Wall Street advances, ASX set to inch up
Stan Choe
U.S. stocks pared losses from a difficult June month on Tuesday.
The S&P 500 rose 0.8 percent, but despite two great months it’s still heading for its first losing month. The Dow Jones gained 140 points, or 0.3 percent, and the Nasdaq composite rose 1.4 percent.
The Australian share market will rise, with futures pointing to a gain of 11 points, or 0.1 per cent, at the open. The ASX lost 0.5 per cent on Tuesday. The Australian dollar was trading at US$69.20 at 5.15am (AEST).
The main reason for this month’s weakness on Wall Street has been that stocks in the artificial intelligence sector have fallen to Earth. After soaring to enormous heights in the AI craze, such stocks have come under pressure due to concerns that they have gone too high. This is a big deal for all investors, as AI stocks have become the biggest and most influential stocks on Wall Street, pulling the indexes behind them.
AI stocks were stronger on Tuesday; Nvidia rose 2 percent to pare its loss for the month. This was one of the strongest forces lifting the S&P 500.
Microsoft, which has invested heavily in artificial intelligence, increased by 0.6 percent to reduce its monthly loss below 18 percent. However, Oracle fell 0.8 percent, bringing its June decline to 35 percent. It’s another company struggling with concerns that big spends on AI might not yield enough productivity and profits to be worth it.
Outside of AI, the economy appears to be booming, although U.S. households are still disgruntled about it. U.S. employers posted far more jobs at the end of May than economists expected, a report released this morning said; This is the latest signal that the job market remains resilient.
But a second report said confidence among U.S. consumers rose less than economists expected. A growing number of Americans say it’s hard to find a job, despite data showing hiring is continuing, according to a survey by the Conference Board.
Tuesday’s relatively quiet trading came as companies closed their accounts for the April through June quarter. Investors want to see a strong increase in profits to justify the big gains that stocks made at the beginning of the quarter. Despite June’s decline, the S&P 500 is still on track for its best quarter since six years ago, when stocks rocketed after the crash caused by the Covid-19 pandemic.
Concentrix fell 13.1 percent after the technology company’s last quarter profit and revenue report fell well below analysts’ expectations.
Prices fluctuated in the oil market as two US envoys arrived in Qatar to meet with mediators on the implementation of the first agreement to end the war in Iran. The Americans will not engage in direct negotiations with Iranian diplomats while in Doha.
The barrel price of Brent crude oil, the international standard, erased the early moderate rise and fell 1.1 percent to $73.12. Our hope is that the end of the war will restore full access to the Strait of Hormuz, allowing oil tankers to carry more crude oil and allowing its price to fall.
Expensive oil has already caused inflation to rise around the world, raising concerns that the Federal Reserve and other central banks may be forced to raise interest rates. Higher rates will limit inflation, but they will also slow economic growth and hurt investment prices.
The yield on the 10-year Treasury note rose to 4.41 percent from 4.38 percent at the end of Monday.
Indices on stock markets abroad rose in most of Europe and Asia.
Germany’s DAX index gained 1.5 percent, while South Korea’s Kospi index gained 1 percent, making it the world’s two biggest gainers.
Japan’s Nikkei 225 index rose 0.9 percent as the Japanese yen approached its lowest level in 40 years against the US dollar.
U.S. government bonds are yielding much higher than their Japanese counterparts, and the possibility of a Fed rate hike is putting further pressure on the yen. Speculation is growing that Japan’s government may seek to support the value of the yen, but Japan’s finance minister has said only that the government is ready to “respond appropriately when necessary.”
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The Market Summary newsletter is a summary of the day’s transactions. Let’s each take ittoday afternoon.
