Wall Street Gains on Trade Dispute Ease, Strong Consumer Confidence
Major Financial Institutions Introduce Aviation Division This Week
Following the holiday weekend, Wall Street showed signs of relaxation, as positive signals from Europe propelled a buying mood. Crucial indicators, such as the delay in the trade dispute with the EU and unexpectedly strong consumer confidence, have fostered optimism among investors.
On Monday, the Dow Jones Industrial Average gained 1.8 percent, closing at 42,344 points, while the S&P-500 and Nasdaq Composite rose by 2.0 and 2.5 percent, respectively. In the New York Stock Exchange (NYSE), 2,411 stocks gained and 380 lost ground, with 35 remaining unchanged.
The improved consumer sentiment in the US, as pointed out by economist Stephanie Guichard of The Conference Board, may have played a significant role in bolstering market confidence. Specifically, consumer confidence in May improved considerably more than anticipated, following five consecutive months of decline. Furthermore, orders for durable goods showed unexpected progress, even though they had seen a significant drop in April.
The unfolding trade situation with the EU also demonstrated a positive impact on the stock market. Last week, US President Donald Trump postponed additional tariffs on EU imports to July 9, providing greater leeway for trade agreement negotiations. Overall, investors view tariff threats from the US administration less as trade policy decisions and more as negotiating tools, further weakening their immediate influence on the financial market and enabling stocks to appreciate.
Dollar Recovers, Gold Prices Drop, and Oil Prices Retreat
The dollar recuperated from recent losses, with the Dollar Index gaining 0.4 percent. A promising resolution in the EU trade dispute and buoyant economic data eased concerns about recession and reduced expectations of interest rate cuts, supporting the dollar.
The bond market highlighted auctions of two-year Treasury notes and short-dated securities. According to market analyst Ahmad Assiri of Pepperstone, demand for the two-year bonds remained solid, alleviating worries about oversupply. Consequently, demand picked up on the secondary market, and yields initially declined further. Additionally, with prospects of a trade dispute resolution, faith in US assets increased slightly, favoring both the dollar and US bonds.
Because of a stronger dollar, waning interest in interest rate cuts, and increased preference for US assets, gold prices plummeted significantly, with the troy ounce losing 1.1 percent. Meanwhile, oil prices receded by 1.0 percent. The OPEC+ cartel is expected to discuss potential production increases at its weekend meeting, with predictions hinting at a rise of 411,000 barrels per day in July.
Tech Stocks Soar, Qualcomm Extends Acquisition Bid, and Tesla Surges on CEO Focus Announcement
The technology sector witnessed strong demand, with Nvidia gaining 3.2 percent due to plans from a tech giant to introduce simpler and significantly cheaper AI chips specifically for the Chinese market starting in June. Another tech stock, Apple, also posted impressive gains, regaining most of Friday's losses, despite US President Trump's threats to impose a 25 percent tariff on iPhones manufactured in India.
Qualcomm has been granted more time to make a formal offer for the acquisition of UK semiconductor manufacturer Alphawave IP Group. The deadline for submitting a binding offer has been extended for the third time, to Monday, without disclosing financial details. The news caused Qualcomm shares to rise 2.2 percent.
Tesla gained 6.7 percent after Elon Musk announced his intention to devote more attention to leading his companies. Despite a sharp decline in US electric vehicle sales in Europe in April, the Tesla stock did not see a negative impact.
Salesforce is close to finalizing a blockbuster acquisition, with the enterprise software provider planning to acquire Informatica, a specialist in data management software, for around $8 billion. Eli Lilly is also making a move, agreeing to acquire SiteOne Therapeutics, a pain treatment specialist, for up to $1 billion. PDD Holdings, the parent company of Chinese online retailer Temu, plummeted, reporting a sharp decrease in profits due to waning demand in China.
- In light of improved consumer confidence and the delayed trade dispute with the EU, Wall Street's community policy is expected to prioritize investments in businesses like technology, as demonstrated by the soaring tech stocks.
- Concurrently, the positive resolution of the EU trade dispute and the promising US economic data have bolstered the finance sector, influencing the employment policy, as shown by the demand for US assets and the surge in Qualcomm shares during the acquisition bidding process for Alphawave IP Group.
