Last Updated 4:02 PM EST
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Stock indices finished today’s trading session in the red. The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 0.09%, 0.47%, and 0.72%, respectively. The energy sector (XLE) was the session’s laggard, as it lost 2.26%. Conversely, the consumer discretionary sector (XLY) was the session’s leader, with a gain of 0.76%.
Furthermore, the U.S. 10-Year Treasury yield decreased to 3.73%, a drop of more than nine basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 4.69%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real-time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 1.9% in the second quarter. This is higher than its previous estimate of 1.8%, which can be attributed to this morning’s housing starts report from the U.S. Census Bureau.
Last updated: 1:08PM EST
Stocks remain under pressure at the time of writing, although they are off their intraday lows. In a turn of financial events not seen since 1981, the yield curve inversion broke records on Tuesday. The spread between U.S. 10-Year and 2-Year Treasury yields expanded to over 97 basis points, indicating a potential recession in the pipeline. This pattern has proved a reliable harbinger of past economic downturns, with inversions in 2000 and 2006-2007, each leading into the 2001-2003 market meltdown and the Great Financial Recession, respectively.
Amid this backdrop, Wall Street’s investor mood has made a U-turn, as noted by Morgan Stanley’s equity strategy team. The enthusiasm fueling the steady climb of the Dow, S&P 500, and Nasdaq Composite during June is met with skepticism by the bank’s strategist Mike Wilson. Concerns about ebbing fiscal support, dwindling liquidity, and the impact of inflation falling at an unexpected rate prompt their cautionary stance for the second half of 2023. The team anticipates potential pitfalls in slower inflation, predicting a knock-on effect on revenue growth due to falling import/export prices.
Meanwhile, Goldman Sachs offers a contrasting view, hiking its forecast for the S&P 500 over three, six, and twelve-month periods. Citing an easing inflation landscape despite further Federal Reserve rate hikes, and a dwindling market-implied recession probability, the firm paints a more optimistic picture. Goldman points to AI as a significant catalyst driving investor enthusiasm and potential long-term profit growth, issuing bullish targets of 4300, 4500, and 4700 over the stated periods.
Last updated: 11:30AM EST
Stocks are in the red so far in today’s trading as the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down 0.6%, 0.8%, and 0.9%, respectively.
Last updated: 9:30AM EST
After the Juneteenth holiday, stock markets opened lower on Tuesday, with the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) down 0.11%, 0.34%, and 0.51%, respectively, at 9:30 a.m., EST, June 20.
Meanwhile, the housing starts and building permits data indicated that construction on new homes rose 21.7% in May as builders ramped up the construction of single-family homes to meet strong demand from buyers. Housing permits for single-family homes increased by 5.2% in May, while permits in buildings with five units or more went up by 7.8%.
Housing starts went up for the second consecutive month to 1.63 million at an annual pace in May from 1.34 million in April, while economists were expecting a slight decline of 0.8%.
First published: 2:24AM EST
U.S. Futures are down this morning as markets brace to begin the short trading week today. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down 0.36%, 0.33%, and 0.45%, respectively, at 1:40 a.m., EST, June 20.
The three major indices finished the trading week ending June 16 on a positive footing. Traders seem to have moved past the Fed’s interest rate pause last week and the expected hikes in the future. Even so, all eyes will be on Fed Chair Jerome Powell’s testimony before Congress tomorrow, June 21, to see if he gives any more cues for the future.
Moreover, several Fed Presidents will speak during the week, and markets will be attentive to hear their tones to gauge the direction of July’s monetary policy, which Powell said is currently undecided. New York Fed President John Williams and Fed Vice Chair for Supervision Michael Barr will speak today.
Meanwhile, shipping giant FedEx (NYSE:FDX) will report its fourth-quarter financial results for Fiscal 2023 today after the market close. Elsewhere, Chinese e-commerce giant Alibaba (NYSE:BABA) announced top management shake-up plans, with current CEO Daniel Zhang stepping down to turn his full focus on the spin-off and eventual listing of Alibaba Cloud Intelligence Group as part of the larger reorganization effort.
On the economic front, Weekly Initial Jobless Claims, May’s Existing Home Sales data, and June’s S&P Global Manufacturing and Services PMI figures will be released later in the week.
European indices are trading marginally below the flatline as traders mull over the uncertainty of the macroeconomic backdrop worldwide.
Asia-Pacific Markets Trending Lower on Tuesday
Most Asia-Pacific indices finished lower today as the People’s Bank of China cut the prime lending rates by ten basis points each on its one-year and five-year loans. The steps suggest that China’s economy is heading for a stark slowdown, and the central bank is trying to pump liquidity to revive the economy.
Hong Kong’s Hang Seng index and China’s Shanghai Composite indices are trading in the red, down by 1.85% and 0.52%, respectively, while the Shenzhen Component index was up 0.19% at the time of the last check.
Meanwhile, Japanese stocks seem to be the new attraction for investors. Yesterday, billionaire investor Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) disclosed additional stakes in five of the largest Japanese trading firms, namely Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Buffett’s optimism for Japan is boosting investor confidence in the country’s businesses. Japan’s Nikkei and Topix indices are trading down by 0.09% and 0.40%, respectively, as of the last check.
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