Tech stocks pushed US stocks higher amid easing inflationary concerns. Bitcoin is slowly recovering from the crash late last week.
All 11 groups in the S&P 500 rallied, while the Nasdaq 100 outperformed major stocks amid gains from giants such as Apple Inc., Amazon.com Inc. and Alphabet Inc., Google’s parent company. The world’s largest cryptocurrency skyrocketed after falling 18% on Sunday. Most non-ferrous metals were under pressure, with iron ore and steel falling as China stepped up its fight against soaring commodity prices.
While some analysts warn that it may be too early to signal inflationary risks, weaker-than-expected economic reports helped allay investor concerns. Data from the Federal Reserve Bank of Chicago on Monday showed that US economic activity slowed in April. 10-year break-even rates – a market indicator of inflation expectations over the next decade – have fluctuated after their highest weekly decline since September.
Tom Essay, former Merrill Lynch trader and founder of The Sevens Report, wrote to clients: “General inflation concerns are a headwind for stocks, and will continue to be so until it becomes clear that inflation is temporary. Until then, expect a more volatile market, but for now, strong political support for the stock remains in place, which is a good thing. ”
Meanwhile, Fed Chairman Lael Brainard said Monday that she expects inflation to rise as the US economy recovers from the pandemic, but downplayed the risk that this potential increase would permanently exceed that rate. Recordings of the April central bank meeting showed that some officials were open for discussion in “upcoming meetings” last week regarding a cut in large-scale bond purchases.
Chris Larkin, managing director of trading and investment products at E * Trade Financial, said: “The Fed remains on hold, which has added winds under the wings of the tech sector, with stocks rushing into the last full week of the month trying to break a two-week bullish stalemate.”
This week it is worth highlighting the following significant events:
– Until May 27, the CoinDesk consensus brings together well-known cryptocurrencies to discuss NFTs, exchanges and the role of central banks, which will be attended by Fed Governor Lael Brainard and Bridgewater founder Ray Dalio;
– Wednesday the Reserve Bank of New Zealand policy decision;
– On Wednesday, heads of major US banks, including JPMorgan and Goldman Sachs, will speak to lawmakers on the Senate Banking and Financial Services Committees of the House of Representatives;
– on Thursday, the number of initial applications for unemployment benefits in the US, GDP, durable goods, pending home sales;
– on Thursday the decision of the Bank of Korea on the interest rate.
As a result, as of 10:45 New York time (17:44 Moscow time), the S&P 500 showed an increase of 1.1%.