The S&P 500 climbed to a fresh record close on Tuesday, lifted by Federal Reserve Chair Jerome Powell’s cautionary remarks about the risks of maintaining high interest rates for too long. Despite a minor dip in the Dow Jones Industrial Average, the Nasdaq Composite also edged higher, reaching new intraday highs earlier in the session. Powell’s comments, part of his semi-annual update on monetary policy, hinted at a potential easing of the Fed’s restrictive stance, igniting investor optimism. This comes as markets brace for key inflation data later this week, underscoring the delicate balance between economic growth and curbing inflation.

Key Takeaways:

  • S&P 500 Posts Another Record Close Amid Powell’s Comments: The S&P 500 rose 0.1% to reach a new record close, driven by Federal Reserve Chair Jerome Powell’s warning about the dangers of prolonged high interest rates. This marks a significant milestone as the index continues to be driven by tech leaders benefiting from AI advancements.
  • Nasdaq Composite Hits New Intraday High: The Nasdaq Composite added nearly 0.1%, closing just shy of its new intraday peak. This gain was supported by strong performances in tech stocks, notably Nvidia, which saw shares rise by 2.2% following a price target hike by KeyBanc to $180.
  • Dow Jones Edges Lower: The Dow Jones Industrial Average dipped by 62 points, or 0.2%, indicating a cautious sentiment among investors despite the broader market’s strength. Key components like McDonald’s and Microsoft saw declines of 1% and 1.6%, respectively.
  • European Markets Close Lower: The pan-European Stoxx 600 index fell 0.99%, with retail stocks leading the losses at 1.65%. BP shares dropped over 4% following a forecasted $2 billion impairment in Q2 and warnings of lower refining margins. Novo Nordisk shares declined by 1.89% due to competitive pressures from Eli Lilly’s rival obesity drug. The Paris CAC 40 index fell by 1.81%, impacted by political uncertainty following France’s recent election, which resulted in a hung parliament. The U.K.’s FTSE 100 also dipped by 0.70%.
  • Asian Markets Reach New Heights: Japan’s Nikkei 225 surged 1.96%, hitting an all-time high of 41,769.35. The broad-based Topix added 0.97% to close at 2,895.55 after reaching a new peak of 2,907.21. South Korea’s Kospi inched up 0.34%, with Samsung Electronics gaining 0.46% despite ongoing union strikes. India’s Nifty 50 index reached a record high of 24,401.2, while the BSE Sensex added 0.38%. Hong Kong’s Hang Seng Index was up 0.1%, and the CSI 300 advanced 1.12% to close at 3,439.81. Australia’s S&P/ASX 200 added 0.86%, even as consumer sentiment dipped by 1.1%.
  • Oil Prices Decline for Third Consecutive Day: West Texas Intermediate crude fell 1.12% to $81.41 per barrel, while Brent crude dropped 1.27% to $84.66 per barrel. The decline followed the resolution of concerns over significant production halts due to Tropical Storm Beryl.
  • Treasury Yields Rise Amid Powell’s Testimony: The yield on the 10-year Treasury increased by 2.7 basis points to 4.295%, and the 2-year Treasury yield edged up less than one basis point to 4.62%. Powell’s cautious comments on inflation influenced investor sentiment.

FX Today:

  • Gold Price Inches Higher as Powell Signals Patience: Gold prices edged higher, pushing XAU/USD towards the $2,400 figure before retreating to the current level. With the Relative Strength Index (RSI) remaining in bullish territory above the 50-neutral line, buyers remain in control. The first resistance level is at $2,392, followed by $2,400. Further upside targets include the year-to-date high of $2,450 and the significant $2,500 mark. On the downside, if XAU/USD falls below $2,350, it could decline to $2,300. Failing to hold this support may see the metal drop to $2,277, and then to $2,222.
  • GBP/USD Slips Below 1.2800 as ‘Evening Star’ Formation Looms: The GBP/USD uptrend remains intact, but a ‘shooting star’ formation on Monday hints at a potential decline if prices fall below the July 8 low of 1.2785. A daily close beneath this level would confirm an ‘evening star’ three-candle bearish pattern, opening the door for further losses. Initial support is around 1.2750/75, with a break lower targeting 1.2709, and potentially 1.2700. Conversely, defending 1.2800 could resume the uptrend, with resistance at 1.2845 and 1.2860, before challenging the year-to-date high just below 1.2900.
  • Canadian Dollar Goes Sideways After Tuesday’s Fed Fizzle: USD/CAD remains stagnant near 1.3640, struggling to break above 1.3650. Despite a recent rebound from the last swing low around 1.3600, the pair failed to climb above the 200-hour Exponential Moving Average (EMA) at 1.2656. Current price action is confined between the 200-day EMA at 1.3590 and resistance above the last peak near 1.3750, reflecting a technical stalemate.
  • USD/CHF Mildly Rises, Eyes on US Inflation Data This Week: The USD/CHF gained slight momentum, rising to 0.8980 after Federal Reserve Chair Jerome Powell’s congressional testimony. Powell’s cautious remarks about the Fed’s next steps have kept traders alert ahead of Thursday’s US inflation data release. The key focus is whether the 20-day Simple Moving Average (SMA) at 0.8950 can hold as support. Resistance remains at the 100-day SMA at 0.8990, potentially containing further gains.
  • US Dollar Recovers Some Ground as Powell Continues Asking for Patience: The US Dollar saw a modest recovery, with the DXY rising to 105.20 following Powell’s recent comments emphasising patience over immediate rate cuts. Despite losing 0.80% last week and dipping below its 20-day SMA, the DXY found support above the 100-day SMA. The 104.78 zone, marked by the 100-day SMA, remains a critical support level, with additional backstops at 104.50 and 104.30 to prevent further declines.

Market Movers:

  • Nvidia Shares Surge on KeyBanc Price Target Hike: Nvidia shares rose by 2.5% after KeyBanc increased its price target to $180, implying a 40% upside from Monday’s close. The firm noted robust demand for Nvidia’s H100 chip, even with the upcoming launch of Blackwell in the latter half of the year.
  • Helen of Troy Plummets on Earnings Miss: Helen of Troy’s stock plunged nearly 28%, hitting a new 52-week low during the session. The company reported an earnings miss for its first quarter of fiscal 2025, posting 99 cents per share, excluding items, against analysts’ expectations of $1.59 per share. The company also slashed its full-year guidance.
  • UiPath Drops on Workforce Reduction Announcement: UiPath’s stock fell around 7% following the company’s announcement of plans to reduce about 10% of its global workforce. The majority of these reductions are expected to occur by the end of the first quarter in fiscal 2026, as part of a restructuring plan to manage operating expenses.
  • Jumia Technologies Soars on Analyst Coverage: Shares of Jumia Technologies surged approximately 30%, reaching a new 52-week high after Benchmark initiated coverage with a buy rating and a $14 price target, implying about a 65.5% upside from Monday’s close. The firm cited a demographic transformation in the region and Jumia’s positioning as a pan-African leader with tailored services as key catalysts.
  • Chemours Gains on UBS Upgrade: Chemours’ stock rose almost 1% after UBS upgraded the chemical company from neutral to buy, citing favourable demand and price drivers heading into 2025.
  • Lucid Motors Declines After Previous Session’s Rally: Lucid Motors’ stock fell more than 2% after an 8% rally in the previous session. The electric vehicle company reported the delivery of 2,394 vehicles in the second quarter, marking a 70% year-over-year increase, which initially boosted the stock.
  • Novo Nordisk Slips on Competitive Pressures: Novo Nordisk shares dropped around 1.9%. A study published in JAMA Internal Medicine indicated that Eli Lilly’s tirzepatide, used in its Mounjaro and Zepbound treatments, is more effective at weight loss than semaglutide, the active ingredient in Novo Nordisk’s Ozempic and Wegovy.
  • Sony Rises on Merger News: Sony shares rose by 4.4% following news of a merger between Paramount Global’s parent company National Amusements and Skydance Media. The transaction had attracted a bid from Sony and Apollo, as reported by CNBC.
  • Tesla Gains Amid Positive Analyst Outlook: Tesla shares climbed 3.7%, on track for a 10th straight positive day. Morgan Stanley maintained its overweight rating, noting that Tesla’s share of the global battery electric vehicle market in May was 15%.
  • Corning Increases Expectations, Stock Rises: Corning’s stock added nearly 4%. The company revised its expectations for second-quarter core sales to about $3.6 billion, up from its previous outlook of $3.4 billion. Additionally, Corning anticipates core earnings per share to be at the high end or slightly above the guidance of 42 cents to 46 cents.

The S&P 500 reached new heights amid Federal Reserve Chair Jerome Powell’s comments on interest rates, while the Nasdaq followed suit strengthened by tech giants like Nvidia. However, the Dow Jones showed signs of restraint with slight declines. Across the globe, European and Asian markets reflected varied sentiments, influenced by regional political uncertainties and economic data. The movements in forex and commodities, coupled with significant stock performances, underscored a market landscape that remains responsive to macroeconomic signals and sector-specific developments. As investors look ahead to key inflation data and further testimony from Powell, the balance between economic growth prospects and fiscal caution continues to shape market dynamics.