New York Stock Market Mixed Amid Employment Report and Nvidia Watch... ECB Cuts Rates Before US

NVIDIA Rises Over 2% Early in Trading
ECB Cuts Key Interest Rate by 0.25%P
Focus on May US Labor Department Employment Report on 7th

The three major indices of the U.S. New York stock market showed mixed movements in the early trading session on the 6th (local time), hovering around the flat line. Amid recent persistent weak employment data, investors are adopting a wait-and-see stance as they await the Labor Department's May employment report to be released the next day. Nvidia is rising more than 2% in early trading following its record high the previous day.

As of 9:35 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was down 0.04% from the previous close at 38,791.52. The S&P 500, which focuses on large-cap stocks, was up 0.09% at 5,358.74, and the tech-heavy Nasdaq index was trading 0.2% higher at 17,222.61.

By individual stocks, sportswear brand Lululemon jumped 4.16% after reporting quarterly earnings that exceeded market expectations. Discount retailer Five Below plunged 17.76% due to earnings and future outlook falling short of expectations. Nvidia rose 2.33%. Recently, Nvidia unveiled its next-generation artificial intelligence (AI) graphics processing unit (GPU) 'Rubin,' which led to a 5.16% surge the previous day, setting a new all-time high and pushing its market capitalization beyond $3 trillion. Bank of America (BoA) predicts that Nvidia will rise an additional 22% from the previous day's closing price, surpassing $1,500 per share.

Aswath Damodaran, a professor at New York University, said, "If you were to design a company with perfect momentum, it would be Nvidia," adding, "It has a great story, a CEO who sticks to that story, a market that contributes to it, and we are witnessing one of the best momentum plays in history right before our eyes."

[Image source=Yonhap News]

On the same day, the European Central Bank (ECB) cut its key interest rates ahead of the United States, following the Bank of Canada the previous day. The ECB lowered its key interest rate to 4.25%, the deposit rate to 3.75%, and the marginal lending rate to 4.5%, each by 0.25 percentage points. This is the first time in eight years that the ECB has cut its key interest rate and the first time in five years that it has lowered the deposit rate.

The ECB stated in a release, "Price pressures have eased, and inflation expectations have declined across all dimensions," adding, "High borrowing costs have significantly contributed to the slowdown in inflation, making it appropriate now to ease the degree of monetary policy restraint."

Markets are paying close attention to the timing of interest rate cuts by other G7 advanced economies as the ECB has shifted to rate cuts ahead of the U.S. The U.S. Federal Open Market Committee (FOMC) is scheduled to decide on the key interest rate on the 12th, with the rate likely to remain at the current 5.25-5.5% range.

The employment data released on the day confirmed weaker-than-expected figures. The U.S. Labor Department reported that initial claims for unemployment benefits in the week of May 26 to June 1 totaled 229,000, exceeding both market expectations (220,000) and the previous week's figure (221,000).

Investors are focusing on the Labor Department's May nonfarm payroll report, to be released on the 7th, as the most important indicator this week. The key question is whether the recent trend of weak employment data will be confirmed in this report. May nonfarm payrolls are expected to increase by 185,000 compared to the previous month. In April, the increase was 175,000, falling short of the expected 243,000.

Earlier, according to the U.S. employment report released by private labor market research firm ADP, private sector job growth in May was 152,000, significantly below market expectations (173,000) and April's figure (188,000). If signals of a cooling overheated labor market are confirmed again, expectations for interest rate cuts are likely to spread further.

Government bond yields are on the rise. The U.S. 10-year Treasury yield, a global benchmark for bond yields, rose 2 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.3%. The 2-year U.S. Treasury yield, sensitive to monetary policy, traded slightly higher at around 4.73%.

International oil prices are rising on expectations of Fed rate cuts. West Texas Intermediate (WTI) crude oil rose $0.63 (0.9%) from the previous trading day to $74.7 per barrel, while Brent crude, the global benchmark, increased $0.56 (0.7%) to $78.97 per barrel.