U.S. inflation is on a high, with CPI exceeding expectations for growth in June, up 5.4% year-over-year for the largest increase since August 2008. The bond market sees more pressure on the Fed to raise interest rates, U.S. bond yields jumped intraday and the yield curve flattened. Demand for unexpectedly weak 30-year U.S. bond tender results were released, long-dated U.S. bond yields climbed even more sharply, the yield curve regained steepness, 30-year and 10-year U.S. bond yields hit a one-week high. The dollar strengthened further under the threat of inflation, approaching a three-month high.
The three major U.S. stock indexes fell in unison during the session, and the 30-year U.S. bond bid extended its losses after the sale, with the financial sector leading the pressure on the broader market. JPMorgan Chase and Goldman Sachs, which kicked off earnings season, reported mixed results for the second quarter, with the two banks reporting a big jump in investment banking revenue, but a sharp drop in trading revenue. Boeing led the Dow components lower due to manufacturing problems that slowed production of the 787 Dreamliners. Some leading technology stocks such as Tesla and Amazon turned lower mid-day, hitting the Nasdaq and Nasdaq 100, the technology indexes that made record highs during the session.
Top Chinese stocks generally bucked the market. Shares of Sohu, Sogou’s second-largest shareholder, jumped more than 20% after China’s General Administration of Market Regulation announced it approved Tencent’s acquisition of a stake in Sogou, while Tencent ADR and Sogou also rose. Beili Beili, which was the top domestic search engine due to the “collapse of Station B,” maintained its gains as the network rumored that Station B collapsed due to a fire in its headquarters building and server management center, after Shanghai Fire denied there was a fire.
Along with the strong dollar, cryptocurrencies such as bitcoin continued to sink, with ethereum leading the decline, falling below $2,000 during the day to refresh the two-week low again.
In commodities, the market is expected to release this week’s U.S. crude oil inventories will fall for the eighth consecutive week, crude oil to carry the pressure of the climbing dollar rebounded, U.S. crude oil futures are refreshing nearly three years high; CPI reflects the support of high inflation, gold rebounded, but silver and other precious metals fell back; copper and other parts of the industrial metals rebounded, for the first time in a decade on the $ 32,000 Lun tin and a new high, but China in June Import growth eased and a stronger dollar curbed the rally.
In Europe, the media, telecom and technology sectors led the gains and the pan-European stock indexes were able to reach new highs, but the banking sector led the declines under the pressure of mostly continued downward pressure on European debt yields. Major European stock indices fell in tandem.
Boeing fell more than 4% led by the Dow components Financial sector led by the S&P Tesla led by the leading technology stocks, the Chinese outperformed the broader market
The three major U.S. stock indexes opened lower collectively, with mixed performance in the session. The S&P 500 turned up in early trading and hit a new intraday high for the third consecutive day near midday, up nearly 0.18% during the day, but has since turned down again, down 0.4% at a new daily low. Dow Jones Industrial Average only at the beginning of the session had a short turn up and the third day of new intraday highs, up more than 20 points during the day, down nearly 120 points at lunchtime when the new daily low. The Nasdaq Composite Index turned up at the beginning of the session, and since then the early market to maintain the upward trend, near lunchtime on the third day of a new intraday high, up nearly 0.5% at one point during the day, but also turned down at lunchtime, down nearly 0.5% at a new daily low.
Finally, the three major stock indexes fell collectively for the first time in the last three trading days, all falling off the record highs set for two consecutive days as of this Monday. The Dow closed down 107.39 points, or 0.31%, at 34,888.79; the S&P closed down 0.35% at 4,369.21; and the Nasdaq closed down 0.38% at 14,677.65.
Small-cap stocks continued to underperform the broader market, with the value-cap-dominated small-cap index Russell 2000 opening lower and closing down 1.88%. Technology stocks for the heavy Nasdaq 100 index intraday had risen more than 0.8% to a record high, turned down at midday, closing down 0.02%, temporarily parting from the record high closed on Monday.
Dow components, Boeing fell more than 4% to lead the decline. S&P 500 of the 11 major sectors, Tuesday only up more than 0.4% of information technology a closing gain, real estate, finance, non-essential consumer goods are down more than 1% decline in the top, industrial and materials fell nearly 1%, the bottom of the decline is a slight decline in essential consumer goods, as well as down more than 0.1% of health care and telecommunications services.
Bank stocks were mostly lower. Among the five largest banks, Bank of America fell 1.9%, Goldman Sachs, JPMorgan Chase, Citi fell more than 1%, while Morgan Stanley rose 0.5%, in addition to Wells Fargo fell more than 2%.
Leading technology stocks were mixed, Monday rose more than 4% led by Tesla early in the session that turned down, closing down 2.5%, the worst performance in leading technology stocks. six major technology stocks in FAANMG, the lunchtime turn down Amazon closed down more than 1%, the low opening of Facebook had turned up in early trading, the lunchtime return to the decline, closing down 0.3%; and Microsoft closed up more than 1%, Apple rose nearly 0.8%, Nifty rose more than Microsoft closed up more than 1%, Apple rose nearly 0.8%, Nifty rose more than 0.6%, the lunchtime had turned down Google parent company Alphabet closed up nearly 0.3%.
Top Chinese stocks outperformed the broader market, with Chinese ETFs KWEB and CQQQ up more than 3% and 1%, respectively. The three parties involved in the acquisition deal – Sohu, Tencent ADR and Sogou – closed up more than 27%, 3% and 2%, respectively. Another M&A deal-related parties, Douyu, which closed down nearly 9% on Monday to a record low, closed up 4.8% and Tiger rose nearly 6%, erasing all of Monday’s losses. Beeper rose more than 3%, Baidu rose more than 2%, and Alibaba rose nearly 2%.
In Europe, the pan-European stock index Euro Stoxx 600 closed slightly higher, up for three consecutive days, and closed at a new high for two consecutive days. Various sectors, 10 closed up on Tuesday, 9 closed down. Up sectors, up more than 1% in the media, up more than 0.9% in telecommunications and up more than 0.8% in technology rose; down sectors, down more than 1% in the banking sector led the decline. Major European stock indexes on Tuesday ended a two-day streak of gains, led by a decline of more than 1% in Spanish stock indexes dragged down by bank stocks, German stocks temporarily parted from the record closing highs set on Monday.
The 10-year and 30-year U.S. bond yields rose above 1.40% and 2.0% for the first time in a week, respectively, and the yield curve resumed steepening after flattening
U.S. 10-year benchmark Treasury yields jumped after the release of the June CPI, once rose to 1.39%, a new intraday high since last Tuesday, July 6, up nearly 3 basis points during the day, but U.S. stocks quickly retracted all gains before the bell, U.S. stocks had fallen to 1.35% below a new daily low in early trading, down more than 1 basis point during the day, then rebounded, erasing the decline to rise at lunchtime.
More sensitive to interest rates 2-year U.S. bond yields in the CPI release once rose above 0.26%, hitting a new high of more than a week, up more than 4 basis points during the day, after some fall, but most of the U.S. stocks in the day above 0.25%, retaining the uptrend.
After the announcement of the 30-year U.S. bond tender results, the 30-year U.S. bond yield rose above 2.0% in midday trading, hitting a one-week high, once rising nearly 6 basis points intra-day, and the 10-year U.S. bond yield rose above 1.40% for the first time in a week.
The higher-than-expected CPI in June prompted traders to bet that the Fed will tighten money in early 2023, with the 5-year and 30-year U.S. bond spread narrowing to less than 114 basis points, approaching the lowest level of 2021 touched last month, and the 30-year Treasury tender completed with the spread advancing to 120 basis points, but still well below the 167 basis points reached in February.
By the end of the day in New York, both the 10-year and 30-year U.S. bond yields had risen more than 5 basis points during the day to be above 1.41% and 2.00%, respectively, while the 2-year U.S. bond yield rose 2.6 basis points during the day to be above 0.25%.
European government bond prices Tuesday mostly continued to rebound, but the U.S. CPI release yields generally climbed in the short term during the day, to the end of the European market, the British 10-year benchmark Treasury yield fell 1.9 basis points during the day to 0.632%; the same period the German government bond yield rose 0.1 basis points to -0.294%, the U.S. CPI release had fallen to -0.312%.
Dollar index nears three-month high Bitcoin falls below $33,000 Ether falls below $2,000 for another two-week low
The ICE US Dollar Index (DXY), which tracks the exchange rate of a basket of six major US dollar currencies, continued its upward movement during Tuesday’s US and European trading sessions, rising above 92.80 at one point during the US midday session, approaching the intraday high set last Wednesday since early April, up nearly 0.6% during the day.
By Tuesday’s U.S. stock market close, the dollar index was close to 92.78, up more than 0.5% on the day, up two days in a row; the Bloomberg Dollar Spot Index rose 0.5%.
Bitcoin (BTC) fluctuated between $33,000 and $32,000 overall on Tuesday, closing below $32,400 on U.S. stocks and down more than 1% in the last 24 hours, falling below $32,300 shortly after the close to set a new intraday low since last Thursday, July 8, and down more than $1,000, or more than 3% in percentage terms, from its intraday high in the European stock market.
Ether (ETH), the second-largest cryptocurrency after Bitcoin in terms of market capitalization, fell below $2,000 at midday in the U.S. stock market and once below $1,920 at the end of the day, hitting a new intraday low since June 28, down more than 6% from the intraday high in the European stock market, and closing below $2,000 in the U.S. stock market, down more than 4% in 24 hours.
CoinMarketCap data shows that mainstream cryptocurrencies continued to fall on Tuesday, and by the close of U.S. stocks, ETH led the decline in cryptocurrencies, with cryptocurrency Dogcoin (DOGE), which dropped one position to eighth in market capitalization, down 3% in the last 24 hours, and Cardano (ADA), which is fifth in market capitalization, and Bitcoin Cash (BCH), which dropped one position to 13th in market capitalization, both down more than 2%. Litecoin (LTC), the fourth largest cryptocurrency (BNB), and Ripple (XRP), the sixth largest cryptocurrency, all fell more than 1%.
U.S. Oil Hits Near Three-Year Closing Highs, Brewer Nears Near Three-Year Highs
International crude oil futures, which just ended a two-day winning streak on Monday, quickly rebounded to erase Monday’s losses.
U.S. WTI August crude oil futures closed up 1.55% at $75.25 per barrel, the second day this month after July 1 to set a new closing high for the immediate-month contract since Oct. 3, 2018, but it did not break $76 during the session, and is still far from the intraday high set last Tuesday when it approached $77 since November 2014. Brent September crude oil futures closed up 1.77% at $76.49 per barrel, a new closing high since July 5, approaching the high since October 2018 set on July 5 by rising above $77.
U.S. gasoline and natural gas futures remained mixed. nymex August gasoline futures closed up 1.8%, erasing Monday’s losses; nymex August natural gas futures closed down 1.4%, giving back more than half of Monday’s gains.
Copper rallies, tin hits 10-year high, gold rallies to over three-week high
London base metals futures were mostly higher on Tuesday. Copper rebounded slightly, but still failed to regain $9,500 as it did on Friday when it hit a three-week high, closing below $9,500 for the second consecutive day. Aluminum and nickel also rebounded, hitting new one-week and four-plus-month highs, respectively. Lunitic tin rose for a second straight day, refreshing the decade-long high set on Monday, closing above the $32,000 mark for the first time in a decade on Monday. But LON zinc fell for two days in a row, and LON lead ended a three-day streak of gains, falling off the high set on Monday since July 2018.
Gold futures rebounded in New York, with COMEX August gold futures closing up 0.2% at $1,809.90 an ounce, approaching the high since June 16 set by Friday’s rise above $1,810. New York silver futures, which barely closed up for a second straight day on Monday, closed down 0.4%. Platinum and palladium halted their two-day streak of gains, closing down nearly 1.1% and 0.9%, respectively.