ASX set to dip as Wall Street edges higher
By Stan Choe
Stocks edged toward more records as Nvidia surpassed Microsoft to become the most valuable US company. The gains followed the latest signal that the economy’s growth may be slowing without cratering, as hoped.
The S&P 500 rose 0.2 per cent a day after setting an all-time high for the 30th time this year. The Dow Jones was up 0.1 per cent and the Nasdaq composite mostly unchanged. The Australian sharemarket is set to slip, with futures pointing to a dip of 7 points, or 0.1 per cent, at the open. The ASX added 1 per cent on Tuesday as the RBA left interest rates on hold.
Wall Street continues to push higher.Credit: Reuters
Nvidia rose 3.6 per cent. The chip company has ridden a surge of growth in demand for artificial intelligence applications, and its stock has more than tripled over the past year.
Stocks got some lift from easing yields in the bond market. Treasury yields fell after a report showed sales at US retailers returned to growth last month but remained below economists’ expectations.
That could be an encouraging signal for the Federal Reserve, which is trying to pull off a tough balancing act for the economy. The Fed wants to slow the economy by just enough through high interest rates to get inflation under control. The hope is that it will cut its main rate, which is at its highest level in two decades, in time so that the slowdown stops short of a painful recession.
Following the retail sales data’s release, bets built among traders that the Federal Reserve will cut rates at least once this year and possibly twice, according to data from CME Group. Fed officials themselves are largely penciling in one or two cuts in 2024.
The yield on the 10-year Treasury fell to 4.22 per cent from 4.29 per cent late Monday. The two-year yield, which more closely tracks expectations for the Fed, fell even more. It dropped to 4.71 per cent from 4.77 per cent.
A survey of global fund managers by Bank of America showed they’re the most optimistic about stocks since the autumn of 2021, with relatively little hiding out in cash and allocations heavy to stocks. Fewer managers are also calling for a “hard landing” where the economy tumbles into a bad recession.
Of course, the downside of Tuesday’s weaker-than-expected data could be that it’s a warning signal that the main engine of the US economy, spending by households, is cracking. Alongside May’s numbers, the US government also revised down figures for retail sales in prior months.
Inflation is still high, even if it’s slowed since its peak, and lower-income households in particular are struggling to keep up with the more expensive prices.
Lennar, a homebuilder, fell 4.9 per cent after co-CEO Stuart Miller said “challenged consumer sentiment” and swings in interest rates are testing the company. Its stock fell even though it reported better profit for the latest quarter than analysts expected.
Shares of Fisker plunged 52 per cent to 2 cents after the electric-vehicle maker filed for Chapter 11 bankruptcy protection. The company cited “various market and macroeconomic headwinds.”
On the winning side of Wall Street was La-Z-Boy, which jumped 18.9 per cent after reporting stronger profit and revenue for the latest quarter than expected. The furniture maker said the current quarter is also off to a good start, with a solid Memorial Day, even as high interest rates keep down housing activity throughout the economy.
Silk Road Medical jumped 23.9 per cent after Boston Scientific agreed to buy the medical device company in a cash deal valuing it at roughly $US1.26 billion ($1.9 billion), including its cash. Boston Scientific added 0.2 per cent.
In stock markets abroad, indexes continued to recover in Europe following last week’s rout. Surprise victories by far-right parties in elections had raised worries about the potential for mounting debt loads at the French government in particular.
France’s CAC 40 rose 0.8 per cent for a second straight gain.
In Asia, Japan’s Nikkei 225 rose 1 per cent. Heavyweight Toyota Motor climbed after its shareholders rejected a proposal to force Akio Toyoda, grandson of the automaker’s founder, to leave his post as chairman of the board.
AP
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