Market Watch: Dow futures contract increased by 60 points, S&P 500 futures rose 23 points, and Nasdaq 100 futures rose 125 points.
The US political landscape has shifted, with President Biden dropping out of re-election, China attempting to boost its economy by cutting interest rates, and Nvidia developing an AI chip for China.
President Joe Biden has dropped out of the presidential race
President Joe Biden has dropped out of the presidential race due to health concerns. Biden has backed Vice President Kamala Harris for the position, putting her in pole position for the nomination. Harris aims to unite the Democratic Party and defeat Donald Trump. The party may consider a virtual nomination ahead of the convention. Harris could consolidate Black support and highlight differences on abortion rights.
Nvidia is developing an AI chip for Chinese markets
Nvidia is developing an AI chip for Chinese markets, aiming to comply with US export restrictions.
The chip, tentatively called the “B20,” will be distributed by Inspur, Nvidia’s largest Chinese distributor.
Despite weak demand for the H20 in China, increased interest in AI development has boosted Nvidia’s valuation, making it one of the most valuable companies on Wall Street.
PBOC has cut its benchmark loan prime rates
The People’s Bank of China (PBOC) has cut its benchmark loan prime rates to record lows to support the country’s struggling economy.
The cuts come after softer-than-expected Q2 GDP data raised concerns about slowing economic growth.
The cuts come amid speculation that Donald Trump may win a second term as US president, which could negatively impact the world’s second-largest economy.
Economic Calendar
- 8:30Â AMÂ ETÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â National Activity Index for June
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Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark and tech-heavytouched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow,
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.