[New York Stock Market] Big Tech Rally on Strong US Indicators... Nasdaq Up 1.65%

The three major indices of the U.S. New York stock market all closed higher on the 27th (local time). Economic indicators released that day showed positive results, and buying momentum was confirmed mainly in big tech stocks such as Tesla, which had been under downward pressure. Now, investors' attention is focused on the upcoming remarks by Jerome Powell of the Federal Reserve (Fed) and inflation indicators scheduled for this week.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 33,926.74, up 212.03 points (0.63%) from the previous session. The S&P 500, centered on large-cap stocks, rose 49.59 points (1.15%) to 4,378.41, and the tech-heavy Nasdaq index closed at 13,555.67, up 219.90 points (1.65%).

All ten sectors except healthcare in the S&P 500 rose. Technology and consumer discretionary stocks showed gains in the 2% range. Representative tech stocks such as Tesla (+3.8%), Microsoft (+1.82%), Apple (+1.51%), Meta Platforms (+3.08%), and Nvidia (+3.05%) rebounded as buying momentum flowed in that day. Snowflake jumped more than 4% on news of an AI-related partnership with Nvidia and Microsoft. Amid the rally of major big tech companies, Google Alphabet closed slightly lower after Bernstein downgraded its investment rating.

Delta Air Lines rose nearly 7% after raising its quarterly and annual earnings forecasts at its investor day event. Supported by expectations that the economy will be better than anticipated, travel-related stocks such as United Airlines (+5.08%), American Airlines (+5.54%), JetBlue (+8.82%), Carnival (+8.84%), Airbnb (+3.87%), and Expedia (+3.77%) also rallied together. On the other hand, Walgreens Boots Alliance, a U.S. pharmacy chain, fell more than 9% after lowering its annual earnings guidance and reporting below-expectation earnings per share. U.S. electric pickup truck startup Rivian Motors filed for bankruptcy protection and sued Taiwan's Foxconn over a failed deal, causing its shares to drop more than 17%.

[Image source=Reuters Yonhap News]

Investors are closely watching the economic indicators released that day while awaiting Fed Chair Powell's remarks, the inflation indicator PCE index, and U.S. economic growth figures scheduled for this week.

The U.S. economic indicators released that day showed better-than-expected levels, helping to restore investor sentiment. Ryan Detrick, chief market strategist at Carson Group, said, "Although news of an imminent recession has been heard since the beginning of the year, the economy is actually building a solid foundation," adding, "Every time economic indicators come out, the possibility of a recession decreases." U.S. durable goods orders in May increased by 1.7% month-over-month, far exceeding Wall Street's forecast of -0.9%. This marks the third consecutive month of growth, indicating that despite more than a year of tightening, the U.S. economy remains robust. Corporate investment indicators also showed growth for two consecutive months.

The consumer confidence index reported by the Conference Board also rose from 102.5 in May to 109.7 in June. This exceeded Dow Jones' estimate of 104 and marked the highest level since January 2022. The Conference Board commented, "Despite expectations of a recession, consumer outlook in June was brighter." In this survey, the percentage of respondents expecting a recession decreased from 73.2% in May to 69.3% this month.

U.S. home prices showed an upward trend. According to the S&P Dow Jones Indices, the S&P CoreLogic Case-Shiller Home Price Index rose 0.5% month-over-month in April. This index, which measures average home price trends in major U.S. cities, has continued to rise for three consecutive months. However, compared to a year ago, April home prices fell 0.2%, marking the first decline since April 2012. New home sales in May increased 12.2% month-over-month on a seasonally adjusted annual rate to 763,000 units, the largest since February 2022.

Later this week, events that could provide hints about the direction of monetary policy remain, including Fed Chair Powell's remarks. On the 28th, Powell will participate as a policy panelist alongside ECB President Christine Lagarde and others at the Sintra Forum hosted by the European Central Bank (ECB). The following day, on the 29th, he will have a dialogue with Hern?ndez de Cos, Governor of the Bank of Spain, in Madrid. Since indicating the possibility of two rate hikes this year during last week's U.S. congressional hearing, attention is focused on whether such hawkish remarks will continue. Regarding the ECB, President Lagarde stated that it is highly likely that rates will be raised in July and maintained at that level for some time.

Economic indicators that could impact Fed tightening will also be released later this week. The final U.S. first-quarter Gross Domestic Product (GDP) figure will be released on the 29th, and the U.S. May PCE price index will be published on the 30th. The market estimates that the May core PCE will rise 4.6% year-over-year and 0.3% month-over-month, a slight slowdown from the previous month. However, if inflation indicators show stronger-than-expected levels, tightening pressure around the Fed could increase.

Currently, the market consensus is that the Fed will resume rate hikes at the next July FOMC meeting. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) rate futures market currently reflects nearly a 77% probability of a baby step hike in July. However, unlike the Fed's dot plot, which forecasts two hikes this year, the rate futures market still favors a scenario of one hike followed by a prolonged pause.

Additionally, earnings reports from U.S. semiconductor company Micron, recently targeted by the Chinese government in the tech supremacy competition, and leading consumer goods company Nike will be released this week. Consumers are expected to closely watch these to gauge the impact of U.S.-China tensions on semiconductor companies and the current state of U.S. consumption. Chris Senyak of Wolfe Research emphasized, "U.S. consumers will be the biggest driver of economic outlook and sector rotation in the coming months." Bank of America (BoA) diagnosed that the bifurcated market risk in the U.S. stock market will continue until the Dow Jones surpasses its previous high in November.

In the New York bond market that day, Treasury yields rose. The 10-year Treasury yield hovered around 3.76%, and the 2-year Treasury yield, sensitive to monetary policy, moved around 4.76%. The dollar index, which shows the value of the dollar against six major currencies, fell more than 0.2% to 102.4. The Volatility Index (VIX), known as Wall Street's fear gauge, dropped nearly 4% from the previous session to 13.7.

Oil prices fell. On the New York Mercantile Exchange, the August delivery West Texas Intermediate (WTI) crude oil price closed at $67.70 per barrel, down $1.67 (2.41%) from the previous session. This closing price was the lowest since June 12.