The S&P 500 index recorded its fourth consecutive record closing on Thursday, rising by 0.23% to end at 5,433.74. The Nasdaq Composite also showed positive performance, advancing by 0.34% to close at 17,667.56, also marking its fourth consecutive record. In contrast, the Dow Jones Industrial Average underperformed, dropping by 65.11 points or 0.17%, to close at 38,647.10.
The S&P 500 and Nasdaq reached new highs thanks to economic data indicating potential easing of inflationary pressures. These signs of inflation slowdown helped bolster investor confidence, pushing major stock indices to record levels. The positive market performance suggests an atmosphere of optimism among traders, despite fluctuations in the Dow Jones index.
Among notable stocks, Broadcom surged 12% due to better-than-expected results in the second fiscal quarter and the announcement of a 10-for-1 stock split. Conversely, Dave & Buster’s Entertainment fell by 11% due to disappointing revenues in the first quarter. In the media sector, Paramount Global dropped 7% after National Amusements halted negotiations with Skydance for a merger proposal. Salesforce and Amazon also closed lower, down 2.9% and 1.6%, respectively.
The Consumer Price Index remained unchanged in May, lower than the Dow Jones estimate of a 0.1% increase. Year-on-year, inflation increased by 3.3%, also lower than expected and down from the previous 3.4%. Core CPI data, which excludes energy and food, also fell short of expectations, highlighting a slowdown in inflationary pressures.
In May, the Producer Price Index fell by 0.2%, against expectations of a 0.1% increase. This, coupled with lower-than-expected Consumer Price Index data, influenced the Federal Reserve’s decision to maintain interest rates unchanged, reducing expectations of future cuts.
Meanwhile, Beijing has warned that it may retaliate to persuade European Union governments to oppose the introduction of new tariffs, in addition to the existing 10%. Currently, Beijing imposes a 15% tariff on European electric vehicles. Germany, Sweden, and Hungary have expressed disagreement with the decision, fearing Chinese retaliation. EU officials believe Berlin pressured Ursula von der Leyen, who is seeking a second term as Commission President, to drop the anti-subsidy investigation.
Meanwhile, electric car manufacturers’ stocks rose on Thursday after the European Union announced higher tariffs of up to 38% on Chinese electric vehicles. Analysts consider the EU tariffs modest compared to those in the United States. The EU explained that Chinese manufacturers benefit from unfair subsidies that threaten the European electric vehicle industry.
On Thursday, Citi analysts stated that the EU’s increase in tariffs on Chinese electric vehicles is “generally positive” compared to estimates of 25%-30%. Citi observed that while tariffs may impact the electric vehicle sector, they will not hinder China’s economic recovery. The additional tariffs follow an EU investigation launched in October. Currently provisional, the tariffs will become effective on July 4 if discussions with Chinese authorities do not reach a resolution. Final measures will be adopted within four months of the establishment of provisional tariffs, according to Brussels.
In response to provisional tariffs, China stated on Wednesday that the measure represents “blatant protectionism that will create and exacerbate trade frictions.” A spokesperson for the Chinese Ministry of Commerce expressed “deep concern and strong dissatisfaction” with the development, stating that it “interrupts and distorts” the global electric vehicle industry. Joseph Webster, a senior member of the Atlantic Council’s Global Energy Center, suggested that the EU is warning state-backed SAIC to build a production facility in Europe, or else face new tariffs.
Thursday, June 13, 2024 Indexes:
DOW Jones -0.17% at 38,647.10
S&P 500 +0.23% at 5,433.74
NASDAQ Composite +0.34% at 17,667.56
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