S&P, Nasdaq Peak; Nvidia Tops Market Cap List

On June 18,2023,local time,the three major stock indices in the United States experienced slight fluctuations,ultimately closing with modest gains.Notably,the S&P 500 and the Nasdaq Composite Index achieved new record highs,bolstered by strong performances from chip stocks,including the tech giant NVIDIA.However,recent retail sales data for May fell short of expectations,intensifying market speculation about potential interest rate cuts by the Federal Reserve starting in September of this year.

Wednesday marked a federal holiday in the U.S.,leading to a market closure for the day,further emphasizing the significance of trading outcomes from the preceding days.

By the end of trading,the Dow Jones Industrial Average had climbed by 56.76 points or 0.15%,settling at 38,834.86 points.The Nasdaq Composite rose by 5.21 points,a growth of 0.03%,reaching 17,862.23 points.Meanwhile,the S&P 500 saw an increase of 13.80 points or 0.25%,ending at 5,487.03 points.Remarkably,the Nasdaq has recorded new highs for seven consecutive trading sessions.

One of the day's highlights was NVIDIA's ascension as the most valuable company in the world,dethroning industry leaders like Apple and Microsoft.NVIDIA's stock jumped 3.51% to $135.58,pushing its market capitalization to an impressive $3.335 trillion.This marked the first time since early 2019 that a company other than Microsoft or Apple held the top position in terms of market value.

Hans Mosesmann,an analyst at Rosenblatt Securities,raised NVIDIA's target price from $140 to $200 on the same day,which now represents Wall Street's highest forecast for the company.Historically,NVIDIA has been seen as a hardware-centric business,yet Mosesmann highlighted the essential role of its software offerings,suggesting that the true value lies in software that complements its hardware advantages.

He expressed optimism about NVIDIA's software business,predicting significant growth in the coming decade.Mosesmann stated,“Given sustainability,valuations are biased to the upside,” reflecting a sentiment of confidence in the company's long-term prospects.

Turning to the broader retail environment,the U.S.reported a retail sales increase of only 0.1% in May,a figure that fell below market expectations.Despite a retreat in gasoline and vehicle prices,which negatively impacted revenues at gas stations and auto dealers,the overall retail landscape exhibited signs of vulnerability.The original estimate for April's retail sales was revised downward to reflect a 0.2% decline.

Specifically,the retail sales report indicated a slight uptick to $703.1 billion,underwhelming against the anticipated 0.3% increase.The year-over-year growth stood at 2.3%.Core retail sales,which strip out volatile items like automobiles and gas,declined by 0.1%,below the expected 0.2%.However,the broader group of retail sales,excluding a few sectors,showed a 0.4% increase,aligning with projections and surpassing the revised prior figure of -0.5%.

The sector-specific breakdown revealed a mixed bag; non-store retailers (primarily online entities) posted a growth of 0.8%,while sales in sporting goods,hobby stores,musical instruments,and bookstores soared by 2.8%.Nonetheless,gas stations saw a 2.2% decrease,and electronic goods stores remained steady with a 0.4% increase.

Analysts have pinpointed rising prices and interest rates as key factors compelling households to prioritize essential expenses while curtailing discretionary spending.Though the labor market continues to demonstrate resilience,the pathway to reemployment appears complicated for job-seekers,with slowing wage growth adding to the pressures faced by consumers.On a positive note,some sectors,including the retail sales control group,observed a 0.4% increase in spending,suggesting that consumer expenditure still retains some upward momentum.

A report from Wells Fargo analysts summarized that the retail sales data for May aligned with the view of a gradual slowdown in consumer spending.The broader control group,which includes auto,gasoline,building materials,and food service sales,saw a 0.4% rise,directly affecting real goods expenditure calculations.However,given the revisions in April's data,they expressed apprehension regarding their forecast of nearly 2% for the actual annualized growth rate of personal consumption expenditures in the second quarter,suggesting a potential downside risk.

In remarks on the commodity market,New York Federal Reserve President John Williams conveyed optimism about the direction of the U.S.economy while refraining from commenting on timing regarding interest rate cuts.He noted,“Some very good signs show that supply and demand are coming into balance,” underscoring that any Fed decisions related to easing policies would hinge on the economic data trends.Williams projected that inflation within the U.S.is likely to continue its downward trajectory this year.

On the commodities front,West Texas Intermediate (WTI) crude oil for July delivery increased by $1.24,or 1.54%,settling at $81.57 per barrel.

The subpar U.S.retail sales report served as a catalyst for declines in both the U.S.dollar and long-term bond yields.On that day,COMEX gold futures climbed 0.77%,reaching $2,346.90 per ounce.

According to the CME Group's FedWatch Tool,traders currently assign a probability of approximately 67% for a Fed interest rate cut in September.

Simultaneously,an annual survey conducted by the World Gold Council revealed that the proportion of central banks anticipating an increase in gold reserves within the next 12 months reached an all-time high.