Inflation Cools Again in May, Clearing Way for Fed to Suspend Interest Rate Hikes

The latest data released by the United States showed that inflation cooled again in May, paving the way for the Federal Reserve (Fed) to suspend interest rate hikes this week. Major US stock indexes opened higher on Tuesday (13th), withS&P 500 IndexandNasdaqThe index hit a fresh one-year high.

before the deadline,Dow Jones Industrial Averagerose more than 200 points or nearly 0.6%,Nasdaq Composite Indexrose nearly 100 points or nearly 0.7%,S&P 500 Indexup nearly 0.6%,Philadelphia SemiconductorThe index rose more than 1%.

The U.S. consumer price index (CPI) increased by 4% year-on-year in May, the eleventh consecutive decline, hitting a new low since March 2021, lower than market expectations of 4.1%, and a sharp drop from the previous value of 4.9%. In addition, the key core CPI in May increased by 5.3% year-on-year, in line with market expectations, slightly lower than the previous value of 5.5%.

On a monthly basis, CPI growth in May was 0.1%, lower than market expectations of 0.2%, and a significant drop from the previous value of 0.4%. Core CPI growth was 0.4%, in line with market expectations and the previous value of 0.4%.

After the release of the US CPI data, the three major US stock index futures rose in the short term, and the Nasdaq futures rose 0.52%.S&P 500 IndexFutures rose 0.23%,DowFutures rose 0.06%.

The cooling of CPI in May paved the way for the Fed to suspend interest rate hikes this month, and the probability of raising interest rates has been greatly reduced; JP Morgan Chase’s analyst team had previously given expectations for the trend of US stocks on the day after the announcement of CPI. In their view, overall inflation is between 4% and 4.2% between %,S&P 500 IndexIt was on track for gains of 0.75% to 1.25% on the day.

In other news, investors are “fully long” tech stocks amid the artificial intelligence (AI) boom, according to Bank of America’s latest survey of global fund managers. 55% of participants said that being long big tech stocks was the most active trade, the strongest belief since 2020.

However, fund managers remained broadly underweight equities as sentiment, as measured by cash levels, economic growth expectations and asset allocation, remained “stubbornly low,” Bank of America strategist Michael Hartnett wrote in a note. Investors cut their equity allocations to a five-month low.

As of 21:00 on Tuesday (13th) Taipei time:

Focus stocks:

Tesla (TSLA-US) rose 1.70 percent to $254.07 a share in early trade

As Tesla shares rose for a 12th straight session, Wood’s Ark Investment Management sold off a large stake in the company on Monday, cashing in $98 million. Her Ark Investments firm had previously forecast Tesla’s stock price would hit $2,000 a share by 2027. In addition, Wood’s fund also sold 20,100 shares of Huida (NVDA-US) stock, bought 174,000 shares of Facebook parent company Meta (META-US) shares, and 98,000 TSMC shares (TSM-US)。

Manchester United (MANU-US) rose 11.92% to $22.53 a share in early trade

Manchester United was up 30% before the market, to $ 26.2 per share. According to a report from Qatar local media AI-Watan, the Qatar consortium has completed the acquisition of Manchester United, and it is estimated that an announcement will be made soon.Subsequently, the “Washington Post” reported that the Qatar consortium’s offer was about 5 billion yuan.GBPhoping to take full control of Manchester United, while the offer from the Ratcliffe consortium hopes to obtain about 60% of the shares.

Broadcom (AVGO-US) fell 0.5 percent to $851.12 a share in early trade

According to the documents released by the US Securities and Exchange Commission (SEC), Charllie Kawwas, chairman of Broadcom Semiconductor Solutions, reduced his holdings of 1,645 shares on June 8, worth 1.318 million US dollars; $4.787 million. A total of 7,645 shares were reduced by the two top executives, worth about US$6.11 million.

Today’s key economic data:

• U.S. CPI increased by 4% year-on-year in May, expected to be 4.1%, and the previous value was 4.9%
• U.S. May CPI increased by 0.1% month-on-month, expected 0.2%, and the previous value was 0.4%
• The core CPI in the United States increased by 5.3% in May, expected to be 5.3%, and the previous value was 5.5%
• The core CPI in the United States increased by 0.4% in May, expected to be 0.4%, and the previous value was 0.4%

Wall Street Analysis:

Richard Flynn, managing director of Charles Schwab UK, said that the decline in US inflation in May gave investors a shot in the arm, but remained stubbornly above the Fed’s 2% target. The good news is that, compared to earlier this year, the “stickiness” of inflation is now limited to a handful of line items.

Morgan Stanley analysts said in a research note that “the bear market is not over” according to their boom/recession analysis model, althoughS&P 500 IndexIt has rebounded 20% from its previous low and entered a technical bull market. They also mentioned that they are currently monitoring the quality of US stock earnings, and that the ratio of net income to cash flow has recently fallen to the weakest level in the past 25 years.