On June 28th local time, the Federal Reserve's most important inflation indicator - the May core PCE of the United States - showed a significant cooling in inflation, which the market believes increases the possibility of the Federal Reserve cutting interest rates this year.
Most European and American stock markets closed lower. The "seven sisters" in US stocks fell collectively. Among them, Apple fell 1.6%, ending its four consecutive upward trend, Amazon and Google A broke away from historical highs, and Nvidia fell for two consecutive days. Nike fell nearly 20%, with mainstream investment banks withdrawing their overweight ratings.
Significant cooling of inflation levels in the United States
Pay attention to the performance of non farm employment data next week
On a macro level, the US Department of Commerce released data showing that the month on month growth rate of the US PCE price index in May fell from 0.3% in April to 0, the lowest record since November 2023, in line with market expectations; The year-on-year growth rate also decreased from 2.7% in the previous month to 2.6%, which is consistent with expectations. After excluding volatile food and energy prices, the year-on-year growth rate of the core PCE price index in May hit a record low since March 2021, dropping from 2.8% in April to 2.6%, which is also in line with expectations. Meanwhile, the month on month growth rate of the core PCE price index in May was 0.1%, the lowest record since December 2023.
After the above data was released, traders are still betting about 65% on the Fed's September rate cut, and it is expected that the most likely rate cut will be twice within the year.
However, some Federal Reserve officials remain cautious. This year's vote committee and San Francisco Fed Chairman Daley said that PCE data shows that monetary policy is working and the timing of interest rate cuts cannot be determined at this time. The Federal Reserve's Barkin stated that he is open to the idea of a shift in neutral interest rates and will "act cautiously" in policy, and expressed willingness to accept the view that interest rate hikes have not limited the economy as imagined and are seeing "significant" strength in the economy. Regarding the prospect of interest rate cuts, it is currently not an appropriate time to issue forward-looking guidance.
In addition, consumer confidence at the University of Michigan in the United States rebounded from its initial level in June, with a one-year inflation expectation dropping to 3%. The data shows that the final consumer confidence index for the University of Michigan in the United States in June was 68.2, with an expected value of 65.8, an initial value of 65.6, and a final value of 69.1 in May. The expected one-year inflation rate in the United States for June is 3.0%, with an expected final value of 3.2%, an initial value of 3.3%, and a final value of 3.3% in May.
Bank of America believes that next week's US non farm payroll data is crucial for assessing the Federal Reserve's policy path.
US equities "seven sisters" fell collectively
Tesla's performance in the first half of the year was at the bottom
On June 28th local time, the US stock market opened high and closed low, with all three major stock indices closing slightly lower. According to Wind data, the Dow Jones Industrial Average fell 0.12%, the S&P 500 fell 0.41%, and the Nasdaq fell 0.71%.
The three major European stock indices closed with mixed gains and losses. According to Wind data, as of the close, the German DAX index rose 0.13%; The French CAC40 index fell 0.68%; The FTSE 100 index in the UK fell 0.19%.
The "seven sisters" in US stocks fell collectively. Among them, Apple fell 1.6%, ending its four consecutive upward trend. Its latest total market value was 3229.7 billion US dollars, ranking second in the US stock market; Microsoft fell 1.3% after hitting a new high for three consecutive days, with its latest total market value reaching $3321.9 billion, the highest in the US stock market; Amazon fell 2.32%, with its stock price off its all-time high and a market value of 2011.1 billion US dollars; Netflix fell 1.38%, Google A fell 1.76%, also breaking away from the highest point; The Metaverse fell 2.95%; Nvidia fell 0.36% for two consecutive days, with its latest total market value reaching $30391 trillion, ranking third in the US stock market.
Chip stocks mostly rose, with Microchip Technology up 2.31%, Qualcomm up 2.07%, Chaowei Semiconductor up 1.72%, TSMC up 1.28%, Intel up 1.24%, Broadcom up 1.19%, and Asma down 0.51%.
June 28th is the closing day of the US stock market in June, and also the last trading day of the second quarter and the first half of 2024. In the first half of the year, the S&P 500 index rose 14.48%, the Dow Jones Industrial Average rose 3.79%, and the Nasdaq rose 18.13%.
Among the "seven sisters" in the US stock market, Nvidia rose 149.50% in the first half of the year, far ahead of the rest; Meta rose 42.74% cumulatively; Google A rose 30.55% cumulatively; Amazon rose 27.19% cumulatively; Microsoft rose 19.29%; Apple rose 9.68% cumulatively; Tesla fell 20.36%, performing the worst.
Nike fell nearly 20%
Mainstream investment banks are withdrawing their overweight ratings one after another
Sports footwear and apparel giant Nike plummeted 19.99%, with its latest total market value reaching $113.7 billion. Its daily market value evaporated by $28.414 billion (equivalent to approximately RMB 206.497 billion), and it has fallen 30.07% since the beginning of this year.
Nike's fourth quarter revenue for fiscal year 2024 fell short of expectations and lowered its performance guidance for fiscal year 2025. Nike expects its revenue to decrease by approximately 10% in the first quarter of the fiscal year 2025, while the market expects a decrease of 3.2%. In addition, Nike expects a mid single digit decline in revenue for the fiscal year 2025, while expecting a 0.91% growth.
Nike's dismal performance forecast for the fiscal year 2025 has shocked Wall Street, with mainstream investment banks withdrawing their overweight ratings. UBS downgraded Nike's rating from "buy" to "neutral", with a target price of $78; Citigroup has lowered Nike's target price from $115 to $102; Stifel has downgraded Nike's rating to hold, with a target price of $88.
Morgan Stanley and Stifel analysts have questioned Nike's management, including CEO Donahoe, and stated that the sports company is losing its once indestructible reputation. But Nike founder Phil Knight told the media that he has full confidence in Donahoe and fully supports him.
Buffett donated $5.3 billion in stocks
On June 28th, "Stock God" Buffett completed his highest annual charitable donation to date, donating up to $5.3 billion worth of Berkshire Hathaway stock to five charitable organizations.
According to a statement on Friday, this legendary investor will turn 94 in August and convert his 8674 Berkshire A-shares into over 13 million B-shares. Approximately 9.93 million shares were donated to the Bill and Melinda Gates Foundation, while the remaining shares were donated to the Susan Thompson Buffett Foundation named after his deceased first wife, as well as three charitable organizations led by his children Howard, Susan, and Peter Buffett.
After the donation was completed, Buffett still held 207963 Berkshire A-shares and 2586 B-shares, with a total market value of approximately $130 billion. It is reported that Buffett, who has been in charge of Berkshire Hathaway since 1965, has promised to use the wealth he has accumulated in the company for charitable purposes. Since 2006, Buffett has been donating to these five charitable organizations every year.
Russia strongly protests against Japan's planned military exercises near the Russian border
According to Xinhua News Agency, the Russian Ministry of Foreign Affairs announced on the 28th that the Russian side strongly protested to the Japanese Embassy in Russia over Japan's plan to conduct joint military exercises with Germany and Spain near the Russian border.
According to the news, Japan plans to hold a series of joint military exercises with Germany and Spain in Hokkaido near the Russian border from July 19th to 25th, and the Russian side strongly protests against this. The Russian side will never allow Japan to cooperate with NATO member countries outside the region to carry out provocative military activities near the Russian Far East border, as it is a potential threat to Russian security.
The Russian Ministry of Foreign Affairs emphasizes that the irresponsible policies of Japanese Prime Minister Fumio Kishida's government have led to an escalation of tension in Northeast Asia and the Asia Pacific region, putting Japan on a dangerous path. The Russian side will take full countermeasures, strengthen defense capabilities, and protect Russian sovereignty.