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Mixed US Stocks: Dow Jones 6-Day Winning Streak
**Three major stock indices diverge, Nasdaq down nearly 0.2%;
**US Treasury yields halt decline, 10-year US Treasury approaches 4.50%;
**Intel drops over 2%, company issues second-quarter revenue warning.
On Wednesday, US stocks experienced mixed performance with a rebound in US Treasury yields dampening risk appetite. By the close, the Dow Jones Industrial Average (DJIA) rose by 172.13 points, a gain of 0.44%, to 39,056.39, achieving a six-day winning streak, the longest since 2024, and recapturing the 39,000 level. The Nasdaq Composite fell by 0.18%, to 16,302.76, while the S&P 500 Index was nearly flat, at 5,187.67.
Market Overview
The US Department of Commerce stated on Wednesday that wholesale inventories in April fell by 0.4% month-on-month and by 2.3% year-on-year, which implies a continued drag on the second-quarter economy. Previously released data showed that the US GDP growth rate for the first quarter was 1.6%, the slowest in nearly two years.
Several Federal Reserve officials made routine speeches. Boston Fed President Collins indicated that the Federal Reserve's interest rate policy may need to remain at current levels until inflation moves "sustainably" towards the central bank's 2% target.
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Federal Reserve Governor Cook stated that, overall, the risk of commercial real estate credit is considered "substantial but manageable." Companies have sufficient earnings to repay debt obligations, and financial firms are prepared to absorb shocks.
New York Federal Reserve Bank official Roberto Perli said that the Fed's decision to slow the pace of balance sheet reduction gives policymakers more time to assess changes in market conditions and allows liquidity to redistribute within the banking system. The official, who is responsible for the Federal Reserve's System Open Market Account (SOMA) for its asset portfolio, stated that although the Fed's balance sheet has shrunk by over $1.5 trillion since the balance sheet reduction began nearly two years ago, the level of bank reserves considered sufficient by the Fed remains uncertain. Therefore, it makes sense to approach this level gradually.
Long-term US Treasury yields fluctuated and rebounded, with the 2-year US Treasury, closely linked to interest rate expectations, reporting at 4.84%, and the benchmark 10-year US Treasury at 4.49%. According to the Fedwatch tool from the Chicago Mercantile Exchange Group, the likelihood of the Federal Reserve cutting interest rates by at least 25 basis points in September is close to 70%, higher than the approximately 55% a week ago.Morgan Stanley believes that the Federal Reserve will cut interest rates by 25 basis points in September and will cut rates once more before the end of the year. "By September, there will be five CPI inflation data and four PCE inflation data, with an expected average monthly rate of 0.20%. Considering the inflation path, we believe that waiting to act after September is too late."
NorthEnd Private Wealth Chief Investment Officer Alex McGrath stated: "We have a lot of data that has unexpectedly softened, which increases the probability of a rate cut in September. The bigger question is what the Federal Reserve will do when macro data begins to deteriorate and inflation has not yet returned to the target. Will they stick to their guns or start cutting rates? This is the dilemma we face this summer."
Ameriprise Chief Market Strategist Anthony Saglimbene believes that investors are just waiting for the next catalyst to set the market's direction, which may come next week—Producer Price Index (PPI) and Consumer Price Index. "I think that investors are reluctant to push the market higher before getting the latest news on inflation."
On individual stocks, Tesla fell 1.7% as the U.S. Department of Justice is investigating whether the company has misled investors and consumers regarding its self-driving features.
Intel fell over 2% as the company downgraded its second-quarter revenue guidance.
Ride-hailing giant Uber fell 5.7% after unexpectedly reporting a quarterly loss and issuing a pessimistic outlook, with total bookings for the second quarter expected to fall short of expectations. In contrast, main competitor Lyft surged 7.1% after the company forecasted total bookings and core profits for the quarter to be higher than expected.
E-commerce platform Shopify plummeted 18.5%, with the company reporting first-quarter revenue of $1.9 billion, a 23% year-over-year increase, and a net loss of $273 million, compared to a net profit of $68 million in the same period last year.
International oil prices rebounded from their lows, with unexpected declines in U.S. crude oil inventories boosting buying activity. WTI crude oil's nearest-month contract rose 0.78%,报价 at $78.99 per barrel, while Brent crude oil's nearest-month contract rose 0.51%,报价 at $83.58 per barrel.
International gold prices fluctuated narrowly as investors continued to await clues on Federal Reserve monetary policy and monitor developments in the Middle East. The COMEX gold futures for delivery in May at the New York Commodity Exchange fell 0.07%,报价 at $2,313.60 per ounce.
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