Economic data fuels expectations of two rate hikes, US bond yields surge, bank stocks support US stocks, Micron Tech plunges.

Thursday's release of US data once again reflects the resilience of the economy: the final value of Q1 GDP was significantly revised upward, exceeding expectations, due to strong consumer spending. The PCE price index, an inflation indicator closely watched by the Federal Reserve, was slightly revised downward, falling short of expectations. The number of initial jobless claims, released last week, decreased by 26,000 compared to the previous period, marking the largest decline since October 2021.

The day before the data release, Fed Chair Powell had just signaled the possibility of two consecutive interest rate hikes this year. After the data release, market expectations for two more rate hikes by the Fed this year quickly increased. Swap contract prices indicate that traders estimate a nearly 50% probability of two more rate hikes by the Fed this year. The US dollar strengthened during trading, while US Treasury prices plummeted and yields surged by more than 10 basis points. The two-year US Treasury yield, which is more sensitive to interest rate prospects, rose by nearly 20 basis points at one point.

Market expectations for two more rate hikes by the Fed this year have risen to nearly 50%.

In the face of pressure from rate hike expectations, US stocks showed mixed performance, with tech stocks falling and bank stocks rising. After market close on Wednesday, the Fed announced that all major banks had passed the stress tests, including scenarios of severe global recession, clearing a major obstacle for these banks to pay dividends or buy back shares in the future. However, several blue-chip tech stocks, such as Meta and Google, declined, while chip stocks had mixed performance and failed to benefit from Micron Technology's latest earnings report, which showed lower-than-expected losses and higher-than-expected revenue. Micron's stock plummeted in early trading. Some analysts questioned Micron's prospects for recovery and mentioned the security risks of its products. Some comments also noted that Micron mentioned the uncertain situation in China when announcing its financial results.

The US dollar index strengthened further due to expectations of Fed rate hikes, reaching a three-week high, while non-US currencies generally declined. The Japanese yen hit a more than seven-month low for the third consecutive day, with the USD/JPY pair reaching 144.90, just a step away from the threshold of 145, at which the Japanese government intervened in the foreign exchange market last year. The offshore yuan against the US dollar fell below 7.27 for the first time in more than seven months during intraday trading. Fidelity officially submitted an application for a physically-backed Bitcoin ETF listing, and Bitcoin maintained its upward trend, although not as strongly as when Fidelity's application was first reported earlier this week.

In the commodities market, the prospect of Fed rate hikes, coupled with the rise in the US dollar and US Treasury yields, continued to weigh on gold prices, which hit a three-month low. After the unexpected sharp decline in US EIA crude oil inventories last week, international crude oil managed to maintain its rebound, but the rise was suppressed by the strengthening US dollar. Some comments suggest that there is a struggle between the bulls and bears in the oil market, with two expectations of economic recession and supply tightening. EIA data shows that US crude oil exports remain strong, and if Saudi Arabia continues to cut production after July, oil prices will gain upward momentum.

S&P 500 and Dow Jones rebound to near two-week highs, JPMorgan Chase and Goldman Sachs lead the Dow Jones components, Micron briefly drops over 5%.

The three major US stock indexes rose in early trading. The Dow Jones Industrial Average maintained its upward trend throughout the day, rising by about 295 points or nearly 0.9% at its daily high during the midday session. The S&P 500, which opened slightly lower, quickly turned higher and maintained its upward momentum, rising nearly 0.5% at its daily high. The Nasdaq Composite Index initially fell twice in early trading, dropping nearly 0.4% at its daily low, but then rebounded and is currently up over 0.1%.

In the end, the three major indexes failed to close higher as a whole. The Dow Jones rose by 269.76 points, or 0.8%, to 34,122.42 points, while the S&P 500 rose by 0.45% to 4,396.44 points. Both indexes rebounded after a slight decline on Wednesday and reached their highest levels since June 16. The Dow Jones has seen its second consecutive day of gains in the past nine trading days, with gains of over 200 points on Tuesday and Thursday. The Nasdaq closed slightly down by 0.42 points, basically unchanged, at 13,591.33 points, failing to rise for three consecutive days and still far from the closing low since June 9, which saw a 1.9% rebound from Monday's close.

The tech-heavy Nasdaq 100 Index fell by 0.16%, underperforming the broader market after two consecutive days of gains. The small-cap Russell 2000 Index, which is dominated by value stocks, rose by 1.23%, outperforming the broader market for two consecutive days and reaching its highest level since June 15.

Major US stock indexes showed mixed trends on Thursday, with the Nasdaq falling during the session, while the S&P 500 and Dow Jones rebounded, and small-cap stocks continued to rise.

Among the major sectors of the S&P 500, only three recorded declines on Thursday, with communication services falling by over 0.6%, consumer staples falling by nearly 0.2%, and utilities falling by less than 0.1%. Financials led the gains, rising by nearly 1.7%, highlighting the upward momentum of bank stocks, while materials and energy both rose by over 1%. Non-essential consumer goods, including Amazon, rose by less than 0.1%.

After the Federal Reserve released the results of its stress tests, banking stocks, which had seen two consecutive days of gains, rebounded to their highest levels since June 21 on Thursday. The KBW Bank Index (BKX) rose by 1.8%, while the KBW Nasdaq Regional Banking Index (KRX) rose by 1.8%, and the SPDR S&P Regional Banking ETF (KRE) rose by nearly 1.9%.

Among the major banks, by the close of trading, Wells Fargo rose by 4.5%, JPMorgan Chase and Goldman Sachs rose by approximately 3.5% and 3% respectively, leading the Dow Jones components. Bank of America rose by 2.1%, Morgan Stanley rose by 1.5%, and Citigroup rose by over 0.1%. Among regional banks, First Citizens BancShares (FCNCA) rose by nearly 4%, PacWest Bancorp (PACW) rose by 3.3%, and Zions Bancorporation (ZION) rose by The market saw a 0.7% increase, with Western Alliance Bancorporation (WAL) rising by 0.5% and Keycorp (KEY) rising by 0.2%.

Most leading technology stocks experienced a decline, although Tesla saw a nearly 0.5% increase, marking its third consecutive day of gains. However, its increase was far less significant compared to the 3.8% and 2.4% gains seen on Tuesday and Wednesday, respectively.

Among the six major FAANMG technology stocks, Meta, the parent company of Facebook, saw a more than 1.3% decline on Tuesday, breaking away from its low point since June 14th. Amazon experienced a nearly 0.9% decline, while Alphabet, the parent company of Google, saw a 0.9% decline, approaching its low point since June 14th, which was refreshed on Monday. These three stocks have all experienced a two-day decline. On Wednesday, Netflix, which had previously seen a more than 3% increase, experienced a nearly 0.4% decline after reaching a high point since June 20th during its two-day increase. Microsoft, which had also seen a two-day increase, experienced a decline of over 0.2%. Apple, on the other hand, saw a nearly 0.2% increase, marking its third consecutive day of reaching a new closing high since last Thursday and bringing its market value closer to the $3 trillion mark.

Apple failed to reach the $30,000 market value threshold, as its stock price was hindered by the $190 resistance level on Thursday.

Chip stocks experienced mixed gains and losses, with related indices barely seeing an increase and avoiding a two-day decline. The Philadelphia Semiconductor Index experienced multiple declines during the day, with a decline of over 0.7% when it reached its daily low point. However, it managed to recover and close with a gain of over 0.1%. The semiconductor industry ETF, SOXX, closed with a slight increase. Among individual stocks, Micron Technology initially saw an increase of over 1% but quickly turned into a decline, with a drop of over 5% during early trading and a closing decline of nearly 4.1%. NVIDIA, which initially saw an increase of over 1%, experienced a decline of over 1% during midday trading and closed with a decline of 0.7%. Intel saw a decline of nearly 2%, while Broadcom saw an increase of over 1.7%. AMD and ON Semiconductor saw an increase of nearly 1%, Qualcomm saw an increase of over 0.4%, and Skyworks Solutions saw an increase of nearly 0.2%.

AI concept stocks experienced varying gains and losses. BigBear.ai (BBAI) saw an increase of approximately 7%, C3.ai (AI) saw an increase of 1.4%, Guardforce AI (GFAI) saw an increase of 0.6%, and Adobe (ADBE) saw an increase of nearly 0.3%. On the other hand, SoundHound.ai (SOUN) saw a decline of nearly 4.5%, Bullfrog AI (BFRGW) saw a decline of 3.8%, and Palantir (PLTR) saw a decline of 0.5%.

Overall, popular Chinese concept stocks continued to decline, underperforming the broader market. Among the three emerging electric vehicle companies that saw gains on Wednesday, only XPeng Motors continued to see a slight increase. The Nasdaq Golden Dragon China Index (HXC) closed with a decline of 1.6%. The Chinese concept ETFs, KWEB and CQQQ, saw declines of approximately 2.1% and 1.7%, respectively. Among individual stocks, Baidu saw a decline of over 5%, while JD.com, Bilibili, and Li Auto saw declines of over 2%. Alibaba, Pinduoduo, Tencent Music, and NIO saw declines of over 1%. On the other hand, NetEase saw an increase of nearly 2%, and XPeng Motors saw an increase of nearly 0.2%. In the group of stocks with significant fluctuations, battery manufacturer Freyr (FREY) rose 20.4% after being upgraded to overweight by Morgan Stanley and given a target price more than 70% higher than Wednesday's closing price. E-commerce platform Overstock.com (OSTK) rose 19.7% after completing the acquisition of bankrupt home goods brand Bed Bath & Beyond. Joby Aviation (JOBY), an aviation transportation company, rose 11.4% after announcing a $100 million investment from SK Telecom. On Wednesday, they also received flight permits for their first electric vertical takeoff and landing aircraft (eVTOL), causing the stock to surge 40%. Steel pipe manufacturer Tenaris (TS) initially received a buy rating from Jefferies, with a projected stock price increase of over 45%, leading to a nearly 4% intraday increase and a 3% overall increase. Western Oil (OXY) rose 1.8% after Warren Buffett's Berkshire Hathaway increased its stake, surpassing 25%. Despite completing its first commercial space flight, Virgin Galactic (SPCE) fell approximately 10.8%.

In European stocks, although central bank governors in Europe and the United States have signaled continued tightening, some companies, led by H&M, the world's second-largest fast-fashion retailer, have shown positive performance, supporting a three-day consecutive increase in the pan-European stock index. The STOXX Europe 600 index has reached its highest closing level since Wednesday, June 21. Major European country stock indices showed mixed performance on Thursday. Italian and Spanish stock indices rose for four consecutive days, while French stock indices rose for three consecutive days. British stock indices rose for three consecutive days, and German stock indices fell after rising for two consecutive days.

Among the sectors of the STOXX 600, the retail sector led the gains with an increase of nearly 1.8%, driven by a strong second-quarter profit performance from Swedish-listed H&M, whose stock price reached a new high in over a year, rising 18.2%. The automotive sector rose more than 1.3%, partly due to a 5% increase in the stock price of French automaker Renault after the successful launch of their new car.

US Treasury Yields Reach Three-Month High, 2-Year Yield Rises Nearly 20 Basis Points

Germany's harmonized consumer price index (CPI) for June, released on Thursday, rebounded to 6.8%, halting the slowdown that had been occurring since the beginning of the year. Economic data from the United States also strengthened expectations of interest rate hikes.

European government bond prices collectively fell, leading to an increase in yields. The yield on the 10-year UK benchmark government bond closed at 4.37%, rising 6 basis points intraday. It is still below the high of nearly 4.50% reached in October last year. The yield on the 2-year UK government bond closed at 5.19%, rising 8 basis points intraday, approaching the high reached on Wednesday, the highest since 2008. The yield on the 10-year German benchmark government bond closed at 2.41%, rising 10 basis points intraday, moving away from the low of 2.29% reached on June 2, which was the lowest since June 2016. The 2-year German bond yield closed at 3.18%, rising 10 basis points intraday and approaching the high of 3.29% reached on March 9, which was close to last Thursday.

After the release of US GDP and other data, US bond yields rose more than 10 basis points during the day, erasing the decline on Wednesday.

The yield on the 10-year US benchmark Treasury bond fell below 3.71% in early Asian trading, hitting a daily low. Before the release of US data, it was below 3.75%, but quickly rose to 3.80% after the data was released. It briefly approached 3.87% during the US stock market session, reaching a three-month high. It rose nearly 16 basis points intraday and stood at around 3.84% at the end of the bond market session, up about 13 basis points intraday.

The 2-year US Treasury yield, which is more sensitive to interest rate prospects, fell to a daily low of 4.71% in early Asian trading. Before the release of GDP and other data, it was below 4.80%, but also rose after the data was released. It briefly approached 4.90% during the US stock market session, rising about 18 basis points intraday, and stood at around 4.86% at the end of the bond market session, up nearly 15 basis points intraday.

The 2-year US Treasury yield approaches the high since the collapse of Silicon Valley Bank in March.

The US dollar index rises and reaches a two-week high, the yen hits a seven-month low for the third consecutive day, and the offshore renminbi falls below 7.27.

The ICE US Dollar Index (DXY), which tracks the exchange rates of the US dollar against six major currencies, mostly maintained an upward trend. It briefly fell below 102.80, hitting a daily low, and fell more than 0.1% intraday. However, it rose sharply after the release of US GDP data and turned positive. It surpassed 103.00 before the US stock market opened and rose above 103.40 in early trading, reaching a high since June 13, up more than 0.5% intraday.

By the close of the US stock market on Thursday, the US dollar index was above 103.30, up about 0.4% intraday. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, rose nearly 0.3%, reaching a high since June 7. Both the US dollar index and the Bloomberg Dollar Spot Index rebounded after two consecutive days of decline.

The Bloomberg Dollar Spot Index reaches a three-week high.

Among non-US currencies, the yen has fallen for three consecutive days, approaching the threshold of 145, which prompted the Japanese government to intervene to boost the yen last year. The US dollar against the yen jumped after the release of US data, with the US stock market rising to 144.90. It reached a new high since November last year for the ninth time in the past ten trading days, rising nearly 0.3% intraday, and stood at around 144.80 at the close of the US stock market.

The euro against the US dollar fell to 1.0860 at the beginning of the US stock market session, approaching the intraday low since June 15, which broke below 1.0850 last Friday. It fell nearly 0.5% intraday. The British pound fell below 1.2600 in early US stock trading, hitting a two-week low for the second consecutive day and a low since June 13, with a drop of nearly 0.4% during the day.

Offshore renminbi (CNH) against the US dollar rose in the Asian market, hitting a daily high of 7.2335. After the release of US data before the US stock market, it accelerated its decline. After falling below 7.27 in early US trading, it briefly fell to 7.2769. After hitting a low since the end of November last year for five consecutive days, it hit a new low since November 10 last year for two consecutive days. At 4:59 am Beijing time on June 30, the offshore renminbi against the US dollar was reported at 7.2686 yuan, a decrease of 254 points from the New York closing on Wednesday, and a decrease for two consecutive days after a three-day decline on Tuesday.

Bitcoin (BTC) rose above $30,800 before the US stock market, hitting a daily high. It rebounded by about $800 from the daily low in the Asian market, an increase of more than 2%. During the US stock market session, the price of Bitcoin rose above $30,600 after Fidelity applied for a Bitcoin spot ETF, but it fell back below $30,400 after the US stock market closed. In the past 24 hours, it has risen by less than 1%, far below the level on Tuesday. After Fidelity announced its application for an ETF on Tuesday, Bitcoin rose more than $1,000 at one point during the session.

Crude oil continued to rise from a two-week low, but the rate of increase slowed down, and US oil has not yet recovered $70.

International crude oil futures rose and fell more than once before the European stock market, and finally maintained the upward trend until the close. When the US stock market opened, US WTI crude oil rose back above $70 to $70.6, and Brent crude oil rose to $75.15, both rising by about 1.5% during the day. However, US oil failed to hold this level.

At the close, WTI August crude oil futures rose 0.43% to $69.86 per barrel, closing below $70 for the sixth consecutive trading day; Brent August crude oil futures rose 0.42% to $74.34 per barrel, both continuing to rise from the closing low since June 12, which was refreshed on Tuesday.

US WTI crude oil broke through $70 during the session but failed to hold this level.

US gasoline and natural gas futures both rose. NYMEX July gasoline futures rose more than 0.5% to $2.6177 per gallon, rising for two consecutive days to a high since June 21; NYMEX August natural gas futures, which fell for two consecutive days, rose 1.23% to $2.7010 per million British thermal units, still far from the high of this contract since March 24, which was refreshed on Monday.

London copper fell for three consecutive days, with a drop of less than 1% for most base metal futures on Thursday. After hitting a new low since early June on Wednesday, London lead, zinc, and aluminum fell for two consecutive days, with London lead hitting a three-week low, and London zinc and aluminum approaching the lows since the end of last year and three weeks ago, respectively, which were refreshed on Monday. While London nickel rebounded on Monday and Wednesday, closing up about 2.9% and bidding farewell to its low since July last year. London tin, which fell on Wednesday, rebounded slightly and closed above $26,000 for three consecutive days, but it did not approach the low of the past three weeks that was broken on Monday when it fell below $25,700.

New York gold futures remained bearish throughout Thursday, plunging after the release of US economic data. The US stock market initially hit a daily low of $1900.6, falling more than 1.1% intraday. Subsequently, most of the losses were gradually erased.

In the end, COMEX August gold futures fell 0.2% to $1917.9 per ounce, marking a new closing low since March 14 for two consecutive days and a third consecutive day of decline.