Dead calm

Wednesday is usually a tough day, but not this time. After Tuesday’s solid rally, market players decided to take a short pause, and fortunately, nothing got in the way. Though it could have. First came some underwhelming data on new home sales for May: 623,000 versus the expected 700,000. Still, the market shrugged it off. Then came Fed Chair Jerome Powell’s turn to deliver his semi-annual report to the U.S. Senate. While there were no major surprises, Mr Powell did slightly dampen the market’s mood, but only slightly and not for long. As a result, the second half of the trading session passed in a calm and peaceful manner, which was clearly reflected in the day’s final figures.

Changes across all major U.S. indexes were minimal. The blue-chip Dow Jones (DJIA-30) slipped by 0.25%, largely due to a modest sell-off in McDonald’s (MCD) shares. Meanwhile, the tech-heavy NASDAQ Composite inched up by 0.31%. The spotlight here was on Nvidia (NVDA), which jumped more than 4% (4.33%) in a single day to reach a new all-time high. The surge in demand followed an updated forecast from Loop Capital, which raised its target price from 175 to 250 dollars while maintaining a “buy” rating.

As for the S&P 500, the main benchmark of the U.S. market, it essentially stood still, losing a mere 0.02 points (points, not %). No one was particularly surprised. The market needed a pause, and that is exactly what it got.

The ITS Shariah Index (ITSS) once again delivered a pleasant surprise, posting a confident gain for the second day in a row and setting a new all-time high with a 0.40% increase. As on the previous day, the main growth drivers were leading tech stocks. This time AMD, Apple (AAPL), Microsoft (MSFT), Cisco Systems (CSCO), and others joined Nvidia in the rally. Even Tesla (TSLA) could not derail the index’s upward momentum, despite losing nearly 4% of its market value (3.79%) on Wednesday following reports of a 28% year-on-year drop in its EV sales in Europe.

The ITS World Index (ITSW) struggled to withstand the Tesla sell-off, along with declines in several leading Chinese companies, including Alibaba (BABA). Overall, investor sentiment on global markets was subdued. Only 30% of the index’s constituents (16 out of 50) ended the day in the green. The decline was evenly spread across regions, with American, European, and Asian stocks all closing in the red. Fortunately, the losses were modest: the ITSW index slipped just 0.21%.

In summary, despite the near-flat performance of major indexes, market sentiment remains broadly positive. This suggests that a continued upward trend is likely in the near term, with the S&P 500 and NASDAQ Composite well positioned to reach new record highs.

 

 

Market expectation for 26 June

Theatre begins at the cloakroom, and this Thursday begins with Micron Technology (MU). The company released its results yesterday right after the closing bell, and to say investors had been waiting for the report would be an understatement. The MU report was expected to confirm that all is well in the industry and that the outlook for the year-end is promising. As for the current state, it’s solid. The outlook is not bad either, though without much of a wow factor.

However, there is a caveat that disappointed those expecting a strong upward gap after the release. It did not happen. The reason lies in the MU shares themselves: they had already seen significant growth recently. As a result, solid earnings left little room for further upside — at least for now. Following the release, MU shares barely moved.

Still, the results from one of the semiconductor industry leaders should lend a positive tone to today’s market sentiment.

So far, by midday, the wave of optimism on global stock markets has somewhat subsided. Investors, seeing calm in the U.S., decided to take a pause in other regions as well. As a result, today we are seeing modest gains or small losses, and nothing more.

On the U.S. market, the sideways movement near neutral levels is likely to continue. That said, Micron’s earnings did lend a mild boost to index futures, which rose by a few tenths of a percent. But significant growth seems unlikely. There are no major drivers on the horizon — just an ordinary Thursday. As usual, jobless claims data will be released, though they remain within normal ranges and are not causing concern. Durable goods orders are also due — interesting, but hardly market-moving.

Moreover, tomorrow brings the release of truly important data on consumer inflation, so investors will likely remain on the sidelines in anticipation of the PCE index. In short, there are no signs of trouble, but no reason to celebrate either. The pause that began yesterday will likely continue today.

The only genuinely interesting events are expected after the market close, when quarterly results from two notable companies will be released: Walgreens Boots Alliance Inc (WBA) and Nike (NKE). While the former is of interest in itself and unlikely to sway overall market sentiment, Nike’s report could stir investors’ emotions. The company’s performance often reflects broader trends in global trade. So we wait and hope for good news, despite President Trump’s continued efforts to “bury” it under yet another pile of tariffs.

All in all, Thursday is likely to become another small step towards new record highs for U.S. indexes, which are now less than 1% away.