The holiday-shortened week saw the end to the best 2nd quarter in six years as the S&P 500 added over $8 trillion in market value. The Semiconductor sector recorded its best quarter ever with a gain of 87.75% as AI demand for chips continued. That said the semiconductor names saw huge swings in prices last week and ended the week with a 2-day 11% plunge. Tensions in the Middle East eased as the US and Iran resumed peace talks. Oil prices continued to decline, and economic data showed a decline in manufacturing input costs likely due to oil price declines. Kevin Warsh, the Fed Chairman, speaking at the ECBs summit in Sintra Portugal, said inflation risks have come down. This statement coupled with a weaker than expected Employment Situation Report likely gives the Fed reason to stay put with its monetary policy. Currently, Fed Fund futures are pricing in a twenty-five basis point hike in December of this year.
The S&P 500 rose 1.78% as the market rally broadened out as evidenced by the equally weighted S&P 500 index hitting an all-time high. The Dow also forged a new high last week after gaining 1.99%. The NASDAQ climbed 2.12%, while the Russell 2000 fell by 0.42%. The Treasury curve steepened as yields climbed across the curve. The 2-year yield increased by five basis points, while the 10-year yield increased by twelve basis points. Oil prices fell by $0.56 to $68.82 a barrel. Gold prices climbed by $29.20 to $4,125.90 an ounce. Silver prices rose by 5.2% or $3.15 to $62.82 an ounce. Copper prices fell by four cents to $6.17 per pound. Bitcoin’s price increased by $3,200 to $63,200. The CBOE Volatility Index fell by 14% to 15.81. The US Dollar index fell by 0.5% to 100.87.
The economic calendar featured the June Employment Situation Report which showed weaker than expected payrolls figures. Non-Farm Payrolls came in at 57K versus the consensus estimate of 130k, while Private Payrolls increased by 49k, well below the estimated 98k. The Unemployment rate fell to 4.2% from 4.3%. Average Hourly Earnings and the Average Work week were in line with expectations at 0.3% and 34.3 hours, respectively. Job Openings in June increased to 7.594m, while ADP Private Payrolls increased by 98k. Initial Jobless claims declined by 1k to 215k, while Continuing Claims increased by 2k to 1814k. June Consumer Confidence rose to 91.2 from 90.6 in May. ISM Manufacturing remained in expansion, coming in at 53.3, down from the previous reading of 54.
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