[New York Stock Market] Slight Rise Awaiting FOMC and CPI Data... Apple, 'AI Reveal', Down 1.9%

NVIDIA Rises 0.75% After Split
Focus on FOMC Dot Plot Revision on 12th

The three major indices of the U.S. New York stock market all closed higher on the 10th (local time). Ahead of this week's Federal Open Market Committee (FOMC) regular meeting and the release of the May Consumer Price Index (CPI), technology stocks rose, showing a gradual upward trend.

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On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 38,868.04, up 69.05 points (0.18%) from the previous trading day. The large-cap-focused S&P 500 index rose 13.8 points (0.26%) to 5,360.79, and the technology-focused Nasdaq index jumped 59.4 points (0.35%) to 17,192.53, marking an all-time high.

By stock, Nvidia rose 0.75% on its first trading day after a 10-for-1 stock split. Generally, stock splits increase trading volume and act as a positive factor for stock price rises. Nvidia showed weakness after the opening but closed slightly higher. Meta, the parent company of Facebook, jumped 1.96%. Microsoft (MS) and Alphabet, the parent company of Google, rose 0.95% and 0.5%, respectively. On the other hand, Apple, which unveiled a new artificial intelligence (AI) service that day, fell 1.91%. At the annual Worldwide Developers Conference (WWDC) held that day, Apple introduced its first AI system, 'Apple Intelligence,' and announced cooperation with OpenAI to provide ChatGPT functionality on the iPhone.

Investors are focusing on the fourth FOMC regular meeting of the year, scheduled for June 11-12. Earlier, the European Central Bank (ECB) initiated a pivot by cutting interest rates by 0.25 percentage points on the 6th, but the Fed is likely to keep the benchmark interest rate unchanged at 5.25-5.5% for the seventh consecutive time immediately after the FOMC meeting on the 12th.

The key issue is the revision of the dot plot reflecting FOMC members' interest rate forecasts. In March, the Fed maintained its previous forecast (from December last year) that interest rates would be cut three times by 0.25 percentage points each this year. However, with the U.S. economy performing well and employment remaining strong, it is expected that the number of rate cut forecasts will be reduced to two or fewer at this meeting.

Anna Wong, Chief U.S. Economist at Bloomberg Economics, analyzed, "The new dot plot at the June FOMC meeting will include forecasts for two rate cuts of 0.25 percentage points each. Given the continuous decline in U.S. growth indicators, Fed Chair Jerome Powell is expected to take a relatively dovish stance during the press conference immediately after the FOMC."

The May CPI will also be released on the 12th. Last month, the CPI and core CPI are expected to have risen by 3.4% and 3.5%, respectively, compared to the previous year. The May CPI inflation rate is expected to be the same as the previous month, while the core CPI inflation rate is forecasted to have decreased by 0.1 percentage points from the previous month. Attention is focused on whether the core CPI inflation rate, which hit a three-year low in April, continued to slow last month. With employment indicators fluctuating, the market is likely to look for clues about the future interest rate path through inflation figures. According to the U.S. Department of Labor's May employment report released earlier, nonfarm payroll employment increased by 272,000, significantly exceeding Bloomberg's forecast of 180,000 and the previous month's 175,000.

Chris Larkin, Managing Director at Morgan Stanley, said, "The interest rate speculation game continues," adding, "Even if the most favorable inflation figures come out, the Fed will not lower rates before September."

The interest rate futures market reflects the possibility of one rate cut within the year. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on that day priced in about a 49% chance that the Fed will cut rates by at least 0.25 percentage points at the September FOMC meeting. A probability below 60% essentially means no chance. The probability of a cut in November is 64%, and in December, 86%.

Government bond yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 3 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.46%, while the 2-year Treasury yield, sensitive to monetary policy, traded up 1bp at 4.88%.

International oil prices rose on expectations of increased demand during the summer peak season. West Texas Intermediate (WTI) crude oil closed at $77.74 per barrel, up $2.21 (2.9%) from the previous trading day, and Brent crude, the global oil price benchmark, closed at $81.63, up $2.01 (2.5%).