S&P Hits New Record, Surpasses 5,500; Tesla Soars 10%
* Tesla's stock price surges by over 10%
* Federal Reserve Chairman Powell says risks are balanced
* US JOLTs job openings in May rise to 8.14 million
On July 2nd (Tuesday), local time, boosted by the rise of mega-cap stocks such as Tesla, the three major US stock indices rose, with the S&P 500 index once again setting a new historical record for the highest closing level, surpassing 5,500 points for the first time. Investors digested the public speech of Federal Reserve Chairman Powell, waiting for more clues on interest rate cuts from the US employment report for June later this week.
On the other hand, US stocks will close early on Wednesday, and will be closed all day on Thursday for the US Independence Day holiday, resulting in light trading in the market so far this week.
As of the close of the day, the Dow Jones Industrial Average rose by 162.33 points, an increase of 0.41%, to 39,331.85 points; the S&P 500 index rose by 33.92 points, an increase of 0.62%, to 5,509.01 points; the Nasdaq Composite index rose by 149.46 points, an increase of 0.84%, to 18,028.76 points.
Tesla's stock price soared by more than 10.2% on Tuesday, reaching its highest level in nearly six months. The company's second-quarter deliveries of 443,956 vehicles exceeded expectations.
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"The delivery data above expectations greatly alleviated concerns about weak demand for electric vehicles," said analyst Nelson from research firm CFRA Research. "The company's stock continues to maintain positive momentum, following the shareholders' reaffirmation of Musk's 2018 compensation plan at the annual shareholder meeting held in mid-June."
Some analysts and investors believe that the stock price rebound and delivery data indicate that Tesla's short-term trend may remain optimistic before the launch of the robotaxi robot taxi on August 8th.
Musk posted on social media that the rise in Tesla's stock price on Tuesday was "relatively small compared to Autopilot and Optimus." He said that once these technologies become a reality, they will significantly boost Tesla's market value.Powell: The Fed Needs More Confidence to Cut Interest Rates
On the evening of the 2nd Beijing time, at the European Central Bank Forum held in Sintra, Portugal, Federal Reserve Chairman Jerome Powell attended and delivered a speech, marking his first public appearance since the June Federal Reserve meeting. Also in attendance were European Central Bank President Christine Lagarde and Brazilian Central Bank President Roberto Campos Neto.
Although Powell did not provide any specific guidance on the timing of the first interest rate cut, he expected the inflation rate to remain around 2.5% in the coming year and possibly return to 2% by the end of next year or the year after. Powell stated that the latest economic data shows inflation is returning to a downward track, and officials want to see more data before cutting interest rates. "Due to the strong U.S. economy and labor market, we have the ability to take our time and do things well," Powell said, "That's what we plan to do."
Analysts believe that against the backdrop of high borrowing costs, the U.S. economy has shown significant resilience, but there are signs that the Fed's restrictive policies are taking effect, such as a slowdown in housing sales, an increase in delinquency rates, and a slowdown in consumer spending. Changes in labor market conditions may be one of the biggest uncertainties in the trajectory of U.S. inflation.
Powell stated that the labor market has achieved a "substantial" balance between labor supply and demand, with U.S. wage growth falling back to a more sustainable level. Wage growth is still higher than the level when it ultimately reaches equilibrium, and the labor market is cooling down.
Gent Capital Management CEO Dan Genter said, "What the Fed really wants to see is a further rise in the unemployment rate, followed by a slowdown in job growth."
The market focus turned to the monthly employment report for June released on Friday and the Consumer Price Index for June released on July 11. Although the timing of the first interest rate cut may have little impact on the larger economic outcomes the Fed is seeking, policymakers have become aware of the risks of maintaining tight monetary policy for a long time—if the economy slows down too much or too quickly, the current low unemployment rate will be at risk.
Before Powell's speech, the U.S. Bureau of Labor Statistics released a report on Tuesday showing that the U.S. had 8.14 million job vacancies in May, with an expected 7.95 million, and 8.059 million in April. Both hiring and layoffs increased, indicating a turbulent job market. The quit rate remained unchanged. The number of job vacancies in the U.S. in May rebounded, breaking a downward trend that had lasted for several months.
Specifically, the increase in the number of job vacancies in May was driven by manufacturing, government, and healthcare, while the number of job vacancies in the accommodation and catering service industry led the decline across all industries. The rebound in the number of hires was mainly driven by professional and business services and construction. Business services were also the industry with the most layoffs, indicating that more people are changing jobs.
The JOLTS report is one of the labor market indicators that U.S. Treasury Secretary Janet Yellen valued the most when she was the Fed Chairman. This indicator is also one of the labor market data that the Fed pays great attention to. It should be noted that some economists question the reliability of the JOLTS statistics because the current survey response rate is very low, about half of what it was a few years ago.On individual stocks, Novo Nordisk closed down nearly 2% after U.S. President Joe Biden and Senator Sanders called on the Danish pharmaceutical company to lower the prices of its Ozempic and Wegovy drugs.
Paramount Global rose by about 2% after billionaire Barry Diller's digital media group IAC is exploring the acquisition of the media giant.
In the commodity market, international crude oil prices rose and then fell on Tuesday. The U.S. WTI crude oil August futures contract closed at $82.81 per barrel, down 0.68%. Earlier, WTI crude oil futures had touched $84.38 per barrel, as investors worried that Hurricane Beryl might have a broader impact on the offshore oil fields in the northern Gulf of Mexico, and with the U.S. entering the summer travel season, the market's expectations for increased demand for automotive fuel were optimistic. Recently, crude oil prices have stopped falling and rebounded, entering a range of fluctuating upward movement. From the lowest point in early June to July 1, the price of WTI crude oil futures rose by 14%.
Looking forward to the second half of the year's crude oil market, analysts believe that in the third quarter, as OPEC+ continues to implement production cuts, coupled with the peak season for refined oil consumption, the supply and demand structure of crude oil remains tight, and there is room for oil prices to rise.