S&P 500 and Nasdaq Reach New Highs as Nvidia Boosts Tech Stocks and Investors Await Fed Decision

Vida Markets

Tuesday 11th June 2024, 10:17 am Time to read: 5 mins.

Despite a challenging market environment, the S&P 500 and Nasdaq Composite have closed at fresh records, driven by gains in technology stocks, particularly Nvidia, and optimism ahead of the Federal Reserve's upcoming interest rate decision. Both indices marked their first winning day in three, with investors closely watching the Fed's updated projections and the May

Despite a challenging market environment, the S&P 500 and Nasdaq Composite have closed at fresh records, driven by gains in technology stocks, particularly Nvidia, and optimism ahead of the Federal Reserve's upcoming interest rate decision. Both indices marked their first winning day in three, with investors closely watching the Fed's updated projections and the May Consumer Price Index report, which are expected to provide critical insights into the future direction of interest rates. The anticipation of these economic indicators, coupled with robust performances from tech giants like Meta Platforms, has fuelled positive sentiment in the market, underscoring the ongoing resilience and optimism among investors.

Key Takeaways:

S&P 500 and Nasdaq Close at New Highs: The S&P 500 rose 0.26% to close at 5,360.79, and the Nasdaq Composite gained 0.35% to end at 17,192.53. These fresh records mark the first winning day in three for both indices.
Dow Jones Posts Modest Gains: The Dow Jones Industrial Average added 69.05 points, or 0.18%, ending at 38,868.04, reflecting restrained optimism among investors.
Nvidia Lifts Tech Sector: Nvidia shares climbed approximately 0.8% as its 10-for-1 stock split took effect. This gain contributed to the S&P 500 tech sector rising by about 0.3%.
Fed's Rate Decision and CPI Report in Focus: Investors are keenly awaiting the Federal Reserve's latest rate decision and the May Consumer Price Index report, both scheduled for Wednesday. These events are expected to provide crucial insights into the future of interest rates.
Treasury Yields Rise: The yield on the 10-year Treasury increased by nearly 4 basis points to 4.465%, while the 2-year Treasury yield edged up 1 basis point to 4.883%, as investors anticipate the Fed's policy meeting.
European Markets React to Macron's Election Call: The pan-European Stoxx 600 index closed down 0.27%, with France's CAC 40 index dropping 1.4% following President Emmanuel Macron's call for snap parliamentary elections. The FTSE 100 Index was down 16.89 points or 0.20%. Societe Generale and BNP Paribas shares fell 7.5% and 4.7%, respectively.
Mixed Performance in Asian Markets: Japan's Nikkei 225 climbed 0.92% to close at 39,038.16, while South Korea's Kospi fell 0.79% to 2,701.17. Several markets, including Australia, mainland China, Hong Kong, and Taiwan, were closed for a holiday.
Oil Prices Surge: US crude oil futures rose by 2.93% to $77.74 a barrel, and Brent crude futures increased by 2.52% to $81.63 a barrel, driven by expectations of a summer fuel demand pushing the market into a supply deficit.


FX Today:

Gold Price Rises Amid Climbing US Treasury Yields and Strong US Dollar: Gold posted solid gains on Monday, rising more than 0.50% as US Treasury yields climbed. Although the yellow metal traded above last week’s low of $2,277, it remains on the defensive amid broad US Dollar strength ahead of crucial US economic data releases. XAU/USD trades at $2,308. Further weakness could push the spot price below $2,300, with the next support levels at $2,277 and $2,222. On the upside, consolidation is expected in the $2,350-$2,380 range if buyers lift prices above $2,350.
EUR/USD Declines to One-Month Low Amid Eurozone's Political Uncertainty: EUR/USD extended its decline to 1.0730 during Monday's New York session, pressured by political uncertainty in the Eurozone following French President Emmanuel Macron's call for a snap election. The pair is expected to find support near 1.0635, with the long-term outlook turning negative as it drops below the 200-day EMA at 1.0800. 
GBP/USD Consolidates Around 1.2730 After Hitting 7-Day Low: GBP/USD tumbled below 1.2730, printing a new seven-day low of 1.2687 before recovering some ground. If the pair reclaims 1.2750, it could challenge the June high of 1.2815, with further resistance at 1.2850 and 1.2900. Conversely, a daily close below 1.2700 would target at 1.2686, 1.2602 and 1.2543.
Canadian Dollar Flatlines Against Greenback Ahead of US CPI and Fed Decision: The Canadian Dollar traded sideways, with USD/CAD stuck just below 1.3800. The pair's topside push from last Friday failed to extend, with sellers unable to regain control. The key levels to watch are 1.3780 for buyers and 1.3700 for sellers. USD/CAD is up 3.9% in 2024 but remains below its mid-April peak of 1.3845.
EUR/JPY Support Holds Strong at 168.00: EUR/JPY fell to 168.15 before stabilising at 168.80, affirming the support level around 168.00. The broader bullish trend persists, with robust support at 164.00 and 161.00. Despite recent mild bearish fluctuations, these movements are likely corrective rather than indicative of a major trend change.
Market Movers:

Eli Lilly Hits 52-Week High: Eli Lilly shares, up about 48% year-to-date, gained nearly 2% and hit a fresh 52-week high. The rise follows a unanimous recommendation from a US FDA panel for its Alzheimer’s treatment, donanemab, which is effective for early-stage patients.
Southwest Airlines Surges on Activist Stake: Shares of Southwest Airlines rose 7% after activist hedge fund Elliott Management amassed a $1.9 billion stake. The firm is pushing to replace CEO Bob Jordan and Chairman Gary Kelly, reflecting confidence in potential strategic changes.
GameStop Slips in Volatile Trading: GameStop, the well-known meme stock, dropped nearly 12% following a roller-coaster week. The company reported significant first-quarter sales drops and announced additional stock sales, contributing to Friday’s steep losses.
Huntington Bancshares Slides on Updated Guidance: Huntington Bancshares fell more than 6% after updating its full-year guidance. The bank now expects net interest income to decline 1% to 4%, compared to a previous range of a 2% decline to a 2% gain, raising investor concerns.
Advanced Micro Devices Downgraded: Shares of Advanced Micro Devices (AMD) fell 4.5% after Morgan Stanley downgraded the stock to equal weight from overweight, citing elevated investor expectations.
KKR, CrowdStrike, and GoDaddy Join S&P 500: KKR, CrowdStrike, and GoDaddy shares rose 11%, 7%, and 2%, respectively, following the announcement that they will join the S&P 500 on June 24. Conversely, Robert Half rose nearly 1.5%, while Comerica and Illumina fell 3.4% and 1.9%, respectively, as they are set to leave the index.
Apple Slips Post-WWDC: Apple shares slipped nearly 2% after unveiling new products at its Worldwide Developers Conference, including a new iOS operating system and AI-related features.
ReNew Energy Global Pops on Upgraded Price Target: ReNew Energy Global shares rose 4.8% after Morgan Stanley raised its price target, citing the company’s strong positioning in India’s energy transition.
Planet Fitness Advances on Upgrade: Planet Fitness gained 4.6% following a Jefferies upgrade from hold to buy. Jefferies highlighted potential rallies following recent weakness and changes under the new CEO, including price increases and franchise model adjustments.
DraftKings Gains as Morgan Stanley Top Pick: DraftKings saw a 3.1% increase after being named a top pick by Morgan Stanley. The firm noted that recent concerns over Illinois' progressive tax on sports-betting companies were overdone.
As markets approach a critical point with the Federal Reserve's upcoming rate decision and key inflation data on the horizon, the S&P 500 and Nasdaq's record highs underscore investor optimism, particularly in the technology sector. Despite the political uncertainties in Europe and mixed performances across Asian markets, the resilience seen in tech stocks, coupled with significant individual stock movements, highlights a cautious yet hopeful sentiment. With rising Treasury yields and robust performances from companies like Nvidia and Meta Platforms, investors are navigating a complex landscape of economic indicators and corporate developments. As the week unfolds, the market's reaction to the Fed's guidance and inflation trends will be crucial in determining the near-term direction of equities and broader economic sentiment.

 

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