Summary of the Latest Trading Session
US stocks experienced modest gains as investor sentiment turned cautiously optimistic amid signs of a cooling labor market. The $S&P 500(.SPX)$ and $NASDAQ(.IXIC)$ both rose by 0.2%, while the $DJIA(.DJI)$ climbed 0.4%, gaining 140 points. Technology stocks, particularly Nvidia, continued their impressive rally, with Nvidia reaching a market value milestone of $3 trillion.
Key Events Driving the Session
1. European Central Bank (ECB) Decisions: The ECB is expected to cut the deposit rate by a quarter-point to 3.75% on Today. While this move is widely anticipated, the path beyond remains uncertain due to stubborn inflation. ECB President Christine Lagarde's briefing will be closely watched for clues on future rate cuts.
ECB
2. US Labor Market Data: The JOLTS report showed a significant drop in job openings to 8.1 million, the lowest since February 2021. Despite this, rate cut expectations for the Fed's June and July meetings remain low, with only a 17.5% chance of a July cut according to Fed-funds futures.
3.Nvidia's Milestone: $NVIDIA Corp(NVDA)$ market value surged past $3 trillion, making it the first computer-chip firm to achieve this milestone. This gain propelled the technology sector higher, pushing the Nasdaq Composite to its 13th record high of the year.
$NVDA
4. Economic Indicators: The Atlanta Fed’s GDPNow estimate for Q2 GDP growth dropped to 1.8% from 2.7%. The ISM manufacturing report showed a larger-than-expected contraction, while the ISM Services PMI indicated continued expansion in the services sector.
5.Oil Prices and OPEC+: Oil prices extended their losses due to weak US economic data and OPEC+ members raising production. Brent crude fell by 1.4% to $77.29 per barrel, following a 4% drop the previous day.
Market Scenario
The market is currently in a state of cautious optimism. Investors are hopeful for a summer rally driven by technology stocks and a potential easing cycle by the ECB. However, the outlook remains uncertain due to mixed economic signals and the possibility of persistent inflation. The Fed’s stance of keeping rates steady until there is more confidence in inflation's decline adds to the complexity.
Looking ahead, the ECB's actions and subsequent statements from Christine Lagarde will be critical in shaping market expectations. The upcoming May jobs report and next week’s inflation data will also play significant roles in determining the market's direction.
CNN Index
Fear & Grid
Conclusion
As the ECB prepares to start an easing cycle, markets are buoyed by gains in technology stocks and the anticipation of further rate cuts. However, persistent inflation and mixed economic data continue to pose risks. Investors should remain vigilant and stay tuned for key economic reports and central bank announcements that will guide future market movements…
This analysis is provided for informational purposes only and does not constitute investment advice. Investment decisions should be made after thorough analysis of personal financial situations, objectives, and associated risks. Past performance is not indicative of future results. Always consult with a financial advisor before making investment decisions.
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