Last Week
Investor optimism over a U.S.-Iran peace agreement and wild animal spirits over SpaceX drove the market higher despite a more hawkish-than-expected debut from Federal Reserve Chairman Kevin Warsh.
Stocks surged Monday after the U.S. and Iran announced an agreement that would reopen the Strait of Hormuz, sending oil prices sharply lower. The enthusiasm waned on Tuesday, and selling pressure intensified on Wednesday following Chairman Kevin Warsh’s first meeting, as the Fed removed its easing bias and placed greater focus on price stability, suggesting a greater likelihood of a rate hike this year. That pressure evaporated on Thursday as traders reinterpreted Warsh’s comments through a hawkish lens.
SpaceX and other tech stocks remained in focus throughout the week. Chip stocks traded higher on a report of a partnership between Apple and Intel. AI stocks have been on a rollercoaster ride, with the thrill of increased demand offset by sudden drops when the costs of buildouts are called into question.
For the week, the Nasdaq Composite led the major indexes, rising 2.43%, while the S&P 500 rose 0.93%. The Russell 2000 added 1.22%; however, the S&P SmallCap Index, which excludes companies without profits, was flat. The number of declining issues slightly outnumbered advancing issues, with the Technology sector faring the best, and the Oil & Gas sector suffered a 6.56% loss as Crude prices sank 10% to $76.60 a barrel. The Dollar strengthened 1%, and Gold was steady. The yield on the 10-year Treasury stayed in a very narrow range, finishing at 4.45%, down 4 basis points.
In addition to Kevin Warsh’s Fed debut and what it means to the market, other news of interest highlighted by our interns included the government approving a plan for AI data centers to connect to the grid, the Knicks winning the NBA Finals noting how investing and running a franchise shares many similarities, and how Apple is going to raise its prices due to the cost of memory and storage chips spiking.
On the Chicago Sports Scene, the Bulls named Tiago Splitter as their new coach. Most recently, the 6’11” Brazilian was the interim coach of the Portland Trail Blazers, where he had some modicum of success. The Cubs and the White Sox are both playing slightly better than .500 ball, while the Sky is falling in the WNBA.
This Week
Developments in the Middle East will continue to influence the markets. There were signs of progress in the peace negotiations over the weekend.
On Thursday, the PCE for May, the Federal Reserve’s preferred inflation gauge, will be released. Economists expect the Fed’s preferred inflation gauge to rise to 3.4%. The report will receive plenty of attention, but traders will also consider the subsequent plunge in energy prices in June.
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