(Bloomberg) — A rally in shares of the world’s biggest technology companies helped traders take weak economic data in their stride, sending stocks higher.
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Stocks extended their June gains as Nvidia Inc. recovered after a $430 billion selloff, easing out of a three-day selloff that forced the company into a technical correction. Treasuries were modest ahead of a $69 billion auction of two-year notes, the first of three Treasury offerings this week.
U.S. consumer confidence has weakened due to weakening prospects for the economy, the job market and incomes. Home price growth has slowed as would-be buyers faced with rising mortgage rates have refrained from buying. Federal Reserve Governor Michelle Bowman said there are several upside risks to the inflation outlook and reiterated the need for borrowing costs to remain high for some time.
For BMO Capital Markets’ Bayle Hartman, Tuesday’s economic report didn’t do much to change the macroeconomic outlook.
“The job market will be key to future consumer spending,” said Jeff Roach of LPL Research. “Investors will be closely watching Friday’s personal income and spending releases for clues about upcoming Fed policy. A higher-than-expected reading of the Fed’s preferred inflation measure could cause market volatility.”
The S&P 500 halted a three-day streak of losses. Nvidia rose about 3%. Carnival Corp. surged on a bullish outlook, while peers Royal Caribbean Cruises Inc. and Norwegian Cruise Line Holdings Inc. also rose.The updraft in transportation stocks will face a major test later on Tuesday, when FedEx Corp. reports earnings that highlight the strength of the U.S. economy.
The 10-year Treasury yield was little changed at 4.24%. Bitcoin surpassed $62,000.
Investor positioning continued to favor U.S. stocks over European ones last week, according to strategists at Citigroup Inc. Chris Montague and his team noted that bullish positions in the S&P 500 and Nasdaq rose modestly, but momentum in the Nasdaq slowed.
Commodity trading advisors (CTAs) are estimated to have a long position worth $130 billion (84th percentile) in global equities after selling $29 billion last week, according to Goldman Sachs Group Inc., and all market scenarios could lead to further selling this week.
Karen Morgan, an equity derivatives and flows expert, estimates that CTAs will sell $36 billion worth of stocks this week in a falling market (including $2.8 billion in S&P 500 futures) and $15 billion worth of stocks in a flat market, with another $3 billion worth of stocks expected to be sold if stocks rise.
Company Highlights:
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Boeing has offered to buy Spirit AeroSystems Holdings Inc. for about $35 a share in a deal that would be funded primarily with stock, according to people familiar with the matter.
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Airbus SE is facing shortages of millions of parts that make up its commercial jets, making the situation worse, not better, for the world’s largest plane maker.
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Microsoft has been accused by European Union regulators of abusing its market power by bundling its video conferencing app Teams with other business software, and faces the risk of heavy fines.
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According to local media reports, OpenAI has warned Chinese developers that it will block access to the company’s tools and software starting in July, suggesting that ChatGPT’s developers are taking a more aggressive stance to lock out users in countries where they don’t offer their services.
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AbbVie Inc. failed to get approval for a new Parkinson’s disease drug after U.S. regulators found problems with a third-party manufacturing facility.
Major events this week:
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U.S. new home sales Wednesday
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China industrial profits Thursday
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Eurozone economic confidence, consumer confidence on Thursday
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U.S. durable goods, jobless claims, GDP on Thursday
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Nike reports earnings on Thursday
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Japan Tokyo Consumer Price Index, unemployment rate, industrial production, Friday
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US PCE Inflation, Spending and Income, University of Michigan Consumer Confidence, Friday
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Fed President Thomas Barkin to speak on Friday
Some of the key market developments:
stock
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The S&P 500 was up 0.2% as of 10:30 a.m. New York time.
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The Nasdaq 100 rose 0.7%.
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The Dow Jones Industrial Average fell 0.3%.
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The Stoxx Europe 600 index fell 0.3%
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The MSCI World Index rose 0.2%.
currency
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The Bloomberg Dollar Spot Index rose 0.2%.
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The euro fell 0.4% to $1.0694.
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The British pound was little changed at 1.2677 to the dollar
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The Japanese yen was almost unchanged at 159.67 yen to the dollar.
Cryptocurrency
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Bitcoin rose 4.3% to $62,057.58.
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Ether rises 2.8% to $3,403
Bonds
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The yield on the 10-year Treasury note was little changed at 4.24%.
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German 10-year bund yields fell 2 basis points to 2.40%.
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UK 10-year government bond yields fell 2 basis points to 4.07%.
merchandise
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West Texas Intermediate crude fell 0.2% to $81.43 a barrel.
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Spot gold fell 0.4% to $2,324.58 an ounce.
This story was produced with assistance from Bloomberg Automation.
—With assistance from Vildana Hajric, Alex Nicholson, Jeran Wittenstein, Ryan Vlastelica, Aya Wagatsuma, and Jason Scott.
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