Concerns that the Fed will keep interest rates higher for longer are still hanging over the market, as traders are no longer betting much on the possibility of the Fed starting to cut interest rates in September…
US stocks rose on Friday, with the Nasdaq hitting a record closing high, as gains in chipmaker Nvidia outweighed concerns the Federal Reserve may delay interest rate cuts. Crude oil prices also rebounded after several consecutive sessions of declines, but ended a week of losses on concerns about the demand outlook.
At the close, the S&P 500 index rose 0.7% to 5,304.72 points. The Nasdaq index rose 1.1% to 16,920.79 points. The Dow Jones index rose 4.3 points, equivalent to an increase of 0.01% to 39,069.59 points.
For the week, the S&P 500 rose 0.03% and the Dow Jones fell 2.33%, marking the blue-chip index's first weekly decline in five weeks. The Nasdaq, on the other hand, outperformed thanks to strong gains in chip stocks, posting a gain of 1.41% for the week.
Nvidia shares rose 2.61 TP3T on Friday, after rising more than 91 TP3T on Thursday. The chipmaker, with a market capitalization of more than $2.5 trillion, continued to excite investors after reporting first-quarter results that beat expectations on Wednesday. On Thursday, Nvidia's stock price topped $1,000 for the first time, helping other tech stocks rally.
The technology group, with its core being stocks related to artificial intelligence (AI) such as Nvidia, continues to be a pillar of the market, in the context of investors' concerns that the US Federal Reserve (Fed) may delay the timing of its first interest rate cut.
Goldman Sachs was one of the earliest forecasters of when the Fed would begin easing monetary policy. However, after a series of better-than-expected US economic data this week, Goldman has pushed back the Fed's first rate cut from July to September.
“Inflation could improve significantly by September, but it is unlikely to be perfect. The full-year inflation rate will still be high enough to make it difficult for the Fed to cut rates,” Goldman economist David Mericle said in a report.
Most experts and investors even think the Fed will start cutting interest rates later than September. Data from the CME's FedWatch Tool shows that the market is betting on a less than 50% chance of the Fed cutting interest rates for the first time in September. Last week, the chance was around 70%.
Concerns about higher interest rates for longer have also contributed to the sharp decline in crude oil prices this week. On Friday, WTI futures in New York fell to $76.15 a barrel, the lowest since February 26, and Brent futures in London fell to $80.65 a barrel, the lowest since February 8.
Oil prices then recovered and closed the session in an uptrend. WTI crude oil prices increased by 0.85 USD/barrel, equivalent to an increase of 1.11%, closing at 77.72 USD/barrel. Brent crude oil prices increased by 0.76 USD/barrel, equivalent to an increase of 0.93%, closing at 82.12 USD/barrel.
For the whole week, WTI oil price decreased by 2.91 TP3T and Brent oil price decreased by 2.21 TP3T, but at the beginning of the year, the prices of the two types of oil still achieved increases of 8.41 TP3T and 6.51 TP3T, respectively.
According to analyst Tamas Varga of oil brokerage PVM Oil, oil prices this week also faced downward pressure from Russia's crude oil production exceeding its committed output within the framework of OPEC+, an alliance between the Organization of the Petroleum Exporting Countries (OPEC) and some non-members.
The OPEC+ production meeting will take place on June 2. The market wants to know whether the alliance will extend its voluntary production cut of 2.2 million barrels per day to support oil prices.
“Next week’s OPEC+ meeting is expected to maintain the current production ceiling, especially since oil prices are in a downtrend,” Varga said. “But that may not be enough to improve market sentiment, as the market appears to be oversupplied.”
Source: VnEconomy
