[New York Stock Market] Slight Rise Ahead of May PCE Inflation... Amazon Market Cap Surpasses $2 Trillion

Micron's 'Surprise Earnings' Still Drop 5% in After-Hours
Focus on May PCE Inflation Data Released on 28th

The three major indices of the U.S. New York stock market closed slightly higher on the 26th (local time). While some tech stocks such as Amazon rose, the market gauged investment directions ahead of the Personal Consumption Expenditures (PCE) price index to be released on the 28th.

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On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 39,127.8, up 15.64 points (0.04%) from the previous trading day. The large-cap-focused S&P 500 index rose 8.6 points (0.16%) to 5,477.9, and the tech-heavy Nasdaq index ended trading at 17,805.16, up 87.5 points (0.49%).

By stock, Amazon rose 3.9%, surpassing a market capitalization of $2 trillion. Tesla surged 4.81%, and Apple jumped 2%. Nvidia increased by 0.25%. FedEx soared 15.51% after reporting fourth-quarter fiscal results that exceeded market expectations. U.S. electric vehicle maker Rivian surged 23.24% on news that it would receive a $5 billion investment from the Volkswagen Group.

On the same day, U.S. semiconductor company Micron announced its third-quarter fiscal results after market close. Micron reported revenue of $6.81 billion and adjusted earnings per share (EPS) of $0.62, exceeding market expectations. Earlier, LSEG had forecasted Micron’s adjusted EPS at $0.51 and revenue at $6.67 billion. Despite the 'earnings surprise,' Micron’s revenue guidance aligned with market expectations, causing its stock to fall more than 5% in after-hours trading.

The market is divided between optimism and pessimism regarding the stock rally led by Nvidia, the AI leader, debating whether there is further upside potential or if it is a bubble.

David Bansen, Chief Investment Officer (CIO) of Bansen Group, said, "The stock market is currently priced very expensively," adding, "We need to see whether last week’s increased volatility in tech stocks marks the start of a deeper (downturn) or if it is just a correction." He also pointed out, "Excessive investment sentiment, euphoria, and momentum always end the same way."

Investors’ attention is focused on the May PCE price index to be released on the 28th. If the PCE inflation slowdown, the Fed’s most closely watched indicator, is confirmed, it will add another basis for a potential rate cut. With both the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation rates easing last month, the PCE inflation is also expected to slow. The market expects the May core PCE inflation to rise 0.1% month-over-month and 2.6% year-over-year, both below the previous month’s figures of 0.2% and 2.8%, respectively.

The U.S. first-quarter Gross Domestic Product (GDP) final figure and last week’s new unemployment claims will also be announced on the 28th. The GDP final figure is expected to remain at the preliminary estimate of an annualized 1.3% quarter-over-quarter growth. New unemployment claims are expected to have slightly increased to 240,000 from the previous week’s 238,000.

Government bond yields are on the rise. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 9 basis points (bp) (1 bp = 0.01 percentage points) to 4.33%, while the 2-year Treasury yield increased 5 bp to 4.74% compared to the previous trading day.

The hawkish remarks by Michelle Bowman, a Federal Reserve (Fed) Board member, the previous day are seen as reflecting caution that the timing of rate cuts may be delayed. At an event in London, Bowman said, "It is not yet the appropriate time to lower policy rates," adding, "I do not expect rate cuts this year and have pushed back the timing of cuts." Regarding inflation outlook, she emphasized, "There are many upside risks," and stated, "If inflation progress stalls or reverses, I am willing to raise the federal funds rate target range at future meetings."

International oil prices rose. West Texas Intermediate (WTI) crude oil closed at $80.90 per barrel, up $0.07 from the previous trading day, and Brent crude, the global oil price benchmark, rose $0.24 (0.3%) to close at $85.25.