Market Overview as of July 4, 2024Market Overview as of July 4, 2024 U.S. Stocks Despite several weak economic reports released Wednesday, U.S. stocks hovered near record highs. The S&P 500 gained marginally by 0.2%, while the Dow Jones Industrial Average and Nasdaq Composite inched up by 0.1%. Tesla Boosts Market Tesla’s 4.2% increase following a report showing a milder drop in spring sales lifted the S&P 500. Bond Market Activity The bond market witnessed stronger action, with Treasury yields declining after a series of weaker-than-expected reports from the labor market and U.S. service companies. This data supports Wall Street’s anticipation of potential interest rate cuts by the Federal Reserve later in the year. Weakness in Service Sector and Labor Market A report revealed that activity in the U.S. service sector contracted for the third time in 49 months, falling short of economists’ forecasts. Simultaneously, reports emerged indicating a slowdown in the labor market, with marginal increases in unemployment claims and decelerating non-government employer hiring. Hope for Economic Soft Landing Investors hope for an economic soft landing where inflation remains under control without triggering widespread job losses or a recession. A crucial report by the U.S. government on June employment figures is expected on Friday. Yields Declining The yield on the 10-year Treasury note dropped to 4.34% from 4.44%, indicating market expectations of easing inflation. However, concerns over rising U.S. national debt due to potential Republican victories in the upcoming elections have contributed to a recent decline in yields. Constellation Brands Performance Constellation Brands, the company behind Modelo beer and Robert Mondavi wines, reported better-than-expected earnings but slightly below-forecast revenue. Its shares remained relatively stable. Foreign Stock Markets Indexes rose in Europe and Asia, with France’s CAC 40 gaining 1.2%, London’s FTSE 100 rising 0.6%, and Tokyo’s Nikkei 225 climbing 1.3%.
NEW YORK (AP) — U.S. stocks hovered near records Wednesday after several weak economic reports left the door open for possible interest rate cuts later this year.
The S&P 500 was up 0.2%, a day after hitting its 32nd all-time high this year. The Dow Jones Industrial Average was up 28 points, or 0.1%, at 10:10 a.m. Eastern Time, and the Nasdaq Composite added 0.1% to its record set the day before.
Trading on Wall Street closes at 1 p.m. Eastern Time, in observance of the Fourth of July holiday.
Tesla helped give the market another boost, rising 4.2% a day after reporting a milder drop in spring sales than analysts had feared. It was the strongest force pushing the S&P 500 higher.
The action was stronger in the bond market, where Treasury yields fell after a flurry of weaker-than-expected reports from both the labor market and U.S. service companies. The data could keep the Federal Reserve on track to cut interest rates later this year that Wall Street wants.
Currency traders work with the screen showing the Korea Composite Stock Price Index (KOSPI) left and the exchange rate between the U.S. dollar and the South Korean won at a currency trading room in Seoul, South Korea, Wednesday, July 3, 2024. Asian stocks were mostly higher on Wednesday after Tesla gained more than 10%, helping to propel U.S. benchmarks to new records. (AP Photo/Lee Jin-man)
Photo: ASSOCIATED PRESS/Lee Jin-man
Activity at companies in the real estate, retail and other U.S. service sectors shrank for the third time in 49 months in June, according to a report. The reading was much weaker than economists’ forecasts, which had predicted only a slowdown in growth. Perhaps more importantly for Wall Street, the report also said prices are rising more slowly.
That followed reports earlier in the morning that pointed to a slowing labor market. One said slightly more U.S. workers filed for unemployment benefits last week than economists had expected, though the number remains low compared to history. Another from ADP said nongovernment employers slowed their hiring last month, while economists had forecast an acceleration.
The hope on Wall Street is that the economy will soften just enough: enough to limit upward pressure on inflation, but not so much that it costs workers their jobs and triggers a recession. A much more anticipated report is due Friday, when the U.S. government will provide a comprehensive update on how many workers employers hired in June.
The yield on the 10-year Treasury note fell to 4.34% from 4.44% late Tuesday, a notable move in the bond market, much of which came after the U.S. services report. It has generally fallen since April on hopes that inflation will ease enough to prompt the Federal Reserve to cut its key interest rate from the highest level in more than two decades.
Yields have been falling recently, however, as traders see the likelihood of a Republican victory in November rising, raising the prospect of tax cuts and other policies that could further increase the U.S. government’s national debt.
The two-year Treasury yield, which more closely aligns with expectations for Fed action, fell to 4.67% from 4.75% late Tuesday. Traders are now betting on a more than 70% chance that the Federal Reserve will cut its key interest rate as early as September, according to data from CME Group.
On Wall Street, Constellation Brands swung between profit and loss after the company behind Modelo beer and Robert Mondavi wines reported stronger earnings for its latest quarter than financial analysts had expected. The company cited strength in its beer business, but its latest quarterly revenue came in just short of analysts’ forecasts. Shares have been flat recently.
In foreign stock markets, indexes rose across much of Europe and Asia. France’s CAC 40 rose 1.2 percent, paring some of its losses on concerns that a shift away from centrist government policies could lead to much higher French debt.
The FTSE 100 rose 0.6% in London on preparations for the upcoming UK election, while the Nikkei 225 in Tokyo rose 1.3%.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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