased by 50.66 points, or 0.13%, to close at 39,169.52. These gains highlight the overall positive sentiment in the market despite ongoing economic challenges.
Tech Sector Leads July's First Trading Session: The technology sector rose 1.3% on the first trading day of July, driven by strong performances from tech giants like Microsoft (up 2.2%), Apple (up 2.9%), and Nvidia (up 0.6%). This sector's robust start to the month underscores the continued investor confidence in technology and AI advancements.
Treasury Yields Climb Amid Inflation Insights: US Treasury yields rose significantly, with the 10-year note climbing nearly 13 basis points to 4.471% and the 2-year Treasury yield increasing by 4 basis points to 4.762%. These movements reflect investor responses to the latest economic data and inflation expectations.
European Markets Rebound on French Election Results: European stocks closed higher as investors digested the results of the first round of France’s snap parliamentary election. The Stoxx 600 index ended the day up 0.44%, rebounding from four straight losses. France’s CAC 40 index rose by 1.09%, initially jumping more than 2.5% before cooling. Additionally, Germany's national consumer price index on an EU-harmonized basis declined to 2.5% from 2.8% in May, providing some relief from inflation concerns. The FTSE 100 Index is up 2.64 points or 0.03%.
Asian Markets Thrive Again: Japan's Topix index climbed 0.52%, achieving a new 34-year high. The Nikkei 225 also saw gains, rising 0.12%, lifted by improved business confidence and revised GDP data. South Korea’s Kospi was up 0.23%, ending at 2,804.31, near its 31-month high, while the Kosdaq advanced 0.8% to 847.15. Mainland China’s CSI 300 climbed 0.48% to 3,478.18, and Australia’s S&P/ASX 200 fell 0.22%, being the only major index in negative territory.
Oil Prices Surge Ahead of Fourth of July: US crude oil futures rose more than 2%, with West Texas Intermediate closing at $83.38 per barrel, up 2.26%, and Brent futures increasing by 1.88% to $86.60 per barrel. This surge comes ahead of the Fourth of July holiday, driven by fears of a wider Middle East conflict and rising fuel demand.
FX Today:
Gold Price Climbs as Markets Brace for Busy US Week: The XAU/USD pair traded within familiar levels near $2,331, up 0.23%. Gold prices remain upwardly biased, though they are consolidating near the Head-and-Shoulders neckline from $2,320 to $2,350. For a bearish continuation, sellers need to push prices below $2,300. Once done, the next support would be $2,277, followed by $2,222. Further losses lie underneath, with sellers eyeing the Head-and-Shoulders chart pattern objective from $2,170 to $2,160. On the other hand, if buyers stepped in and conquered $2,350, that would expose additional key resistance levels like $2,387, ahead of challenging the $2,400 figure.
EUR/USD Looks Higher on Monday but Technical Ceiling Remains: EUR/USD clipped into a fresh multi-week high above 1.0770 on Monday before getting forced back down by a broad-market reversal in investor sentiment. The pair kicked off the new trading week with a fresh push into 12-day peaks above 1.0770 before falling risk appetite dragged it back down to 1.0735. Intraday price action continues to lean into the midrange as EUR/USD grapples with the 200-hour Exponential Moving Average (EMA) at 1.0722. EUR/USD found technical support from a demand zone priced in below 1.0680, but bullish momentum remains limited as technical indicators weigh bids down. Daily candlesticks remain pinned below the 200-day EMA at 1.0786, and the pair remains trapped on the low end of a recent decline from June’s early bids above 1.0900.
GBP/USD Fluctuates as Investor Sentiment Spirals: GBP/USD rallied briefly above the 1.2700 handle on Monday before US markets knocked back investor confidence, sparking a risk-off bid into the US Dollar and dragging Cable back down to the day’s opening bids near 1.2650. Despite a near-term bull run to kick off the new trading week, Cable bidders were unable to keep the pressure up, and GBP/USD tumbled back below the 200-hour Exponential Moving Average (EMA) at 1.2665. Price action still favours shorts, and downside targets will be set below last week’s late low near 1.2615. Daily candlesticks remain delayed in a volatility trap between the 50-day and 200-day EMAs at 1.2668 and 1.2592, respectively. Near-term momentum still leans bearish as GBP/USD continues to drift lower after mid-June’s brief peak above 1.2850.
USD/JPY Breaks 161.00 Amid Rising US Yields: The USD/JPY pair broke the 161.00 barrier as US Treasury bond yields climbed sharply on Monday. With that said, the USD/JPY's first resistance would be 162.00, followed by the 163.00 mark and a breach of the latter will expose 164.00. Conversely, if sellers drag the exchange rate below 161.00, the first support would be 160.22. Once overcome, the next line of defence for bulls would be at 155.66, followed by 158.90.
Canadian Dollar Sheds Weight on Canadian Holiday Monday: USD/CAD found a fresh multi-week high after testing into 1.3750 on Monday. The pair has recovered ground after bouncing from last week’s plunge below 1.3630. Still, intraday price action continues to trade on the rough side as the pair cycles the 200-hour Exponential Moving Average (EMA). Daily candlesticks continue to find a foothold above the 50-day EMA at 1.3679, but bidding pressure will still need to gather enough steam to break north of June’s peak bids just shy of the 1.3800 handle.
Australian Dollar Started the Week Soft: The AUD/USD pair swayed between 0.6600 and 0.6700. From a technical outlook, the pair has been trading sideways since mid-May in this range. Traders on either side are struggling to dominate the direction, while indicators remain flat. The 20-day Simple Moving Average (SMA) at 0.6640 is acting as a robust support level, with further support seen below at 0.6620 and 0.6600. Descriptive resistance levels are situated at 0.6660, 0.6690, and 0.6700.
GBP/JPY Climbs Into Another Peak as Yen Continues to Decline: The GBP/JPY pair has accelerated into the top end as bidding pressure continues to build, clipping into a fresh 16-year peak at 204.75. GBP/JPY has closed in the green for eleven consecutive trading days. The pair has climbed 14.55% bottom-to-top from 2024’s early low bids of 178.14, and one-sided price action has dragged GBP/JPY deep into bull country. The pair has no meaningful technical resistance levels overhead, and it is trading well into the north side of the 200-day Exponential Moving Average (EMA) at 190.35.
Market Movers:
Tesla Surges on Analyst Upgrade: Tesla (TSLA) led the gainers in the S&P 500 and Nasdaq 100, closing up more than 6% after Wells Fargo added the stock to its Tactical Ideas List for the third quarter. The significant boost underscores the continued investor confidence in Tesla's growth prospects.
Merck & Co Gains on License Conversion: Merck & Co (MRK) closed up more than 3%, leading gainers in the Dow Jones Industrial Average. The stock rose after Merck converted its co-exclusive license covering the prostate cancer drug candidate Opevesostat with Orion into an exclusive global license, signalling strong strategic moves in its drug portfolio.
Spirit AeroSystems Jumps on Acquisition Deal: Spirit AeroSystems (SPR) saw its shares climb more than 3% after Boeing agreed to buy the company for approximately $4.7 billion, or $37.25 per share, in an all-stock deal. This acquisition highlights Boeing's strategic expansion efforts in the aerospace sector.
Teleflex Upgraded, Shares Rise: Teleflex (TFX) shares were up more than 2% after Piper Sandler upgraded the stock to overweight from neutral, setting a new price target of $245. The upgrade reflects optimistic projections for Teleflex's future performance and market position.
Cryptocurrency-Linked Stocks Climb: Cryptocurrency-linked stocks saw significant gains as Bitcoin prices surged over 4%, reaching a one-week high. Coinbase Global (COIN), Marathon Digital (MARA), and Riot Platforms (RIOT) all closed up more than 5%, reflecting renewed investor interest in digital assets.
Cruise Line Operators Hit by Hurricane Beryl: Cruise line operators faced substantial pressure as Hurricane Beryl made landfall in the Caribbean. Norwegian Cruise Line Holdings (NCLH) closed down more than 5%, leading the losers in the S&P 500. Carnival Corporation (CCL) also fell more than 5%, and Royal Caribbean Cruises (RCL) declined over 1%.
Homebuilders Decline on Rising Treasury Yields: Homebuilder stocks retreated as the 10-year Treasury yield reached a four-week high, raising concerns about higher mortgage rates affecting housing demand. PulteGroup (PHM) dropped more than 3%, while Toll Brothers (TOL), DR Horton (DHI), and Lennar (LEN) each fell over 2%.
O’Reilly Automotive Drops on Lower Sales Estimate: O’Reilly Automotive (ORLY) closed down more than 3% after Barclays cut its Q2 comparable sales estimate for the company to 2%, below the consensus of 3.7%, citing ongoing demand headwinds. AutoZone (AZO) also saw a decline, closing down more than 4% on the news.
Walgreens Boots Alliance Falls on Price Target Cut: Walgreens Boots Alliance (WBA) dropped more than 4% after JPMorgan Chase reduced its price target for the stock to $20 from $30. The downgrade reflects concerns over the company's future growth and market challenges.
GE Vernova Slips on New Coverage: GE Vernova (GEV) closed down more than 1% after Pekao Investment Banking initiated coverage of the stock with a sell rating and a price target of $128. This new coverage adds pressure to the stock amid investor uncertainties.
Zimmer Biomet Holdings Downgraded: Zimmer Biomet Holdings (ZBH) fell more than 1% following a downgrade from Piper Sandler, which moved the stock to neutral from overweight. The downgrade reflects cautious sentiment regarding the company's near-term growth prospects.
As the second half of 2024 kicks off, the record highs in the Nasdaq Composite and solid gains in the S&P 500 and Dow Jones Industrial Average underscore a market lifted by AI optimism and robust tech sector performances. Despite challenges such as rising Treasury yields, natural disasters, and geopolitical uncertainties, investor sentiment remains cautiously optimistic. European markets showed resilience following French election results, while Asian markets benefitted from positive business confidence data. The movements in major stocks and commodities reflect a complex but hopeful market landscape, where technology and strategic acquisitions drive growth amidst economic fluctuations. As investors navigate these dynamics, the focus remains on balancing opportunities with the essential risks of a volatile global economy.
