The market reduced bets on the Fed to raise interest rates, the main indexes opened higher, and the Dow Jones rose more than 300 points | Anue Juheng

U.S. stocks opened higher on Friday (24th) after signs of slowing economic growth and falling commodity prices eased market expectations that the Federal Reserve (Fed) will aggressively raise interest rates to fight inflation, and investor sentiment improved.

Before the deadline, the Dow Jones Industrial Average rose 300 points or nearly 1%, the Nasdaq Composite rose nearly 200 points or nearly 1.7%, the S&P 500 rose more than 1%, and the Philadelphia Semiconductor Index rose nearly 2%.

The Fed’s most hawkish official, St. Louis Federal Reserve Bank President James Bullard, said the Fed must act boldly in raising interest rates to curb inflation before expectations of higher inflation become entrenched. , hope that this year the interest rate will be raised to 3.5%.

In addition, Bullard also believes that it is too early to start a debate on the possibility of a recession, and he stressed that the current model may not be a good indicator of projected recession risk, and that household spending is in good shape going forward.

Investors are now focusing on one question: If the economic downturn continues, what will happen next? That gives central banks plenty of room to ease and raise interest rates. Fed Chairman Powell reiterated his hawkish stance in congressional testimony this week, showing resolve to fight inflation while acknowledging that a recession could come at a cost.

Meanwhile, investors continued to withdraw cash from equity funds, which recorded their biggest outflows in nine weeks amid rising recession risks. In the week ended June 22, about $16.8 billion flowed out of global stock funds, and U.S. stocks saw their first outflow in seven weeks, totaling $17.4 billion.

In terms of data, the US May new home sales and June Michigan consumer confidence index will be released later. Analysts expect the June Michigan consumer confidence index to remain unchanged from May at 50.2%.

In terms of individual stocks, Polestar announced that it has completed a merger with Gores Guggenheim, a special purpose acquisition company (SPAC), and listed on the Nasdaq today to start trading under the stock code “PSNY”.

In energy, crude oil prices rebounded as risk sentiment picked up, but oil prices may still end the week lower for the first time since early April on concerns that aggressive monetary tightening will drag on global economic growth and hit demand.

Market attention now turns to the OPEC+ production policy meeting next week. OPEC+ is widely expected to increase production by 648,000 barrels per day and 648,000 barrels per day in July and August, respectively.

As of Friday (24th) 21:00 Taipei time:
S&P 500 Index Line Chart (Graphic: Juheng.com)
Stocks in focus:

CarMax (KMX-US) rose 0.17% to $91.92 a share in early trade

Despite market concerns that high inflation could have a severe impact on used car sales, used car retailer CarMax reported strong earnings today, with earnings per share of $1.56 last quarter, beating market expectations by $0.07. An increase of 19% to $9.124 billion was also better than market expectations, although the company did not give a financial forecast.

Zendesk (ZEN-US) rose 28.7% to $74.58 a share in early trade

Customer service software provider Zendesk announced that it has entered into a definitive agreement to acquire it and will be acquired by an investment group led by Permira and Hellman & Friedman LLC, the world’s leading investment firm, in an all-cash transaction valued at approximately $10.2 billion.

According to the acquisition agreement, Zendesk shareholders will receive $77.50 per share, a premium of about 34% over the closing price on Thursday (23rd).

BlackBerry (BB-US) fell 1.3% to $5.30 a share in early trade

Due to the growth of automotive products and network security services, BlackBerry (BlackBerry) reported good revenue last quarter, with revenue of $168 million, beating market expectations of $163.5 million; net loss was reported at $181 million, a loss from the same period last year $62 million expanded; diluted loss per share of $0.35 compared to loss per share of $0.11 in the year-ago period.

By business, BlackBerry’s IoT revenue rose 19 percent to $51 million in the first quarter, the fastest growth in the quarterly report.

Today’s key economic data:
  • The revised monthly growth rate of building permits in the United States in May was -7%, the previous value was -7%
  • The total number of building permits in the United States was revised to 1.695 million units in May, compared with the previous value of 1.695 million units
  • The total number of new home sales in the United States after seasonal adjustment in May reported 696,000 units, expected 588,000 units, and the previous value of 629,000 units
  • The monthly growth rate of new home sales in the United States after seasonal adjustment in May was 10.7%, expected 0.7%, the previous value – 12%
  • The final value of the U.S. Michigan consumer confidence index in June was 50, expected to be 50.2, and the previous value of 50.2
Wall Street Analysis:

Lewis Grant, a senior portfolio manager at Federated Hermes, said the Fed appeared to be at least temporarily successful in its task of cooling an overheating economy, with commodity prices slipping from their highs as recession fears intensified.

“Inflation will remain high, above target, but it is increasingly likely that it will start to peak in the coming months,” said Andrew Hardy, investment manager at Momentum Global Investment Management.

A team led by Deutsche Bank strategist Jim Reid believes that despite hawkish comments from the Federal Reserve, deepening fears that a rate hike could trigger a recession represents investors’ expectations for a rate hike over the next 12-18 months. has slowed down.


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