Stock Market Today
Positive news about the economy’s quick recovery, fueled by fewer coronavirus cases, has boosted people’s confidence in investing in the stock market.
Stock markets have set new highs in recent months, and even the Federal Reserve’s hint that it expects to raise interest rates sooner did not deter the bulls. The S & P 500 gained 2.2%, extending its winning streak to five months. The Russell 2000 has shifted significantly toward value stocks, which are more correlated with economic cycles. During the first half of 2021, the index increased by nearly 17%.
In yesterday’s session, the Dow Jones Industrial Average jumped 0.61% and the S & P 500 index rose 0.13%.The Nasdaq, the tech-savvy index, declined 0.17%, while the Russell 2000, the small-cap index, increased by 0.07%.
Investors should applaud the US government’s performance in containing the Covid outbreak and implementing an effective vaccination campaign, which has supported an increase in earnings, reopenings, and a quick economic recovery.
Future inflation concerns and the advance of bond yields will determine how long the stock market boom lasts. The Fed’s tone regarding potential monetary policy would be a major factor, and investors would need to keep an eye on the market for early signs of a shift toward a more hawkish policy.
If concerns about rising inflation subside and bond yields remain at current levels, technology and growth stocks are likely to continue to drive the markets. On the other hand, if inflation fears continue to rise as a result of strong economic growth, the stock market will be due for a correction. Then, investors should concentrate their efforts on cyclical stocks, small-cap stocks, and international stocks.
The unemployment data released today, as well as the June jobs report due out on Friday, will provide some insight into how the Fed is likely to change its monetary policy. According to the Dow Jones survey, 683,000 new jobs were added in June, and unemployment claims reached 390,000 last week, up from 411,000 the previous week.
End of slump in Bitcoin
Bitmain Technologies, the largest seller of rigs used by cryptocurrency miners, has halted sales of the machines after China’s State Council banned cryptocurrency mining across the country. Since the ban went into effect in April, the price of mining rigs has dropped by nearly 75%. Kazakhstan and Texas have emerged as popular destinations for cryptocurrency miners. Crypto traders should keep an eye on the prices of these rigs to see when the bitcoin price slump will likely end.
Gold falls as the dollar rises.
The dollar gained nearly 2.6% against a basket of currencies in June as a result of the Fed’s hawkish stance. Investors are also concerned about the surge in the spread of the Delta variant of the coronavirus, which has prompted many countries to reintroduce strict controls to prevent the virus from spreading.
The price of gold rose yesterday, but it is on track for its biggest monthly drop since 2016 due to concerns about the tapering of bond purchases following the release of the jobs report data. A positive report could persuade the Fed to raise interest rates sooner, which would harm the precious metal.
Stock traders should likely expect a rise in oil prices in the short term because of steep declines in stockpiles of oil and surging demand. Today’s OPEC+ meeting will focus on the strategy for changing oil production in the coming months. Experts previously predicted that the group would consider adding between 500,000 and 1 million barrels per day, but recent news indicates that the current strategy will be maintained. Yesterday, the price of oil rose as a result of this.
According to Goldman Sachs, demand will rise by 2.2 million barrels per day, resulting in a supply shortage of 5 million barrels per day. Brent crude is currently trading at $74.94 per barrel, up 0.43%, while US WTI crude is trading at $73.8 per barrel, up 0.46%.
Asian Stock Markets
The Asian Pacific markets are trading in a slump today. The Nikkei 225 index in Japan declined 0.53% in morning trade, and the Shanghai Composite Index fell nearly 0.07%. As of 11:49 p.m. EST, the ASX 200 index dropped 0.37%, and Seoul’s Kospi had slumped 0.46%.
As per CNBC, China’s factory activity growth slowed in June. The Purchasing Managers Index fell from 52.0 in May to 51.3 in June. According to these reports, economic growth will likely return to pre-pandemic levels.