[New York Stock Market] Awaiting June CPI and Earnings, S&P and Nasdaq Reach Record Highs... Apple Regains No.1 Market Cap Position

CPI Data Released on 11th, PPI on 12th
Key to Continued Inflation Slowdown Amid Employment Cooling Signals
1-Year Expected Inflation at 3%, Down from 3.2% Previous Month
Powell Testifies Before Congress with Semiannual Monetary Policy Report
Earnings Season for Q2 Begins with Citi and JP Morgan

The three major indices of the U.S. New York stock market closed mixed on the 8th (local time) near the flat line. With the June Consumer Price Index (CPI) and major companies' Q2 earnings reports scheduled for this week, the S&P 500 and Nasdaq indices once again hit record highs. Following recent signals of cooling in the labor market and a continued slowdown in the CPI, the possibility of a rate cut in September is expected to gain more momentum. Apple reclaimed the top spot in global market capitalization, surpassing Microsoft (MS).

On this day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average fell 31.08 points (0.08%) from the previous trading day to close at 39,344.79. The large-cap-focused S&P 500 rose 5.66 points (0.1%) to 5,572.85, and the tech-heavy Nasdaq increased 50.98 points (0.28%) to 18,403.74, marking another record high.

By individual stocks, Apple rose 0.65%, recording a market cap of $3.4934 trillion, overtaking MS ($3.4652 trillion) to regain the No. 1 market cap position. Mopic Holdings surged 75.06% on news of being acquired by U.S. pharmaceutical company Eli Lilly for $3.2 billion. Paramount Global's Class A shares rose 2.69% on news of a merger and acquisition (M&A) with Hollywood production company Skydance. Skydance plans to first acquire Paramount Global's parent company, National Amusements, for $2.4 billion in cash, then inject additional capital to merge with Paramount Global and establish a new entity. SolarEdge, a solar inverter solutions company, jumped 9.26% after Bank of America (BoA) upgraded its investment rating from 'underperform' to 'neutral.'

The biggest event this week is the June CPI release scheduled for the 11th. Last month's CPI is expected to rise 3.1% year-over-year, below May's increase of 3.3%. The CPI growth rates for April and May (3.4% and 3.3%, respectively) both fell short of the previous months (3.5% and 3.4%), raising attention to whether the CPI slowdown trend has continued for three consecutive months. Particularly critical is whether the housing cost component, which rarely slows down, has eased. The core CPI, excluding volatile food and energy, is expected to rise 3.4% in June, matching May's increase.

One day after the CPI release, on the 12th, the June Producer Price Index (PPI) will be announced. The wholesale price index, PPI, influences the retail price index, CPI, over time. PPI is expected to rise 0.1% month-over-month in June, surpassing May's -0.2% figure.

With the U.S. labor market cooling recently, if the June CPI data continues the disinflation trend, the outlook for a rate cut in September is likely to gain more weight. The U.S. unemployment rate for June, released on the 5th, reached 4.1%, the highest in two and a half years. Nonfarm payrolls increased by 206,000, a decrease from the previous month's 218,000.

Meanwhile, a survey showed that consumers' short-term inflation expectations have declined. According to the June consumer expectations survey released by the Federal Reserve Bank of New York, the expected inflation rate for the next year was 3%, down from 3.2% in May.

The market expects the Federal Reserve (Fed) to cut rates twice this year amid forecasts of slowing inflation and signs of a cooling labor market. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on this day priced in a 75.8% chance that the Fed will cut rates by at least 0.25 percentage points at the September Federal Open Market Committee (FOMC) meeting, up from 65.6% a week ago. The probability of a 0.25 percentage point or more rate cut in November rose from 78% a week ago to 85.9% currently.

Vincent Heaney, a strategist at UBS, said in an investment memo on this day, "We believe the fundamental conditions will continue to support stocks, driven by a resilient economy, earnings growth, the possibility of rate cuts, and expanded investment in artificial intelligence (AI)."

Greg Wilansky, U.S. fixed income chief at Janus Henderson Investors, said, "Upcoming inflation data is very important in determining the timing of the first rate cut," adding, "Signs of ongoing economic growth and labor market easing are likely to be positive for stocks and high-yield bonds, at least in the short term."

This week also features remarks from Fed Chair Jerome Powell. Powell will testify before both the U.S. House and Senate on the 9th and 10th, respectively, reporting on monetary policy. Earlier, on the 2nd, Powell stated, "We are returning to a disinflationary path," but also said, "Before embarking on easing policies, we want greater confidence that inflation is sustainably moving toward the 2% target." He is likely to reaffirm this stance during his congressional appearances.

The Q2 earnings season will kick off in earnest this week, starting with financial stocks such as Citigroup and JPMorgan Chase. PepsiCo and Delta Air Lines will also release quarterly results.

U.S. Treasury yields rose slightly. The 2-year Treasury yield, sensitive to monetary policy, increased by 3 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.62%. The 10-year Treasury yield, a global bond yield benchmark, traded around 4.27%, unchanged from the previous day.

International oil prices fell on expectations of ceasefire negotiations between Israel and the Palestinian militant group Hamas. West Texas Intermediate (WTI) crude dropped $0.83 to close at $82.33 per barrel, while Brent crude, the global oil price benchmark, fell $0.79 to $85.75 per barrel.