What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.88%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.50%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.29%.
Stock indexes this morning are moderately higher, with the S&P 500, Dow Jones Industrials, and Nasdaq 100 all climbing to 1-week highs. U.S. stock indexes also have carry-over support today from a rally in global equity markets on signs that China may boost stimulus measures, which is supportive of global growth. China's Ministry of Finance said today that it was considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds this year to finance infrastructure spending.
A rally in semiconductor stocks is leading to gains in technology stocks today after Samsung Electronics reported a larger-than-expected increase in quarterly revenue. Samsung’s revenue jump eased concern about weakening consumer demand and soaring material costs. Also, a +5% surge in crude prices today is lifting energy stocks.
Today’s U.S. economic data was bearish for stocks. U.S. weekly initial unemployment claims unexpectedly rose +4,000 to a 5-1/2 month high of 235,000, showing a weaker labor market than expectations of a decline to 230,000. Also, the May trade deficit of -$85.5 billion was wider than expectations of -$84.7 billion, which has negative GDP implications.
Today’s stock movers…
Semiconductor stocks are rallying today after Samsung Electronics posted a stronger-than-expected increase in quarterly revenue, easing consumer demand concerns. Lam Research (LRCX) is up more than +5% today to lead gainers in the Nasdaq 100. Also, Marvell Technology (MRVL), Applied Materials (AMAT), Advanced Micro Devices (AMD), and ASML Holding NV (ASML) are up more than +4%. In addition, Microchip Technology (MCHP) and Nvidia (NVDA) are up more than +3%.
A jump of more than +5% in crude oil prices today is boosting energy stocks and energy service providers. APA Corp (APA) is up more than +6%. Also, Schlumberger (SLB), Diamondback Energy (FANG), Marathon Oil (MRO), Baker Hughes (BKR), and Haliburton (HAL) are up more than +5%. In addition, Occidental Petroleum (OXY), Valero Energy (VLO), and Devon Energy (DVN) are up more than +4%.
Freeport-McMoRan (FCX) is up more than +7% today to lead gainers in the S&P 500 after the price of copper soared more than +4% when China said it was considering a $220 infrastructure stimulus plan.
Caterpillar (CAT) is up more than +4% today to lead gainers in the Dow Jones Industrials after China’s Ministry of Finance said it was mulling a $220 billion infrastructure plan.
Otis Worldwide (OTIS) is down more than -2% today to lead losers in the S&P 500 after JPMorgan Chase downgraded the company to neutral from overweight.
United Airlines (UAL) is down more than -1% today after Argus Research cut its recommendation on the stock to hold from buy.
Kellogg (K) is down -1% today after UBS cut its recommendation on the stock to neutral on significant inflation headwinds.
Across the markets…
Sep 10-year T-notes (ZNU22) this morning are down -14 ticks, and the 10-year T-note yield is up +3.3 bp at 2.961%. Sep T-notes this morning are under pressure from a rally in global equity markets, which has reduced the safe-haven demand for T-notes. Higher European government bond yields are also weighing on T-note prices today. T-notes rebounded from their worst levels after this morning’s data showed U.S. weekly jobless claims unexpectedly rose to a 5-1/2 month high.
The dollar index (DXY00) this morning is down -0.02%. The dollar index this morning is slightly lower as prices consolidate following the dollar’s surge to a 20-year high Wednesday. Today's strength in the British pound is weighing on the dollar as sterling (^GBPUSD) jumped after Boris Johnson announced that he will resign as UK prime minister. The dollar maintained slight losses on this morning’s negative U.S. economic data on weekly jobless claims and May trade deficit.
EUR/USD (^EURUSD) is up +0.02% today. EUR/USD today is slightly higher as prices consolidate just above Wednesday’s 20-year low. Gains in EUR/USD were limited after today’s data showed German industrial productions in May rose less than expected.
German May industrial production rose +0.2% m/m, weaker than expectations of+0.4% m/m.
USD/JPY (^USDJPY) today is down -0.10%. USD/JPY today is slightly lower as concerns about slowing global economic growth prompt safe-haven buying of the yen. Losses in USD/JPY today are limited as higher T-note yields weigh on the yen. Also, a rally in global equity markets today has reduced some safe-haven demand for the yen.
August gold (GCQ22) this morning is up +7.6 (+0.44%), and September silver (SIU22) is up +0.226 (+1.18%). Precious metals today are moderately higher. A weaker dollar today is supportive for metals prices. Silver also garnered support today after China said it was considering a $220 billion infrastructure stimulus plan, which will boost demand for industrial metals. Gains in gold today are limited due to higher global bond yields.
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