This week, the three major indexes of the US stock market collectively rose, with the Dow Jones Industrial Average rising 1.59% and the S&P rising 0.87%, both rising for two consecutive weeks; The Nasdaq has risen by 0.25%, marking its sixth consecutive week of gains.
Surprisingly, the small cap Russell 2000 Index has risen by 6%, and the last time it had such impressive performance was in October last year. Analysis suggests that after the positive inflation report on Thursday, the US stock market began a "sector rotation", and investors began to favor some stocks outside of technology.
In addition to CPI, Federal Reserve Chairman Powell has also brought investors the "dovish voice" they want to hear. He mentioned at a congressional hearing that "there is confidence in recovering to 2% inflation level and there is no need to wait until the inflation rate drops to 2% before starting to cut interest rates
The expectation of interest rate cuts by the Federal Reserve has also increased. As of press time, the "Federal Reserve" observation tool of Zhishang Institute shows that the probability of the bank starting to cut interest rates in September exceeds 96%, and the rate of interest rate cuts within the year is also between 50 basis points and 75 basis points.
Next week, Powell will attend an event to have a dialogue with executives from his former employer, the Carlyle Group. Several other high-ranking officials from the central bank will also appear to speak, including directors Kugler, Waller, Baumann, as well as local Fed chairmen such as Williams, Barkin, Daley, and Logan.
In addition, the Federal Reserve will also release the "Brown Book" of economic conditions, which is an important reference material for the Federal Reserve's monetary policy meeting. In terms of economic data, retail sales, industrial production data, and initial jobless claims may all be indicators of US monetary policy.
Next Thursday, the European Central Bank will announce its interest rate decision, and currently the market expects interest rates to remain unchanged, as Lagarde has stated that more evidence is needed to determine whether inflation threats have been passed. Economists say that it is very likely that the bank will further cut interest rates within the year, but the question is when to cut rates and how much the reduction will be.
The US stock market has entered the Q2 earnings season, with banking giants such as Goldman Sachs, Bank of America, and Morgan Stanley scheduled to release their performance reports next week. In terms of technology companies, the performance of ASML, TSMC, and Netflix is also highly anticipated by the market.
Overview of Important Overseas Economic Events Next Week (Beijing Time):
Monday (July 15th): Eurozone May Industrial Output Monthly Rate, US July New York Fed Manufacturing Index, Bank of Canada releases Corporate Outlook Survey
Tuesday (July 16th): Federal Reserve Chairman Powell engages in dialogue with executives from Carlyle Group, San Francisco Fed Chairman Daley attends meeting, Eurozone July ZEW Economic Sentiment Index, June US Retail Sales Monthly Rate, June US Import and Export Price Index Monthly Rate, July US NAHB Property Market Index, May US Commercial Inventory Monthly Rate
Wednesday (July 17th): Federal Reserve Governor Kugler delivered a speech, Eurozone June CPI year-end value, Richmond Fed Chairman Barkin delivered a speech, annualized total new home construction in the United States in June, monthly industrial output rate in June, and Federal Reserve Governor Waller gave a speech on the economic outlook
Thursday (July 18th): The Federal Reserve releases its economic status brown book, the European Central Bank announces its interest rate decision, the number of initial jobless claims in the United States for the week ending July 13th, the Philadelphia Fed Manufacturing Index for July, European Central Bank President Lagarde holds a monetary policy press conference, and the June Conference Board leads the way with monthly rates
Friday (July 19th): Dallas Federal Reserve President Logan delivered the opening speech at an event, San Francisco Federal Reserve President Daley attended a fireplace talk, Federal Reserve Governor Bauman delivered a speech, Japan's June core CPI annual rate, European Central Bank releases professional expectations survey, New York Federal Reserve President Williams delivers a speech on monetary policy