Financial industry affects Dow Jones index
Wall Street was perplexed on Whit Monday with investors waiting for the Fed minutes on Wednesday for guidance on interest rates. A decline in JP Morgan's stock shares affected the Dow.
The first trading day of the week saw a mixed pattern on Wall Street. Although the Dow Jones index touched a record high of 40,077 points in early trading, it couldn't sustain this level and dropped below the round mark. The reason being the significant fall in JP Morgan shares. CEO Dimon suggested earlier retirement than expected.
However, the indices faced a limited movement due to a lack of fresh momentum. The Dow Jones index slipped by 0.5 percent to 39,807 points. Conversely, the S&P 500 rose by 0.1 percent, and the Nasdaq Composite rose by 0.7 percent, setting a new record high.
The US stock markets gained momentum from renewed aspirations of interest rate cuts after the latest economic and business data suggested the US Federal Reserve might adjust rates sooner than anticipated. Most investors anticipate a rate cut in September.
Nevertheless, market optimism has been toned down. Remarks from within the US Federal Reserve suggested that interest rates might remain high to further suppress inflation. Thus, investors hope the minutes from the Fed's latest interest rate meeting, due to be published on Wednesday, will provide deeper insight into the Fed's future rate policy. No significant economic data was released at the start of the week. The US reporting season is close to ending. First-quarter results from Nvidia (+2.5%) are anticipated mid-week.
JP Morgan facing defeat in the Dow
Among individual shares, JP Morgan saw a drop of 4.5%. CEO Dimon indicated in an investor day that he might retire earlier than anticipated. He also noted that the company will not be making significant stock repurchases at the current share price. The improved outlook for net interest income in the current fiscal year, though, didn't provide any positive impetus.
Meanwhile, the Federal Reserve and two other federal regulators reportedly plan to substantially reduce the required capital increase of around 20 percent for the largest US banks, as revealed by sources close to the matter. The typical capital increases for institutions - intended to ensure major banks have sufficient cushions to absorb potential losses - would be half the initially intended amount. Goldman Sachs decreased by 1.0 percent, and Citigroup dropped by 1.4 percent. The banking sector in the S&P 500 fell by 2.5 percent.
Dollar modestly stronger - oil prices decline
The dollar saw a modest strengthening. The dollar index increased by 0.2 percent. BBH analysts stated that the dollar is "drifting along" because of a scarcity of important data. They also suggested that the likelihood of a rate cut this summer is high, but Fed officials are cautious about early easing.
Oil prices inched down after marginal gains. Prices for WTI and Brent fell by up to 0.4 percent. The market experience was brief due to news from Iran, where President Ebrahim Raisi died in a helicopter crash. According to ING analysts, oil prices have traded within a range of less than $3.50 since the start of May. Clearer information from the OPEC+ oil cartel concerning its production policy in the second half of the year might be necessary to propel the market out of its recent price range.
The price of gold attained another record high of $2,454 per troy ounce. It concluded the day at $2,428, experiencing a rise of 0.5 percent. Market observers attributed this development to the ongoing speculations over interest rate cuts. They also noted that gold is a sought-after safe haven amidst the present uncertainties in the Middle East following the Iranian President's death.
Yields on the US bond market increased slightly, following last Friday's increase. US Federal Reserve Chairman Jerome Powell discouraged further interest rate hikes and cited the need for more data before commencing rate cuts. BBH analysts expect the Fed minutes on Wednesday to be crucial in determining if there has been any significant disagreement with Powell's sentiment.
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Source: www.ntv.de
