On Friday, U.S. stocks slightly increased and maintained a remarkable surge observed due to indications of a decline in inflation and employment opportunities.
What’s happening
- The DJIA, which is a measure of the stock market performance, increased by 0.2%, or 80 points, to reach a value of 34,487.
- The S&P 500 index (SPX, 0.12%) experienced a 0.2% increase, equivalent to 10 points, reaching the value of 4,436.
- The Nasdaq Composite rose by 15 points, equal to a 0.1% increase, and is currently trading at 13,797.
What’s driving the market
On Thursday, the S&P 500 experienced the longest period of consecutive gains since November 2021, with its sixth consecutive increase. Additionally, the Nasdaq achieved its highest level since March 2022, while the Dow recorded its highest closing price since December 2nd.
The increase in stock prices happened following a second instance of high initial jobless claims. Stephen Innes, a managing partner for SPI Asset Management, stated that although the recent economic figures were mixed, the increasing jobless claims number shows a softening job market and a less aggressive Federal Reserve. Investors are now focusing more on economic data on jobs and inflation trends rather than relying solely on the guidance of the Fed for the July FOMC meeting. Two Federal Reserve officials also commented on the effect of bank failures on the decision to raise interest rates. Christopher Waller suggested that this factor may still influence the central bank’s decisions.
Tom Barkin, who is the President of the Richmond Federal Reserve, has expressed that inflation is still at an unacceptable level, and he will only support the idea of ending interest rate increases if he is convinced that inflation is decreasing at a significantly faster rate.
On Friday in Maryland, during a speech, Barkin reiterated that the target for inflation is 2%. He added that he is still not convinced of the possible scenario where demand slowdown leads to a rapid return of inflation to that target. He also said he is comfortable taking additional steps if the upcoming data does not support that story. However, Barkin is not part of the interest rate-setting panel of the Fed this year and therefore doesn’t have a voting role.
According to Citi’s global strategists, the recent 15% rise of the S&P 500 index, driven by large technology companies, should not make investors feel negative. They believe that having a narrow leadership in the market is not enough of a reason to sell and historically, the stock market tends to show higher numbers a year after such a situation.
The US dollar (USDJPY, 0.72%) increased to the highest level in seven months compared to the Japanese yen because the Bank of Japan did not modify its policy on interest rates. The Hang Seng (HK:HSI) continued to rise after Chinese rate reductions on Thursday and has now fully regained all the losses it experienced in May.
As BlackRock submitted an application for a publicly traded bitcoin fund, the value of Bitcoin (BTCUSD) surpassed $25,000.
Companies in focus
- The stock price of Virgin Galactic Holdings (SPCE) surged by 39% following the company’s announcement that it will start providing space travel services to the public in the current month.
- The shares of iRobot Corp increased by 19.5% following the announcement by the U.K. Competition and Markets Authority that it has approved Amazon.com Inc.’s plan of acquiring the technology company for $1.7 billion.
- The stock of Adobe Inc. (ADBE) increased by 2.5% and exceeded $500 following the announcement of its highest ever quarterly earnings of $4.82 billion. Additionally, the company predicted good sales performance for the current quarter.
- CAVA, a restaurant chain that specializes in Mediterranean fast-casual cuisine, increased by over 3% after its debut on Wall Street on Thursday. The initial public offering price was exceeded by 90% during Thursday’s opening of shares. By the end of the day, the stock had risen by 99% and closed at $43.78.
