The Federal Reserve held the benchmark rate, with a possible increase by year’s end. Surprisingly the U.S. dollar stood strong amongst worldwide currencies, banking rising on higher interest rates the last 6 months of the year. According to Kevin Warsh, Fed Chief: “bringing inflation back to the 2% target and price stability,” are his goals. The Dollar index hit 101.127 as the Euro slid to 1.1416 according to LSEG data. As oil eases downward with war subsiding, pressure on the Dollar has dissipated. Volkmar Baur of Commerzbank Foreign Exchange and Commodity analyst said: “This is due in no small part to the ongoing euphoria surrounding artificial intelligence.” (referring to lower rate expectations for many central banks). He adds, momentum in AI continues to drive U.S. growth.” Markets were closed June 19, in observation of the Juneteenth public holiday trading as activity was limited, trading volumes were soft. The Dollar has strengthened, edging up slightly all week as world wide tensions continue to persist. Foreign exchange strategist Francesco Pesole said in a note: “In the term, the dollar may enjoy post–Fed enthusiasm for a bit longer with markets keen to fully price two hikes by December at the first strong data.”
Early Monday after clashes between Israel and Hezbollah, Iran scuttled Trump’s peace deal as negotiations stalled. President Trump threatened strikes, blasting the Iranian stance. The small–cap value Russell 2000 index was a strong performer in Monday’s market as investors and traders looked for value stocks. Techs, Ai, and semiconductors issues were ‘second fiddle’ as rotation was the ball–game Monday. Elon Musk’s SPACE X came back Monday, announcing plans to raise another $20 billion on the heels of last week’s IPO. Softness in the initial IPO began to appear Monday as shares declined, “sliding well below the peak price of $201.80… to settle near $154.68.” The Dow Jones Industrial Average was up 148 points while the S&P 500 added 0.4%. CFRA researcher senior analyst Keith Snyder said: “Why do you need $100 billion in cash? With Elon Musk you never know what’s going on in that man’s head that could be seen as overly aggressive.” Treasuries were elevated as the 10–year note leveled at 4.507% up from last week’s 4.45%. Bond investors favored higher–rated corporate bonds over Treasury’s hovering near multi–decade lows, a sign of robust investor demand.”
The heavy tech Nasdaq Composite saw stocks in technology, AI, and semiconductors dive on Tuesday as the index lost 2.2%. Surging interest rates, over valuations and the worrisome concerns of the AI build–out has investors on edge, concerned of tremendous debt and fearing supporting projected earnings abilities. These concerns, building more recently, brought the Nasdaq down a significant 579 points. The Dow Jones and S&P 500 each lost 45 and 109 points respectively. Persistent worries of future technology earnings have dragged the Nasdaq lower in the past 4 of 5 sessions. Wednesday’s market was a tale of techs or no techs. The Dow Jones Industrial Average ecked out a small gain of 0.4% while the tech–heavy Nasdaq and S&P 500 were up 0.4% and 0.1% respectively. Oil hit new lows as benchmark crude slid back to $73.00 a barrel while West Texas crude has settled near $70.00 a barrel. The 10–year Treasury note fell to 4.4% in soft trading.
RUMBLINGS ON THE STREET
Jonathan Weil, Writer of “Heard in The Street,” Wall Street Journal, WSJ – “The stock market is salivating over big increases in corporate earnings, but there’s a catch. Much of the growth is due to a lag in when the cost of huge AI investments hit the books.”
Andy Seig, head of Wealth at Citi, WSJ – “There’s a fear out there in the marketplace around artificial intelligence.” He added: “The role of AI is ‘to supercharge’ the abilities of advisors.”
Jamie Dimon. CEO, JPMorgan Chase, WSJ – “certain things won’t change. I tell people you have to move money, raise money, send money, manage money, but everything else can change.” [comments in reference to Ai and what it can change and what it can not change]
