In a bustling week for news, stocks climbed higher as a positive US inflation report suggested that the Federal Reserve might cut interest rates sooner than anticipated. The blue-chip S&P 500 index rose by 1.1%, achieving a new record high, while the technology-focused Nasdaq index increased by 0.4%.
The Bureau of Labor Statistics announced that annual US consumer price inflation slowed more than expected to 3% in June, marking the lowest level in a year. This report followed Federal Reserve Chair Jerome Powell’s statement to Congress that “more good data” is necessary before lowering interest rates. Following the inflation report, money market futures now indicate a 99% likelihood that the Fed will begin cutting rates in September.
In corporate news, the second quarter earnings season started with mixed results. Despite surpassing analysts’ forecasts, shares in Wall Street investment banks JPMorgan Chase and Citigroup fell on Friday. Both banks cautioned that some account holders are feeling the impact of the higher cost of living and are becoming more cautious with their spending. Citi’s consumer lending business, including its credit cards, dropped 74% from a year earlier, and JPMorgan increased its provision for credit losses to $3.05 billion.
Goldman Sachs reported on Monday, and its shares rose by 3% after announcing that profits more than doubled to $3 billion in the second quarter, boosted by increased dealmaking and trading activity in bonds and equities. Goldman advised on ExxonMobil’s $60 billion acquisition of Pioneer Natural Resources during the quarter. CEO David Solomon told analysts that he believes “we are in the early innings of a capital markets and M&A recovery.”
An upgrade by Morgan Stanley propelled Apple shares to a new all-time high, increasing its market valuation to $3.6 trillion. Analysts at the brokerage expect Apple’s suite of artificial intelligence services to drive a record number of its 1.3 billion users to upgrade their iPhones, iPads, and iMacs. Apple also revealed that its annual sales in India rose 33% to almost $8 billion in the year ending in March. This record performance in the world’s most populous country comes at a crucial time as Apple faces more challenging conditions in China, including trade tensions with the US.
The attempted assassination of Donald Trump on Saturday evening shocked the world but had little impact on the markets. However, the expectation that this event will boost his election campaign led to a surge of more than 30% in the shares of Trump Media & Technology Group on Monday.
Closer to home, shares in Burberry plummeted 16% on Monday after it warned that annual profits would fall short of expectations. This prompted the company to replace its chief executive and suspend its dividend. The British fashion group has struggled to revitalise its brand since Christopher Bailey’s departure in 2017 and hopes that new CEO Joshua Schulman can drive the turnaround that his predecessors failed to achieve.
In commodity markets, Brent Crude fell back below $85 a barrel following China’s second quarter GDP report, which did not meet expectations. China’s National Bureau of Statistics reported that the economy grew 4.7% year-on-year, down from 5.3% in the first quarter, due to weaker consumer spending and a downturn in its property sector. China remains the world’s largest importer of crude oil.
The week’s developments show a complex interplay between corporate performances, economic data, and geopolitical events, influencing both market trends and investor sentiment.
TEAM plc (LON:TEAM) is building a new wealth, asset management and complementary financial services group. With a focus on the UK, Crown Dependencies and International Finance Centres, the strategy is to build local businesses of scale around TEAM’s core skill of providing investment management services.
