Rich Asplund
7 min read
In This Article:
The S&P 500 Index ($SPX) (SPY) today is up +0.35%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.56%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.18%. September E-mini S&P futures (ESU25) are up +0.25%, and September E-mini Nasdaq futures (NQU25) are up +0.13%.
Stock indexes are climbing, with the S&P 500 posting a 4-month high, the Dow Jones Industrials climbing to a 3-3/4 month high, and the Nasdaq 100 posting a new all-time high. Strength in chip makers is boosting the broader market today after Micron Technology reported stronger-than-expected Q3 EPS and gave an upbeat forecast for the current quarter, driven by demand for artificial intelligence equipment. Stocks saw support from today's news of a larger-than-expected drop in weekly jobless claims and a larger-than-expected increase in May core capital goods orders.
On the negative side for stocks was today's news of an unexpected downward revision to Q1 GDP. Also, the May trade deficit was wider than expected, a negative factor for Q2 GDP.
Lower bond yields are supporting equity prices as the 10-year T-note yield fell to a 7-week low on speculation that Fed rate cuts could come sooner than expected. The 10-year T-note yield fell to a 7-week low today of 4.26% following a report from the Wall Street Journal that said President Trump may announce Fed Chair Powell's replacement a soon as September, an unusually early appointment, reinforcing expectations of a more dovish leaning Fed, after Trump criticized Powell for holding interest rates steady. Because Powell's term expires in May 2026, announcing a new Fed chair far earlier than the traditional 3-4 month transition period could allow the chair-in-waiting to influence expectations about the likely path for interest rates.
US weekly initial unemployment claims fell -7,000 to 236,000, showing a stronger labor market than expectations of 243,000. However, weekly continuing claims rose +37,000 to a 3-1/2 year high of 1.974 million, above expectations of 1.950 million, signaling more people are staying out of work for longer.
US Q1 GDP was revised lower to -0.5% (q/q annualized), weaker than expectations of no change at -0.2% as Q1 personal consumption was revised downward to 0.5% from 1.2%. The Q1 core PCE price index was revised higher to +3.5% q/q, stronger than expectations of no change at +3.4% q/q.
US May capital goods new orders nondefense ex-aircraft rose +1.7% m/m, stronger than expectations of +0.1% m/m and the largest increase in 4 months.
