Investors toasted the surprising resilience of the US economy Friday by lifting the S&P 500 Index to its highest close in more than 14 months and handing the Nasdaq Composite its strongest first-half performance in four decades.  The Dow closed more than 280 points higher, while the S&P and the Nasdaq added 1.2% and 1.4%, respectively.  PCE inflation, the Fed’s preferred inflation gauge, rose 0.3% mom, in line with forecasts and below 0.4% in April.  Also, the annual core rate slowed to 4.6% and the headline PCE rate reached the lowest in nearly two years.  For Q2, the Dow Jones added 2.5%, the S&P surged 7%, a third straight quarter of gains and the Nasdaq jumped 13.3%, pushing year-to-date gains to 3.8%, 16.4%, and 32.8%, respectively.  European shares also closed higher on the last trading session of June, with the Euro Stoxx 50 Index rising by 1% and 1.9% for the quarter. 

Summary for 03.07.2023 

  • Most Asian equities surged on Monday as a drop in US inflation ramped up hopes for a less hawkish Federal Reserve, while data showing improving sentiment towards the Japanese economy put the Nikkei index back at 33-year highs. 
  • European equity futures edged higher this morning while US futures were mixed with the market expected to close early today ahead of the Fourth of July holiday. 
  • Oil prices moved little this morning, retaining the bulk of their recent gains as markets awaited fresh cues from an OPEC meeting and US economic data this week.  Last week oil prices closed out the second quarter and the first half of the year with losses as a lackluster economic recovery in China, US recession fears and robust exports from Russia and Iran weighed on oil prices. 
  • The Caixin China General Manufacturing PMI fell to 50.5 in June from 50.9 in May but above market consensus of 50.2.  The latest print was the second straight month of expansion in factory activity, with output growth slowing from May’s 11-month high and new orders also softening. 
  • US Treasury Secretary Janet Yellen will travel to China on July 6-9, becoming the second member of Joe Biden’s cabinet to head to the country in recent weeks as the world’s two largest economies look to mend ties after a spate of bilateral tensions.  Yellen will meet with senior Chinese government officials to discuss the importance of responsibly managing the US-China relationship, communicating directly about areas of concern, and working together to address global challenges.   
  • The consumer price inflation rate in the Euro Area decreased to 5.5% in June, down from 6.1% in the previous month and slightly below market expectations of 5.6%.  This marked the lowest rate on record since January 2022.  Additionally, the core rate picked up to 5.4%, remaining close to a recent peak of 5.7% and supporting the view that policymakers are likely to continue raising rates in the upcoming months. 
  • Apple has been forced to make major cuts to the production forecasts for its mixed-reality Vision Pro handset on complexity of the design and difficulties in production, the Financial Times reported this morning, citing people familiar with the matter. 
  • Tesla delivered a record 466,140 cars worldwide in results posted Sunday, outpacing Wall Street estimates.  The results demonstrated that CEO Elon Musk’s vow to chase volume by cutting prices has had its intended effect.  Analysts had expected the company to ship 448,350 cars in the quarter.  The deliveries are the highest ever in a quarter for Tesla, and an 83% increase from a year ago. 
  • Carnival Corp. shares rallied nearly 10% last Friday after Jefferies upgraded the share to “buy” from “hold”, citing leadership changes and an improved outlook for the cruise operator. 
  • Nvidia rose nearly 4% Friday after a Daiwa analyst upgraded the company’s shares to “outperform” from “neutral” and boosted his price target to $475 from $408, citing Nvidia’s “commanding” position in generative artificial intelligence.  Nvidia shares ended around $423, nearly triple where they were at the end of 2022.