Traders Market Weekly: Fed and BOJ Dribble Ahead

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    Dow 38,571.03 -115.29 -0.30%
    S&P 500 5,283.40 5.89 0.11%
    Nasdaq 16,828.67 93.65 0.56%
    VIX 13.44 0.52 4.02%
    Gold 2,366.80 21.00 0.90%
    Oil 74.00 -2.99 -3.88%

    Trading was briefly HALTED today due to COMPUTER glitches
    as the BERK took a 99% nose dive due to some bump in the night TECH issues
    However later in the afternoon – the SWEET FEED returned so that the WALL STREET BULLS
    could have a decent day 🙂


    May S&P Global US Manufacturing PMI – Final 51.3; Prior 50.0

    May ISM Manufacturing Index 48.7% (consensus 49.6%); Prior 49.2%

    The key takeaway from the report is that it showed a faster pace of contraction in manufacturing activity that will stir worries about the economy missing its mark with a soft landing.

    April Construction Spending -0.1% (consensus 0.2%); Prior -0.2%

    The key takeaway from the report is that nonresidential spending was down in both private and public construction markets, which will be a drag on Q2 GDP growth.

    ISM Manufacturing Index reflected a faster pace of contraction than the market expected (actual 48.7%; expected 49.6%). A reading below 50% indicates a contraction in activity.

    Yields moved lower in response.

    The 10-yr note yield fell 11 basis points to 4.40% and the 2-yr note yield fell seven basis points to 4.82%. Dropping market rates had been a source of support for equities recently, but worries about an economic slowdown that could affect earnings prospects drove stock market action today.

    Atlanta Fed GDPNow model estimate for Q2 real GDP growth is now 1.8%, down from 2.7% on May 31, in response to the soft data.


    WTI crude oil futures ($74.29/bbl, -2.79, -3.6%) settled sharply lower in another manifestation of slowdown concerns, which could translate to weaker demand for oil.

    This price action contributed to the selling in the S&P 500 energy sector.

    It was the worst performing sector by a decent margin, dropping 2.6%. The utilities (-1.2%) and industrial (-1.3%) sectors were the next worst performers.

    information technology sector (+1.0%) led the pack by a decent margin, followed by the health care sector (+0.7%).

    There was some speculative buying activity in the meme stock space after “Roaring Kitty” posted a screenshot showing a big position in GameStop (GME 28.00, +4.86, +21.0%).


    Nasdaq Composite: +12.1% YTD
    S&P 500:+10.8% YTD
    S&P Midcap 400: +6.4% YTD
    Dow Jones Industrial Average: +2.3% YTD
    Russell 2000: +1.6% YTD


    U.S. Treasuries began June on a firmly higher note, sending yields on all tenors back below their respective 50-day moving averages to levels last seen two weeks ago.

    Treasuries opened the day with solid gains after overnight action saw the release of final May Manufacturing PMI readings with reports

    China (51.7), Japan (50.4), South Korea (51.6), and India (57.5) showing ongoing expansion while Australia’s (49.7) reading remained in contraction.

    In Europe, only Spain (54.0) and the U.K. (51.2) reported expansionary readings while readings from Germany (45.4), France (46.4), Italy (45.6), and Switzerland (46.4) came in below 50.0, indicating an ongoing contraction in the manufacturing sector.

    Treasuries inched higher during the first 90 minutes of trade, rallying strongly after the ISM Manufacturing Index for May (actual 48.7%; consensus 49.6%; prior 49.2%) showed a deepening contraction in the domestic manufacturing sector, which contrasted with an ongoing expansion in the final May S&P Global U.S. Manufacturing PMI (actual 51.3; prior 50.9) that was released 15 minutes ahead of the ISM report.

    The rally, which left Treasuries on their highs, was also supported by a plunging price of oil despite a weekend OPEC+ decision to maintain production at the current reduced level into next year, and the Atlanta Fed’s second consecutive downward revision to its GDPNow forecast for Q2 GDP (to 1.8% from 2.7%). The U.S. Dollar Index fell past its 200-day moving average toward levels last seen in early April, dropping 0.5% to 104.14.

    2-yr: -7 bps to 4.82%
    3-yr: -8 bps to 4.62%
    5-yr: -11 bps to 4.42%
    10-yr: -11 bps to 4.40%
    30-yr: -10 bps to 4.55%


    Fitch affirmed Greece’s BBB- rating with a Stable outlook and raised Ireland’s rating to AA from AA-1 with a Stable outlook.

    India’s Sensex rallied to a fresh record high after Prime Minister Modi’s party won a weekend election, putting him on track for his third term in office.

    Australia’s minimum wage will increase by 3.75% on July 1


    Manufacturing PMI final reading for May

    China’s May Caixin Manufacturing PMI hit 51.7 (expected 51.6; last 51.4).
    Japan’s May Manufacturing PMI hit 50.4 (expected 50.5; last 50.5).
    South Korea’s May Manufacturing PMI hit 51.6 (last 49.4).
    India’s May Manufacturing PMI hit 57.5 (expected 58.4; last 58.4).
    Australia’s May Manufacturing PMI hit 49.7 (last 49.6).
    Eurozone’s May Manufacturing PMI hit 47.3 (expected 47.4; last 45.7).
    Germany’s May Manufacturing PMI hit 45.4, as expected (last 42.5).
    U.K.’s May Manufacturing PMI hit 51.2 (expected 51.3; last 49.1).
    France’s May Manufacturing PMI hit 46.4 (expected 46.7; last 45.3).
    Italy’s May Manufacturing PMI hit 45.6 (expected 47.9; last 47.3).
    Spain’s May Manufacturing PMI hit 54.0 (expected 52.5; last 52.2).
    Swiss May PMI hit 46.4 (expected 45.4; last 41.4).
    S&P Global U.S. Manufacturing PMI hit 51.3 in the final reading for May, up from 50.9 in the flash reading and 50.0 in the final reading for April.
    US May ISM Manufacturing Index checked in at 48.7% (consensus 49.6%), down from 49.2% in April.


    FibroGen (FGEN) announces FDA Clearance of Investigational New Drug Application for FG-3165, a Galectin-9 targeting monoclonal antibody, for the treatment of patients with solid tumors…
    FGEN up 25.2%

    GitLab (GTLB) beats by $0.07, beats on revs; guides JulQ EPS above consensus, revs in-line; guides FY25 EPS above consensus, revs above consensus
    GTLB down 4.8%

    HealthEquity (HQY) beats by $0.14, beats on revs; guides FY25 EPS above consensus, revs above consensus
    HQY up 4.3%


    OPEC+ to maintain reduced production level into 2025, according to Reuters

    Saudi Arabia extended its 3.6 million barrels per day of existing cuts until the end of next year, but additional reductions of 2.2 million barrels per day would start to unwind over the next 12 months, starting this October.

    “Barring a material upside surprise in demand, lifting previous cuts after this coming September could prove premature,” Peter McNally, global head of analysts at Third Bridge, said in a note on Monday.

    JPMorgan analysts saw the move as “market neutral” for oil balances and prices in 2024, though a demand slowdown is forecast for next year.

    “We have been arguing that the group should unwind some of the voluntary reductions in 2024 at a time when demand allows for it (at the expense of slightly lower prices),” wrote Natasha Kaneva, head of the global commodities strategy team at JPMorgan.

    Oil prices fell as much as 3.5% on Monday following OPEC+’s decision to start unwinding some voluntary cuts earlier than anticipated, increasing demand concerns heading into 2025.

    West Texas Intermediate futures settled at $74.27 per barrel, while Brent closed at $78.36 per barrel. Oil futures are down roughly 13% from their April peak.

    “Otherwise … OPEC’s massive effective spare capacity — a historic 4.1 mbd high at a time of record demand — will make it increasingly difficult to accommodate further large-scale supply reductions when they will likely be needed in 2H25.”

    Crude’s downward trend has also helped ease gasoline prices in recent weeks.

    On Monday, the national average for gasoline stood at $3.53 per gallon, down $0.06 from one week ago, the largest weekly drop of 2024, according to AAA data.

    “We’re seeing an epic slide for wholesale gasoline prices and cocktail party chatter is likely to focus on plunging retail numbers,” Tom Kloza, global head of energy analysis at OPIS, told Yahoo Finance last week.


    Dow 38,711.29 140.26 0.36%
    S&P 500 5,291.34 7.94 0.15%
    Nasdaq 16,857.05 28.38 0.17%
    VIX 13.20 0.09 0.69%
    Gold 2,346.80 -22.50 -0.95%
    Oil 73.32 -0.90 -1.21%


    Equity indices in the Asia-Pacific region ended the midweek session on a mixed note.

    Japan’s Nikkei: -0.9%,
    Hong Kong’s Hang Seng: -0.1%,
    China’s Shanghai Composite: -0.8%,
    India’s Sensex: +3.2%,
    South Korea’s Kospi: +1.0%,
    Australia’s ASX All Ordinaries: +0.4%.

    Equities in India remained volatile after this weekend’s election, returning to little changed for the week.


    Services PMI readings from China and Japan showed stronger-than-expected expansion in May while growth in Australia’s services sector was slower than expected

    May Caixin Services PMI 54.0 (expected 52.5; last 52.5)

    The Bank of Japan may announce a reduction to its bond purchases as early as next week’s policy meeting.
    May Services PMI 53.8 (expected 53.6; last 54.3). April Average Cash Earnings 2.1% yr/yr (expected 1.7%; last 1.0%)

    South Korea
    Q1 GDP 1.3% qtr/qtr, as expected (last 0.5%); 3.3% yr/yr (expected 3.4%; last 2.1%)

    Hong Kong
    May Manufacturing PMI 49.2 (last 50.6)

    May Services PMI 60.2 (expected 61.4; last 60.8)

    Australia’s Q1 growth undershot expectations with GDP/capita decreasing for the fifth quarter in a row.
    Q1 GDP 0.1% qtr/qtr (expected 0.2%; last 0.3%); 1.1% yr/yr (expected 1.2%; last 1.6%).
    May AIG Construction Index -68.1 (last -25.6)
    May AIG Manufacturing Index -31.1 (last -13.9).
    May Services PMI 52.5 (expected 53.1; last 53.6)

    April Retail Sales -2.7% m/m (last -0.8%); -1.2% yr/yr (last 2.8%)
    New Zealand
    Q1 Terms of Trade Index 5.1% qtr/qtr (expected 3.1%; last -7.8%)


    Major European indices trade in the green.

    STOXX Europe 600: +0.7%,
    Germany’s DAX: +0.8%,
    U.K.’s FTSE 100: +0.3%,
    France’s CAC 40: +0.8%,
    Italy’s FTSE MIB: +1.0%,
    Spain’s IBEX 35: +0.9%.


    Final May Services PMI readings from the region showed an ongoing expansion at a modest pace in most economies ahead of tomorrow’s expected 25-bps rate cut from the European Central Bank.
    To that end, ECB policymaker Kazimir said that inflation is on a good trajectory.

    Eurozone’s May Services PMI 53.2 (expected 53.3; last 53.3).
    Germany’s May Services PMI 54.2 (expected 53.9; last 53.2)
    U.K.’s May Services PMI 52.9, as expected (last 55.0)
    France’s May Services PMI 49.3 (expected 49.4; last 51.3)
    Italy’s May Services PMI 54.2 (expected 54.4; last 54.3)
    Spain’s May Services PMI 56.9 (expected 56.5; last 56.2)


    Eurozone’s April PPI -1.0% m/m (expected -0.6%; last -0.5%); -5.7% yr/yr (expected -5.1%; last -7.8%)

    France’s April Industrial Production 0.5% m/m (expected 0.3%; last -0.2%).

    A Philadelphia court reduced Bayer’s Roundup-related fine to $400 mln from $2.25 bln.
    Volvo’s May sales grew 13% yr/yr.

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