Steady as She Goes: Wall Street Surges Ahead Amid Ongoing Trade Disputes - Booming Tech Stocks
Pending Decision Regarding Procedure's Commencement by the Commission
In the face of looming trade uncertainties between the US and China, Wall Street showcased its resilience on Tuesday, with tech stocks taking center stage. Even with potential tariff announcements from President Trump and ongoing accusations of deal undermining, investors on the Street remain undeterred, eyeing tech stocks with keen interest.
The ongoing question lingers: will the US and China reach a final trade agreement? Both sides have taken turns throwing jabs, but market strategist Michael Brown of Pepperstone suggests a call between Presidents Trump and Xi Jinping could be imminent, potentially breaking the deadlock. White House spokeswoman Karoline Leavitt, however, was ambiguous about the call's date.
The Dow Jones Index added 0.5 percent, reaching 42,520 points, while the S&P 500 climbed 0.6 percent and the Nasdaq Composite rose 0.8 percent. The exchange showcased 1,916 advancers versus 853 decliners, with 62 stocks remaining steady.
Cloudy Economic Skies
New forecasts from the Organisation for Economic Co-operation and Development (OECD) paint a dismal picture of the global economy's health, underscoring the damaging effects of the trade dispute. The OECD has once again trimmed its estimates for global growth this year and the next, attributing the decline to increased trade barriers and lingering uncertainty.
US economic indicators reflected these dark clouds, as industrial orders dropped more sharply than expected in April, and the number of job openings increased slightly during the same period. The bond market exhibited little change, with the yield on ten-year US Treasury notes staying steady at 4.46 percent. UBS anticipates rising yields and a subsequent drop in US yields due to growth risks. However, analysts do not foresee the yield dropping below the 4 percent mark for the ten-year period in the coming months.
A Strong Dollar and Gold's Slip
The dollar rebounded strongly from a six-week low, with the dollar index increasing by 0.6 percent. The greenback was further supported by the euro's weakness after inflation data for the eurozone fell below expectations, putting pressure on the common currency. The European Central Bank is planning a rate cut for Thursday, which could increase expectations for further reductions, according to traders.
The dollar's strength weighed on the gold price, causing the troy ounce to fall by 0.8 percent to $3,353. Yet, the precious metal held close to its recent multi-week highs, encouraging traders with its demand as a safe haven during ongoing trade conflicts.
Oil Prices on the Rise
Despite the gloomy economic outlook, oil prices kept climbing. Brent and WTI notations increased by up to 0.9 percent. Slender hopes for a ceasefire in Ukraine diminished the likelihood of additional Russian supply, while the US Congress is preparing new sanctions targeting the oil sector in Russia.
Tech Stocks Shine
The technology sector captivated investors on Tuesday. Nvidia shares surged by 2.8 percent, while Super Micro Computer gained 4.8 percent. Micron Technology improved by 4.2 percent after announcing the shipment of the first sample of a new AI chip designed for smartphone applications.
Walt Disney added 0.6 percent, as the entertainment conglomerate embarks on a wave of layoffs across various departments to boost efficiency. Dollar General soared by 15.9 percent after raising its outlook, while MoonLake Immunotherapeutics jumped 18 percent amid rumors of takeover talks with Merck & Co.
Sources: ntv.de, toh/DJ
- Wall Street
Insight:
The ongoing trade dispute between the US and China has resulted in volatility for tech stocks on Wall Street. This volatility stems from factors including supply chain disruptions, export controls on AI chips, and the potential global economic impact of a complete trade disengagement or escalation. Despite these challenges, some tech companies have adapted by diversifying their supply chains or focusing on domestic markets [1]. However, the unpredictable nature of trade policy decisions and lingering trade tensions continue to pose risks for the tech sector on Wall Street.
[1] Reference: https://www.forbes.com/sites/susanadams/2020/06/30/why-tech-stocks-are-crashing/?sh=45c809b8e268
- The Commission, composed of market strategists and analysts, is discussing potential solutions for tech companies to adapt to the volatility in the stock market caused by the ongoing trade dispute between the US and China.
- In an effort to combat the risks posed by the volatile tech business sector, the Commission is examining strategies that tech companies can implement, such as diversifying their supply chains or focusing on domestic markets.
