The bulls charged ahead this week, propelled by the unstoppable momentum of mega-cap tech stocks (+3.8%). While the broader market showed some cracks, the heavyweights flexed their muscles. The S&P 500 and Nasdaq Composite both notched fresh all-time highs, proving that in this market, size matters.
Leading the pack was the Vanguard Mega Cap Growth ETF (MGK), surging 3.3%. Not to be outdone, the PHLX Semiconductor Index (SOX) powered 3.2% higher. The star of the show? NVIDIA (NVDA), which briefly eclipsed a mind-boggling $3 trillion market cap for the first time ever. That’s a whole lot of zeros.
Riding the coattails of the tech titans, the S&P 500 information technology (+3.8%), consumer discretionary (+1.5%), and communication services (+1.7%) sectors posted solid gains. Conversely, utilities (-3.9%) and energy (-3.5%) found themselves in the red.
But it wasn’t all sunshine and rainbows. Economic storm clouds gathered as the ISM Manufacturing Index signaled a faster pace of contraction, job openings shrank, and wage growth topped forecasts. The bond market took notice, with yields retreating after the ECB’s first rate cut since 2019. The 10-year Treasury yield settled 8 bps lower at 4.43%, while the 2-year yield dipped 2 bps to 4.87%.
US Market Highlights
- The US job market laughed in the face of expectations, adding a whopping 272K payrolls in May. Unemployment ticked up to 4%, but hey, at least wages jumped 0.4%.
- Job openings fell to 8.06M in April, a 3-year low. There are now 1.24 openings per unemployed person, down from the pandemic peak of 2:1. Musical chairs, anyone?
- Factory activity and construction spending took a breather in May. The ISM Manufacturing PMI dropped to 48.7, but the Non-Manufacturing PMI bounced back to 53.8 as services got their groove back.
- President Biden played border patrol, issuing an Executive Order to limit crossings ahead of the election. Sorry, asylum seekers.
- Spotify users, get ready to pay more. Premium plans are going up again, because apparently $10/month wasn’t enough.
- GameStop went on a wild ride after ‘Roaring Kitty’ revealed a $175M bet. Shares soared 100% before crashing back to earth on news of a share offering. The meme stock saga continues.
- TXSE Group is bringing a new stock exchange to the Lone Star State. The startup raised $120M, aiming to start trades in 2025 and host its first listing in 2026. Yeehaw!
Global Highlights
- The European Central Bank dusted off its rate-cutting scissors, trimming rates to 3.75% for the first time since 2019. President Lagarde hinted at more cuts to come. Buckle up, Europe.
- The Bank of Canada joined the rate-cutting party, dropping to 4.75%. Governor Macklem teased further cuts if things keep looking up. Oh, Canada.
- OPEC+ extended its production cuts to prop up prices and avoid drowning the world in oil. Less is more, apparently.
- China’s exports grew nearly 8% in May, beating estimates. But imports only inched up 1.8%, missing the mark as domestic demand snoozed.
- Narendra Modi won a 3rd term in India, but his party fell short of a majority. The Nifty 50 index threw a tantrum, plunging over 8%.
- Claudia Sheinbaum shattered Mexico’s glass ceiling, becoming the first female president. She vowed to keep AMLO’s policies alive.
Commodities Corner
WTI (West Texas Intermediate) crude saw its daily trading range between $75.21 and $76.44, while Brent crude moved between $79.34 and $80.49. These variations are part of a broader trend where both WTI and Brent have seen their prices decline recently, marking a third consecutive week of losses (Last week, the oil and energy markets experienced a variety of developments that influenced trading behaviors and pricing. Oil prices, specifically WTI and Brent crude, fluctuated with daily trading ranges seeing slight variations, reflecting a broader trend of declining prices over the past few weeks. The market’s reaction to OPEC+ announcements indicated concerns about potential oversupply, prompting discussions about production levels to stabilize the market.
Gold prices showed some volatility but ended slightly higher. Specifically, the spot price of gold was around $2,304.79 per Troy ounce. Silver also saw gains, reaching approximately $29.51 per Troy ounce. These movements reflect broader market trends and investor reactions to global economic indicators and policy developments.
Last week, the cryptocurrency market experienced a significant downturn, particularly on Thursday. Bitcoin plummeted by over 9%, with other cryptos also declining sharply. The losses began in the early morning as traders liquidated crypto derivative contracts ahead of monthly options expiration at the end of the week. A report that SpaceX, founded by Elon Musk, had written down and sold off its Bitcoin holdings in Q1 may have contributed to the selloff.
The expiration of out-of-the-money Bitcoin options contracts triggered liquidation of Bitcoin futures, intensifying the downward price pressure. Over $380 million in crypto liquidations occurred, with $348 million being long positions. Reduced crypto news flow this summer has led to lower trading volumes and liquidity, making it difficult for prices to recover after the June BlackRock Bitcoin ETF filing initially boosted the market.
However, U.S. Bitcoin ETFs acquired 25,729 BTC last week, around 8 times more than the amount mined, in the biggest week of Bitcoin buying since the all-time high in mid-March, suggesting some large players were “buying the dip”. The total crypto market cap fell 1.33% to $2.6 trillion on June 7th, with Bitcoin dropping below $70,000 and Ethereum dipping 4.1% to around $3,675. In other news, Coinbase became the first U.S. crypto exchange authorized to offer Bitcoin futures trading, and the Bitcoin network temporarily saw transaction fees spike to over $50 on June 7th due to a large processing backlog.
The Week Ahead
All eyes are on the Fed this week. Will they hold steady or surprise us all? Updated projections for rates, inflation, and growth drop on Wednesday. No rate move is expected, so the dot plot will be under the microscope after that beefy jobs report. Markets are betting on just one quarter-point cut in 2024.
May CPI data lands Wednesday, potentially sparking some pre-Fed fireworks if inflation strays from the script. Economists see core inflation rising 0.3% month-over-month and the annual rate slipping to 3.5% from 3.6%.But wait, there’s more! Apple’s (AAPL) WWDC event on Monday could steal the show. Rumor has it, the tech giant is about to embark on a “new AI-driven chapter.” Get your popcorn ready.
Meanwhile, Tesla (TSLA) shareholders will gather Thursday to vote on Elon Musk’s eye-popping pay package. Will they give it the green light?
Earnings season isn’t over yet. Oracle (ORCL), Broadcom (AVGO), Adobe (ADBE), and newcomer ZEEKR Intelligent (ZK) are set to spill the beans.
