[New York Stock Market] Broad Rise Led by Tech Stock Rally... Nvidia Up 4.8%

Biden Abandons Reelection... 'Trump Trade' Calms Down
Q2 GDP and June PCE to Be Released on 25-26
Alphabet and Tesla Earnings Scheduled for 23rd

The three major indices of the U.S. New York stock market all closed higher on the 22nd (local time), the first trading day after President Joe Biden officially announced he would not seek re-election, buoyed by gains in technology stocks. Investors' attention is focused on key indicators this week, including big tech (large information technology companies) earnings, June inflation, and second-quarter gross domestic product (GDP) growth.

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On the day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 127.91 points (0.32%) from the previous trading day to close at 40,415.44. The large-cap-focused S&P 500 also ended trading up 59.41 points (1.08%) at 5,564.41, marking the largest daily gain since the 5th of last month. The tech-heavy Nasdaq index jumped 280.63 points (1.58%) to close at 18,007.57.

By individual stocks, Nvidia surged 4.76% on news that it is preparing a customized 'Blackwell' chip aimed at the Chinese market, circumventing U.S. export controls on China. Microsoft (MS) rose 1.33%, while Alphabet, Google's parent company, and Meta, Facebook's parent company, increased by 2.21% and 2.23%, respectively. Bank of America (BoA) fell 1.47% following reports that Berkshire Hathaway, led by investment guru Warren Buffett, sold $1.5 billion worth of shares last week. Cybersecurity firm CrowdStrike plunged 13.46% after Guggenheim downgraded its investment rating from 'buy' to 'neutral.'

Mona Mahajan, senior investment strategist at Edward Jones, analyzed, "After the sell-off intensified with the collapse of CrowdStrike, there has been a rotation back into the tech sector. The combination of expanding earnings and expectations of Federal Reserve (Fed) rate cuts is giving investors some hope."

Investors are closely watching the market impact of the change in the presidential race following President Biden's decision not to run for re-election. Biden announced his sudden withdrawal from the Democratic candidacy just over three months before the November election. After a TV debate on the 27th of last month raised concerns about his age and cognitive abilities, and amid fears within the Democratic Party that he would lose to former President Trump, Biden could not withstand the pressure to withdraw. He officially endorsed Vice President Kamala Harris as the next Democratic presidential candidate, and the 'Harris momentum' is spreading both inside and outside the party.

Jay Hatfield, CEO of Infrastructure Capital Advisors, forecasted, "The fact that President Biden endorsed Vice President Harris reduces uncertainty. Since Harris is considered somewhat more likely to win, the Trump trade may retreat slightly today."

The Trump trade refers to the phenomenon where stocks expected to benefit from former President Donald Trump's anticipated victory as the Republican presidential candidate rise.

This week, several key indicators that investors will be interested in are scheduled for release. First, the U.S. Department of Commerce will announce the June Personal Consumption Expenditures (PCE) price index on the 26th. The core PCE price index, which excludes volatile food and energy prices, is expected to have risen 0.1% month-over-month. Accordingly, there are expectations that the second-quarter core PCE inflation rate will fall below the Fed's 2% target.

On the 25th, one day before the June PCE inflation release, the advance estimate of this year's second-quarter GDP growth rate will be released. The growth rate is forecasted to be 1.9% annualized quarter-over-quarter, up from 1.4% in the first quarter. If the second-quarter growth rate comes in around 2%, it is expected to bolster prospects for a soft landing of the U.S. economy.

The market is taking the decline in inflation, cooling of the labor market, and signs of slowing growth as a given for a rate cut in September. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market is currently pricing in a 94.1% probability that the Fed will cut rates by at least 0.25 percentage points at the September FOMC meeting.

Big tech earnings announcements will continue this week. On the 23rd, Alphabet, Google's parent company, and Tesla will report earnings. IBM will release its results on the 24th. Next week, other members of the Magnificent Seven, including Microsoft (MS) and Apple, will report. The performance of big tech earnings is expected to influence the trend in technology stocks.

U.S. Treasury yields are moving in a narrow range. The 10-year U.S. Treasury yield, a global benchmark for bond yields, rose 1 basis point (1 bp = 0.01 percentage points) from the previous trading day to 4.25%. The 2-year U.S. Treasury yield, sensitive to monetary policy, is trading at 4.52%, up 1 bp from the previous day.

International crude oil prices fell due to concerns over rising oil inventories and weakening demand. West Texas Intermediate (WTI) crude closed at $79.78 per barrel, down $0.35 from the previous day, while Brent crude, the global oil price benchmark, ended at $82.40, down $0.23.