Last Updated 4:05 PM EST
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Stock indices finished today’s trading session in the green, as the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) gained 1.6%, 1.23%, and 0.84%, respectively. The real estate sector (XLRE) was the session’s laggard, with a gain of 0.51%. Conversely, the technology sector (XLK) was the session’s leader, with a gain of 1.59%.
Furthermore, the U.S. 10-Year Treasury yield decreased to 3.83%, a drop of more than one basis point. Conversely, the Two-Year Treasury yield increased, as it hovers around 4.89%.
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 2.2% in the second quarter.
This is higher than its previous estimate of 1.8%, which can be attributed to recent releases from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis
Last Updated 3:00PM EST
Stocks are in the green as we head into the final hour of today’s trading session. Indeed, at the time of writing, the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up 1.6%, 1.3%, and 1%, respectively.
The narrative of the S&P 500 in 2023 is primarily driven by the soaring performance of tech giants. This might cause unease given the current concentration of these mega-cap names in the index surpasses that seen during the 2000 equity market bubble.
Despite these concerns, Invesco assures investors that today’s market situation doesn’t forecast an imminent recession, pointing out that the difference between market share and earnings share of the top 10 companies is only one-third of what it was in 2000, implying the fundamental strength of current mega-caps. Furthermore, Invesco emphasizes that today’s valuation ratios are far less inflated compared to those of the 1999 Nasdaq bubble.
On the other hand, Barclays emphasizes that the historically low implied volatility of the S&P 500 relative to sector volatility puts the spotlight on fundamentals as we navigate into the second half of the trading year. This comes with potential risks as earnings per share estimates continue to decline for the majority of the S&P 500.
Barclays notes that the market focus shift towards balance sheet strength and rising AI hype contributed to significant tech gains in the year-to-date performance. However, they also warn that the extraordinary concentration of this rally could herald a near-term market pullback. Additionally, outside the circle of AI beneficiaries, the weakening earnings estimates across the S&P 500 pose another challenge for equities.
Last Updated 11:41AM EST
On Friday, the University of Michigan released its results on consumer inflation expectations over the next five years. Consumers now expect inflation to be 3%, which was in line with expectations but decreased compared to the previous month.
Taking a look at consumer sentiment, results came in at 64.4, which was higher than the expected 63.9. This is also an increase compared to last month’s reading of 59.2. In addition, consumer expectations were also higher than expected. June saw a print of 61.5 versus the forecast of 61.3. This was also an increase compared to last month’s result of 55.4.
It’s likely that hints of easing inflation have positively impacted how consumers feel about the economy. Nevertheless, it’ll be interesting to see if consumers remain positive as interest rates continue to rise.
Last updated: 9:30AM EST
Stock markets opened higher to end the week after an encouraging inflation report. The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up 1.1%, 0.77%, and 0.55%, respectively, at 9:30 a.m. EST, June 30.
The inflation report indicated that while core inflation (excluding food and energy) rose by 0.3% in May, slightly lower than in April, headline inflation cooled down to an increase of 0.1% on a month-over-month basis. On an annual basis, the personal consumption expenditure (PCE) index went up by 3.8% versus a growth of 4.4% in April, and core inflation increased by 4.6% in May versus 4.7% in the prior month.
First published: 2:08AM EST
U.S. Futures are trending higher on Friday morning, ahead of the personal consumption expenditures (PCE) data released at 8:30 a.m. EST today. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up 0.44%, 0.26%, and 0.14%, respectively, at 5:30 a.m., EST, June 30.
The Federal Reserve considers the PCE price index to be a better barometer of inflation. The expectation for core PCE is pegged at a 0.3% increase in May and an annual rise of 4.7%, the same as that in April. Meanwhile, the U.S. economy remains resilient, with the final reading of the first quarter GDP showing an expansion of 2% annually (initial estimate was 1.3%). Also, the job market remains healthy, with initial jobless claims coming in much lower than expected at 239,000 for last week.
The three major averages are on track to finish the month, the quarter, and the first half ending June 30, on a positive footing. Notably, banking stocks continued their upward momentum in trading yesterday following the positive Fed Stress Test results.
Turning towards stocks, Nike (NYSE:NKE) shares slipped 4.3% in extended trading yesterday, following mixed Q4FY23 results. Also, shares of Virgin Galactic (NYSE:SPCE) plunged over 10% yesterday despite successfully launching its first commercial space flight, Galactic 01.
Moreover, iPhone maker Apple’s (NASDAQ:AAPL) stock reached a new 52-week high of $190.07 yesterday, taking it closer to reaching a $3 trillion valuation. Apple received a new Buy rating from Citi analyst Atif Malik, who sees another 30% upside on AAPL from current price levels. Further, beverage maker Constellation Brands (NYSE:STZ) is set to release its Q1FY24 results today before the market opens. Ahead of the earnings, several analysts have reiterated a Buy rating on STZ, and some have even increased the price target on the stock.
Elsewhere, European markets closed mixed on Thursday following hawkish comments from global leaders at the ECB forum of Central Banks held in Portugal. Most central bank officials believe higher monetary tightening is required to tame the stubborn inflation in respective countries. Also, traders await the eurozone inflation data due today to see if the previous rate hikes have had any impact on the economy.
Asia-Pacific Markets End Mixed
Asia-Pacific indices ended mixed this morning. China’s factory activity data showed a contraction in June, following the previous two months of contractions. Also, Japan’s consumer price index (CPI) print came in hotter-than-expected, growing 3.1% annually in June.
Hong Kong’s Hang Seng index ended down by 0.09%, while China’s Shanghai Composite and Shenzhen Component indexes finished higher by 0.62% and 1.02%, respectively.
At the same time, Japan’s Nikkei and Topix indices finished the trading session down by 0.14% and 0.33%, respectively.
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