Despite Thursday’s slight pullback, the S&P 500 briefly broke the 5,500 mark for the first time ever, driven by the ongoing enthusiasm for artificial intelligence (AI) and robust earnings reports. However, Nvidia’s significant decline of 3.5% and dampened the overall market excitement, underscoring the delicate balance in investor sentiment. This latest movement in the stock market highlights a period of mixed economic signals, with new data pointing to both a slowing US economy and resilient global markets lifted by central bank policies. As AI continues to drive tech stocks, the broader market shows signs of strength amidst fluctuating economic indicators.

Key Takeaways:

  • S&P 500 Briefly Surpasses 5,500, Closes Lower: The S&P 500 reached an all-time high of 5,500 during Thursday’s session before closing at 5,473.17, down 0.25%. This minor dip followed a significant rally, highlighting the market’s strong momentum driven by tech stocks, particularly Nvidia.
  • Nasdaq Composite Drops, Dow Jones Rises: The Nasdaq Composite fell 0.79% to close at 17,721.59, reflecting a pullback in tech stocks. In contrast, the Dow Jones Industrial Average rose by 299.90 points, or 0.77%, to finish at 39,134.76, supported by gains in various sectors.
  • Central Banks Diverge on Policy: The Swiss National Bank cut its policy rate by 0.25 percentage points to 1.25%, positioning itself as a frontrunner in the global policy easing cycle. In contrast, the Bank of England held rates steady at 5.25%, a 16-year high, despite UK inflation hitting the 2% target. Meanwhile, China kept its one and five-year loan prime rates unchanged at 3.45% and 3.95% respectively, indicating a cautious approach to monetary stimulus.
  • US Economic Data Shows Mixed Signals: Weekly jobless claims fell to 238,000, lower than the expected 235,000, indicating some resilience in the labour market. However, housing starts declined 5.5% to 1.277 million units in May, the lowest since June 2020, highlighting ongoing challenges in the housing sector amid high interest rates.
  • European Markets Rise: The pan-European Stoxx 600 gained 0.88%, with tech stocks leading at 1.63%. The FTSE 100 rose 0.82% to 8,272.46, and the CAC 40 increased 1.36%. These gains reflect positive investor sentiment in Europe, partially driven by expectations of future rate cuts and the region’s exposure to global tech trends.
  • Asian Markets Show Mixed Performance: Asia-Pacific markets were largely mixed on Thursday. China’s CSI 300 dipped 0.72%, while Hong Kong’s Hang Seng fell 0.65%. Japan’s Nikkei 225 rose slightly by 0.16%. South Korea’s Kospi added 0.37%, and Taiwan’s Weighted Index gained 0.85%, hitting new highs for the third consecutive day. Australia’s S&P/ASX 200 remained flat, but saw excitement with Guzman y Gomez surging 36% in its market debut. 
  • Oil Prices Continue to Rise: US crude oil traded above $82 per barrel, increasing by 0.74% to $82.17. Brent crude rose by 0.75% to $85.71 per barrel, both showing strong weekly gains due to declining inventories.

FX Today:

  • Gold Climbs to Two-Week High on Fed Rate Cut Speculation: Gold prices surged near $2,360, challenging the Head-and-Shoulders pattern. If XAU/USD extends its gains above $2,380, it may expose additional resistance levels at $2,390 and $2,400. Conversely, a drop below $2,343 would keep the pattern intact, potentially pushing Gold down to $2,300, with further support at $2,277 and $2,222.
  • GBP/USD Backslides After BoE Holds Rates: The British pound fell below 1.2700 against the US dollar, ending at 1.2658. Technical indicators favour a bearish extension, with price action failing to hold above the 200-hour EMA at 1.2720. Further declines could see the pair targeting the 200-day EMA at 1.2580 and potentially dropping to the 2024 lows around 1.2300.
  • AUD/JPY Hits New Cycle Highs: The AUD/JPY pair maintained its bullish momentum, reaching new cycle highs around 105.70, the highest since 2013. With strong consolidation at the 104.00 level, the pair could continue rising into the 105.80-106.00 range. Support levels to watch include 105.00 and 104.15, with further potential support at 102.50 and 100.35 if the uptrend falters.
  • USD/CAD Eases as Jobless Claims Fall: USD/CAD traded around the 1.3700 handle, showing bearish momentum. The pair is drifting lower from the 1.3760 supply zone, with eyes on the 1.3680 support level. Technical support comes from the 50-day EMA at 1.3676 and the 200-day EMA at 1.3600, reflecting a 3.5% year-to-date gain for the Canadian dollar.
  • USD/CHF Surges Post-SNB Rate Cut: The USD/CHF pair jumped from 0.8833 to 0.8911, breaching a key resistance level after the SNB cut rates to 1.25%. The Swiss franc weakened significantly, with USD/CHF trading at 0.8911, up 0.83%. If the SNB continues to prevent the franc from appreciating, another rate cut could be expected in September.
  • EUR/GBP Rebounds After BoE Keeps Rates Pinned: The EUR/GBP pair climbed to around 0.8460 following the BoE’s decision to hold rates. Despite the recovery from last week’s 22-month low of 0.8400, the pair faces significant resistance at 0.8500. Bullish momentum remains weak, with the pair needing to overcome 0.8460 to sustain further gains.

Market Movers:

  • Accenture Rises on AI Bookings: Accenture shares surged 7.29% after reporting over $900 million in generative artificial intelligence bookings for its third quarter, bringing the total to $2 billion for the fiscal year. This robust performance underscores the company’s strong position in the AI market.
  • Gilead Sciences Soars on HIV Drug Trial: Gilead Sciences saw its stock jump 8.46%, marking its best day since 2022, following a successful phase 3 trial of its HIV prevention shot, lenacapavir, which demonstrated 100% efficacy for prevention in women.
  • Trump Media & Technology Group Drops: Shares of Trump Media & Technology Group fell 14.56% after the company announced that the SEC had declared effective its registration of additional shares, signalling potential dilution concerns among investors.
  • Super Micro Computer Slips: Despite a midday rise of 5%, Super Micro Computer ended the day 0.26% lower. The company’s involvement in building a supercomputer for Elon Musk’s AI firm, xAI, initially drove gains.
  • Darden Restaurants Edges Higher on Earnings Beat: Darden Restaurants gained 1.53% after reporting mixed financial results for its fourth quarter. The company posted an adjusted EPS of $2.65, beating the expected $2.61, though revenue slightly missed expectations at $2.96 billion compared to the $2.97 billion consensus.
  • Advanced Micro Devices (AMD) Climbs: AMD shares rose 4.62% after Piper Sandler named the semiconductor maker a top pick, citing “bright prospects” for the company in the second half of the year.
  • Winnebago Industries Falls on Weak Earnings: Winnebago Industries’ shares dropped 3.54% following a disappointing quarterly report showing declines in revenue and net profit. The company reported $1.13 in adjusted EPS on $786 million in revenue, missing analyst expectations of $1.31 per share on $798.3 million in revenue.
  • TransUnion Gains on Upgrade: TransUnion shares increased by 2.94% after Bank of America upgraded the stock to buy from neutral, citing an attractive valuation following a recent pullback.
  • Jazz Pharmaceuticals Declines on Drug Trial Results: Jazz Pharmaceuticals’ stock fell 4.72% after its experimental drug for essential tremor failed to show statistically significant improvement in a mid-stage study compared to a placebo.
  • Commercial Metals Rises on Revenue Beat: Shares of Commercial Metals increased by 3.8% after the company reported a revenue beat for its third quarter. The company posted $2.08 billion in revenue, surpassing the FactSet consensus estimate of $2.02 billion, while earnings met expectations.
  • Jabil Falls Despite Earnings Beat: Jabil shares plummeted 11.44% despite beating earnings and revenue expectations in its latest quarterly results. The company cited “softness” in its automotive and transportation markets as a concern.
  • KB Home Jumps on Strong Earnings: KB Home shares rose 2.85% after the homebuilder reported better-than-expected earnings and revenue for the second quarter. The company posted $2.15 earnings per share on $1.71 billion in revenue, exceeding the forecasted $1.80 per share and $1.65 billion in revenue, with net orders up 2% year-over-year.

As Thursday’s trading session concluded, the markets displayed a mix of resilience and caution, with the S&P 500 briefly breaking the 5,500 mark before closing slightly lower. The Nasdaq Composite faced a pullback due to Nvidia’s decline, while the Dow Jones Industrial Average showed strength with a significant gain. Global markets responded positively to central bank decisions, with European and Asia-Pacific stocks exhibiting varied performances. Key economic data indicated a cooling US economy and persistent global inflation challenges, highlighting the intricate balance investors navigate amid AI-driven market enthusiasm and broader economic uncertainties.