The S&P 500 managed a modest gain on Thursday, as Wall Street eagerly anticipates fresh inflation data. The Nasdaq Composite also rose by 0.30% while the Dow Jones Industrial Average climbed higher. Investor focus is now on May’s core personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, hoping it will indicate easing pricing pressures and hint at future interest rate cuts. Despite gains in major indices, key semiconductor stocks like Micron and Nvidia saw declines, raising concerns about the sustainability of the AI-driven market rally. Earnings reports further influenced market sentiment, with Levi Strauss and Walgreens Boots Alliance experiencing significant drops after disappointing results, underscoring the market’s cautious yet hopeful stance amidst economic uncertainties.

Key Takeaways:

  • S&P 500 and Dow Jones Edge Up Ahead of Inflation Data: The S&P 500 closed 0.09% higher at 5,482.87 as investors await May’s core personal consumption expenditures price index. The Dow Jones Industrial Average added 36.26 points, or 0.09%, to close at 39,164.06. This modest gain comes amid mixed earnings reports and market caution ahead of key inflation data.
  • Nasdaq Composite Gains Despite Semiconductor Weakness: The Nasdaq Composite rose by 0.30%, ending at 17,858.68. However, semiconductor stocks struggled, with Micron dropping more than 7% after issuing revenue guidance in line with estimates, and Nvidia declining 1.9%, raising questions about the sustainability of the AI-driven market rally.
  • European Markets Close Lower Amid Inflation Worries: European stocks closed lower on Thursday as investors grappled with global inflation concerns. The pan-European Stoxx 600 declined by 0.4%, with the FTSE 100 dropping 0.55% to 8,179.68 and the CAC 40 falling 1.07%. H&M shares plunged 13% after reporting a smaller-than-expected rise in second-quarter profits. The Riksbank in Sweden kept borrowing costs unchanged but signalled potential rate cuts later in the year. Meanwhile, Spanish retail sales declined by 0.6%.
  • Asia-Pacific Markets Fall Amid Yen Weakness and Mixed Data: Japan’s Nikkei 225 declined 0.82%, while the Topix lost 0.33%, following the yen’s drop to a near 38-year low against the U.S. dollar. Hong Kong’s Hang Seng index led regional losses, falling more than 2% to a near two-month low. Mainland China’s CSI 300 closed 0.75% lower and South Korea’s Kospi decreased by 0.29%, while the small-cap Kosdaq fell 0.41%. Australia’s S&P/ASX 200 trimmed earlier losses, ending 0.3% lower.
  • US Weekly Jobless Claims Fall: Initial claims for state unemployment benefits decreased by 6,000 to a seasonally adjusted 233,000 for the week ended June 22. This drop, despite public holiday volatility, suggests ongoing labour market tightness even as interest rates remain high.
  • Oil Prices Rise Amid Geopolitical Tensions: West Texas Intermediate crude futures rose by 1.04% to $81.74 per barrel, while Brent crude increased by 1.34% to $86.39 per barrel. The gains were driven by concerns over potential conflict within the Middle East, overshadowing soft U.S. gasoline demand.
  • Treasury Yields Inch Lower as Investors Look to Key Inflation Data: U.S. Treasury yields dropped slightly, with the yield on the 10-year Treasury down nearly 3 basis points at 4.288% and the 2-year Treasury yield also down 3 basis points at 4.714%. Investors are closely watching economic data for insights on future monetary policy and economic outlook.

FX Today:

  • USD/JPY Nears Multi-Year Highs Amid Yen Weakness: The USD/JPY pair registered minimal losses, hitting a daily low of 160.28 before trading at 160.77, down 0.03%. The pair approaches the 161.00 level for the second consecutive day despite Japan’s verbal interventions to curb yen depreciation. Key resistance levels are at 161.00 and 162.00, with potential further gains towards the November 1986 high of 164.87. Support lies at 159.01 and June’s low of 158.75.
  • GBP/USD Remains Bearish Despite Bouncing Off Weekly Lows: The GBP/USD traded at 1.2638, navigating between an intraday low of 1.2612 and a high of 1.27133 during the week. The pair remains neutral, with flat daily moving averages (DMAs) within the 1.2636-1.2557 range. Key support levels include the 100 and 50-DMAs around 1.2641/39, followed by the psychological 1.2600 figure. Resistance is seen at 1.2700 and around 1.2730/40.
  • USD/CAD Trapped Near Key Levels: The USD/CAD pair stayed close to Thursday’s opening bids after an early dip to 1.3680. The pair is stuck near the 1.3700 handle, with intraday bids caught at the 200-hour Exponential Moving Average (EMA) at 1.3692. Daily candlesticks indicate a bullish bounce from the 50-day EMA at 1.3676, with key resistance at the 1.3800 level and support at 1.3676.
  • Gold Price Rallies Amid Soft US Dollar: Gold (XAU/USD) rallied, trading around $2,327. Although XAU/USD remains shy of challenging the Head-and-Shoulders neckline, breaking it could pave the way to test the June 21 high of $2,368. Support levels are at $2,300 and $2,277, with potential further losses targeting $2,222. On the upside, reclaiming $2,350 would expose resistance levels like $2,387, ahead of challenging the $2,400 mark.
  • Silver Price Rebounds Successfully: Silver (XAG/USD) staged a comeback, erasing yesterday’s losses of 0.46% and trading near the crucial $29.00 level with a gain of 0.83%. Key support is at $28.28, followed by the psychological $28.00 mark and then $27.01. Resistance lies at the 50-day moving average (DMA) at $29.17, with further levels at $31.54 and $32.51.

Market Movers:

  • Walgreens Boots Alliance Plummets on Earnings Miss: Walgreens Boots Alliance shares plunged more than 22% after reporting third-quarter earnings that missed Wall Street’s expectations. The company also cut its full-year adjusted profit outlook and announced plans to close underperforming stores to reduce costs. Shares of CVS fell nearly 4% in sympathy.
  • Levi Strauss Drops on Disappointing Revenue: Levi Strauss’ stock tumbled 15.4% after the company reported quarterly revenue of $1.44 billion, slightly below the consensus forecast of $1.45 billion from analysts polled by LSEG. The revenue miss raised concerns about the denim maker’s growth prospects.
  • International Paper Declines on Acquisition News: Shares of International Paper fell more than 7% after Suzano announced it was no longer pursuing a potential acquisition of the company. Suzano cited that it had reached the maximum price for the transaction to generate value without receiving any response from International Paper.
  • Hims & Hers Health Slips Amid Report Concerns: The telehealth stock dropped more than 7% after Hunterbrook Media published a report discussing alleged issues about the company’s sale of weight loss drugs. Hunterbrook Capital, a hedge fund affiliated with Hunterbrook Media, holds a short position in Hims & Hers Health shares.
  • RH Surges on CEO Share Purchase: RH shares popped about 9.2% after CEO Gary Friedman completed the purchase of $10 million worth of shares at an average price of $216.10 per share. With this purchase, Friedman now owns just over a quarter of the company’s outstanding shares, signaling strong confidence in the company’s future.
  • Micron Technology Falls on In-Line Guidance: Micron Technology shares shed more than 7% after the company offered fourth-quarter revenue guidance that was roughly in line with expectations. Analysts had hoped for more optimistic guidance amid booming demand for artificial intelligence-related products.
  • AeroVironment Plummets on Lower EBITDA Guidance: AeroVironment’s stock plunged 7.7% after the company reported EBITDA guidance for its fiscal 2025 year that was 5% below analysts’ expectations, according to FactSet. Despite this, AeroVironment posted a fourth-quarter earnings and revenue beat.
  • Arista Networks Rises on Price Target Increase: Arista Networks’ shares rose about 4% after Citi raised its price target to $385 from $330, implying a 15% upside from Wednesday’s close. Citi noted that Arista Networks will benefit from ethernet’s growing share in the AI networking market.
  • Goldman Sachs Slips on Stress Test Results: Goldman Sachs’ stock slipped more than 2% following the latest results of the Federal Reserve’s stress test. The central bank indicated that all 31 banks tested could withstand a severe recession scenario, but Goldman Sachs faced investor scrutiny over its relative performance.

As the market navigates through economic uncertainties, the modest gains in major indices such as the S&P 500 and Nasdaq Composite reflect optimism among investors, who are eagerly awaiting the Fed’s preferred inflation gauge. The mixed performance in the semiconductor sector and significant declines in companies like Walgreens Boots Alliance and Levi Strauss underscore the market’s sensitivity to earnings reports and guidance. Meanwhile, geopolitical tensions and economic data continue to influence market sentiment, with oil prices rising and Treasury yields inching lower. As traders anticipate the core personal consumption expenditures price index, the market remains on edge, balancing hopes for easing inflation against the backdrop of ongoing economic challenges.