Stocks slid from record highs on Friday as a political crisis in France and weak US consumer sentiment dampened risk appetite, but ended the week higher after overcoming a more hawkish stance from the Federal Reserve.
Markets ended a strong week on a gloomy note, with European shares selling off before the U.S. market opened after French President Emmanuel Macron called early elections, raising concerns that his centrist, pro-business Renaissance party could lose seats to the far-right National Rally or the Left Alliance.
In U.S. economic news, a gauge of consumer sentiment unexpectedly fell to its lowest level in seven months as people continue to struggle with rising prices. University of Michigan Consumer Sentiment Index The economic sentiment index fell for the fourth straight month to 65.6 in June. Economists had expected the index to rise to 72 from 69.1 in the previous month.
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“Rising prices and declining earning opportunities led survey respondents to report feelings of distaste regarding their personal finances,” senior economist José Torres wrote. Interactive Brokers“While lower gasoline prices have not translated into improved consumer sentiment over the past few months, this is a significant development given that the University of Michigan’s consumer sentiment index is highly correlated with gasoline prices.”
Stocks were weak on Friday but major stock indexes ended the week with solid gains despite central bank policy. Interest rate committee becomes more hawkish The Federal Open Market Committee (FOMC) ended its two-day meeting on Wednesday with an expectation of cutting the short-term federal funds rate by just 0.25 percentage points by the end of the year.
As of June 14, futures traders were pricing in a 61% chance that the Fed would make its first rate cut in September, according to CME Group’s futures market. FedWatchTools.
Like the economic calendar, next week will be relatively light on earnings releases, leaving market participants free to react to scheduled interviews and speeches by seven Fed officials.
ADBE shares rise on outlook
Adobe Adobe (ADBE) shares rose 14.5%, hitting a four-year high, after the company raised its full-year revenue outlook. The software maker first announced its foray into generative artificial intelligence a year ago, and investors have been waiting to see whether Adobe’s Firefly AI tool can help boost sales and profits.
“We believe it’s entirely possible that investors are currently in a period of disillusionment with Firefly, and we think profitability could begin to creep in over the second half of the year and into next year,” they wrote. J.P. Morgan Analyst Mark Murphy upgraded his recommendation on ADBE to overweight (equivalent to buy) from neutral (hold).
Adobe stock has lagged the market over the past few years, but it has been a winner for long-term holders. Invested $1,000 in ADBE stock 20 years ago I am very happy with the return.
For major indexes, blue chip stocks Dow Jones Industrial Average It fell 0.2% to 38,589. S&P 500 The number of companies in the top 100 in the world fell slightly to 5,431. Nasdaq Composite Index The number of cases increased 0.1% to 17,688.
next time Revenue Calendar There will be relatively little rain next week. Economic Calendar Market participants are free to react or overreact to several upcoming speeches by Fed officials.
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