The DAX reaches the 40,000-point mark
US Markets continue their rally at the end of the week. The Dow-Jones Index climbs to 40,001 points, regaining the 40,000-point mark. Banks start unevenly into earnings season.
A strong recovery on Wall Street at the end of the week propelled the Dow-Jones Index above the 40,000-point mark to a new record high. However, indices gave back some gains in late trading. The Nasdaq, in particular, had fallen significantly the previous day. Despite lower and thus cheaper inflation data, tech-sensitive stocks were among the losers. The semiconductor sector in the S&P 500 gained 1.2%, and the Technology Index rose by the same amount. The focus was also on the quarterly results of JP Morgan, Wells Fargo, and Citigroup, which reacted with significant price declines.
Investors remained optimistic due to the favorable inflation data from the previous day, increasing the likelihood that the US Federal Reserve will begin cutting interest rates in September. The probability is currently priced in at 90%. However, producer prices for June were higher than expected, which could indicate increasing inflationary pressure. However, this did not dampen the prospects for a rate cut in September, according to an observer.
The Dow-Jones Index rose 0.6% to 40,001 points. The new record high is at 40,257 points. The S&P-500 also gained 0.6% and set a new record high. The Nasdaq Composite increased by 0.6%. There were 2,127 (Thursday: 2,433) winners, compared to 705 (405) losers. 60 (55) stocks remained unchanged.
The deteriorating consumer sentiment for June had no reaction. Analysts had expected a slight improvement. However, the inflation expectations of consumers for the next twelve months fell to 2.9% from 3.0%, and for the next five years to 2.9% from 3.0%.
Banks with losses - Tech stocks recover
JP Morgan earned more than expected in the second quarter from a special gain and solid investment banking. However, adjusted for this effect, JP Morgan earned less than in the previous year. The stock fell by 1.2%. Wells Fargo dropped 6.0%. The bank reported a nearly stable profit in the second quarter. A decline in investment banking was offset by a setback in the retail business. JP Morgan exceeded analysts' expectations, but the bank warned of decreasing cost savings.
The shares of Citigroup lost 1.8%, even though the bank earned significantly more and exceeded expectations in the second quarter. It benefited from strong investment banking and lower costs. However, larger provisions were made for potential losses in the credit card business, which weighed on the stock. Bank of New York Mellon rose 5.2%. The financial conglomerate reported higher revenues and earnings in the second quarter. Adjusted, the bank earned more than the market had anticipated.
Hackers obtained data on calls and text messages from almost all AT&T mobile phone customers. The stock lost 0.3%. Among the tech stocks, there were partial recovery movements. The shares of Nvidia gained 1.5%, and Intel were the daily winners in the Dow with a gain of 3.0%. IBM rose by 2.5%.
Dollar continues to weaken - Bonds stabilize
The dollar continued to weaken against major currencies, while bonds stabilized. The yield on the 10-year US Treasury note remained at 1.31%. The yield on the 30-year US Treasury bond was at 1.93%. The yield on the 2-year US Treasury note was at 0.16%. The yield on the 5-year US Treasury note was at 0.63%. The yield on the 7-year US Treasury note was at 1.13%. The yield on the 10-year German Bund was at -0.52%. The yield on the 10-year Japanese Government Bond was at -0.12%.
At the Rentenmarkt, US yields sank further below consumer price data of the previous day due to yield reduction expectations. The yield of ten-year papers decreased by an additional 3.5 basis points to 4.18 percent. Dealers spoke of a stabilization following the strong decline.
After the slide on Thursday when the dollar was weighed down by falling market yields, the Dollar Index reduced by another 0.3 percent. Higher producer prices were shedding off the dollar. Given the overall prevailing yield reduction fantasy, there is downside potential for the greenback, according to ING, and they believe short-term Euro exchange rates will be above the $1.09 mark. This noted just above that level.
Gold saw some profit-taking after the previous day's rally, driven by producer prices. The price for troy ounces fell by 0.1 percent to $2,412.50, after reaching the highest level since late May the previous day.
Oil prices gave back temporary gains but remained relatively stable. Brent and WTI prices fell by up to 0.5 percent. Yield reductions could boost the economy and increase oil demand, it was stated. "We continue to hold our view that the average Brent oil price in this quarter will be $88 per barrel," according to ING. Brent noted at $85.04.
Further information on today's stock market developments can be found here.**
The Dow-Jones Index's ascent to 40,001 points once again puts the focus on Wall Street's robust economy, with tech stocks also recovering from previous losses. Despite JP Morgan and Wells Fargo experiencing significant price declines due to lower earnings, the tech sector showed resilience with Intel leading the gainers in the Dow.
The strong performance of the Dow-Jones Index and the S&P-500, both quietly surpassing new record highs, is indicative of the broader stock market's resilience amidst ongoing economic data and market fluctuations.
