ASX will rise after Wall Street closed the first half of the year on a high

The Fed has already raised interest rates by a massive 5 percentage points from near zero at the beginning of last year. Traders on Wall Street discounted bets that the Fed could raise rates two more times this year, with most betting that the federal funds rate will be just 0.25 percentage points higher by the end of 2023, according to data from CME Group.

Bond market yields fell after the release of economic data. The yield on 10-year government bonds fell to 3.82 percent from nearly 3.87 percent just before the reports were released. It helps set rates for mortgages and other important loans.

There is a lot of noise at the edges, but lukewarm consumption growth and a downward trend in inflation mean that the end is near for rate hikes.

Brian Jacobsen, chief economist at Annex Wealth Management.

Two-year Treasury yields, which are more in line with the Fed’s expectations, fell to 4.88 percent from 4.90 percent just before the reports were released.

A separate report from the University of Michigan said consumer sentiment was improving, but their expectations for inflation were not rising. That could also make for an easier Fed. The central bank has said it wants to avoid a vicious cycle in which high inflation expectations lead to behavior that only exacerbates inflation.

Easier rates of interest help prices for investments of all kinds. But technology and other high-growth stocks are often seen as some of the biggest gainers, and they helped lead the market.

For example, Nvidia rose 3.7 percent. It was among a small number of stocks that have exploded higher this year amid a frenzy over artificial intelligence software. It’s up 189.5 percent for the year so far.

Apple rose 2.3 percent to become the first U.S. stock to end a day with a total market value of more than $3 trillion ($4.5 trillion).

Cruise lines also helped drive the rally. Carnival led all stocks in the S&P 500 with a gain of 9.7 percent, while Norwegian Cruise Line rose 4.2 percent. Travel stocks have been hot lately due to the expectation of strong demand as vacationers depart again.

On the losing side of Wall Street was Nike. It was down 2.6 percent after weaker-than-expected earnings for the final quarter, though sales beat forecasts.

One of the criticisms of this year’s equity rally has been that it was largely due to just a handful of big technology stocks. Earnings have broadened recently, with the smallest stocks in the market rising 0.4 percent as measured by the Russell 2000 index.

Stocks are generally more expensive than they have been in the past, relative to their earnings, but they still seem close to OK, said US Banks Erickson. She suggests that investors stick with a neutral approach, don’t get into stocks versus bonds more than usual, but don’t give up on them either.

All told, the S&P 500 rose 53.94 points to 4450.38. The Dow Jones gained 285.18 to 34,407.60 and the Nasdaq climbed 196.59 to 13,787.92.

The S&P 500 closed its sixth winning week in its last seven and its best month since October. The index gain of 15.9 percent in the first six months of the year is better than in 16 of the last 23 full years.

In foreign equity markets, one of the world’s top stock markets took a breather this year after Japan’s Nikkei 225 lost 0.1 percent. It was still up 27.2 percent in the first six months of 2023.

The US stock market is open for half a day on Monday and closed on Tuesday for the Independence Day holiday.

AP

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