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Market Update:
U.S. Stock Futures Slip After Three-Day Break, Chinese Stocks Weakened by Disappointment in Economic Support.
Here is what happened
Dow Jones Industrial Average futures slipped by 101 points, equivalent to a 0.3% decrease, settling at 34,503. Similar to this, S&P 500 futures dropped 14 points, or 0.3%, to 4,440. Nasdaq 100 futures followed suit, dropping by 67 points, indicating a 0.4% decrease, and closing at 15,202.
The Dow Jones Industrial Average declined 109 points, or 0.32%, in the previous trading session on Friday, resulting in a closing value of 34,299. The S&P 500 also experienced a decrease, declining by 16 points, or 0.37%, settling at 4,410. The Nasdaq Composite exhibited a more significant drop, with a decline of 93 points, equivalent to 0.68%, reaching 13,690.
The Key Factors That Are Shaping the Markets
After the Juneteenth holiday weekend, investors approached the market with caution despite a strong recent performance. The S&P 500 gained 2.6% last week, marking its fifth straight week of gains. A winning streak of eight weeks was added to by the Nasdaq Composite, which is mainly impacted by technology firms.
Notably, both retail and institutional investor sentiment, according to Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, are currently at their highest levels in over two years.
While market consensus tends to be accurate about 80% of the time, Wilson remains skeptical about fully embracing the current excitement and narrative surrounding growth. However, if growth re-accelerates in the second half of the year as anticipated, the bullish narrative supporting equity prices may indeed prove to be correct.
In other news, China reduced its 1- and 5-year lending rates by 10 basis points. However, investors viewed this as a modest move, especially after a state council meeting on Friday failed to produce concrete measures. Expectations were higher for a 15 basis points cut in the 5-year rate, which serves as a benchmark for mortgages. The Hong Kong Hang Seng index decreased by 1.5 percent as a result.
Alibaba, the prominent Chinese internet giant, made headlines with the announcement that its CEO and chairman will step down to focus on the cloud division. The company’s chairman position will be assumed by Joseph Tsai, who is also the owner of the Brooklyn Nets basketball team.
Looking ahead, the economic calendar includes data on housing starts, as well as a panel discussion featuring New York Fed President John Williams and Fed Vice Chair for Supervision Michael Barr. Furthermore, Fed Chair Jerome Powell is slated to offer semi-annual congressional testimony on Wednesday, which market players will keenly observe.
