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

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. St​​​​​ephen 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

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