New Records Set as Job Scans Increase, Tesla Surges – Reuters

Market Overview: A Look Ahead at U.S. and Global Markets

Federal Reserve Chair Jerome Powell eased some concerns in bond markets, contributing to a rebound in Wall Street stocks, which are now approaching all-time highs, as key labor market data is anticipated ahead of the July 4 holiday.

The Nasdaq reached new heights, while the S&P 500 surpassed 5,500 points for the first time. Tesla captured attention by surging 10% to its highest price since January, following a smaller-than-expected 5% decline in vehicle deliveries for the second quarter.

Despite being the only stock among the so-called "Magnificent 7" of major U.S. companies still in the red for the year, Tesla’s shares gained another 3% in pre-market trading.

U.S. Treasury bonds, which faced pressure earlier in the week due to increased speculation about Donald Trump’s potential presidential candidacy and its fiscal implications, stabilized after Powell’s remarks in Portugal. The yield on ten-year Treasuries fell back to 4.43% after hitting close to 4.5% on Monday, as betting markets suggested Trump’s chances of winning against incumbent Joe Biden in November exceeded 60% following Biden’s lackluster debate performance.

The yield curve for U.S. Treasuries, which remains inverted, steepened earlier this week, with the New York Fed indicating that the 10-year term premium for investors in longer-term government debt turned positive for only the third time this year.

Powell’s comments suggested no imminent interest rate cuts, but he did provide some optimism by stating that the U.S. is on a "disinflationary path." He also highlighted the need to balance supporting the economy while controlling inflation, especially amid signs of slowing growth and crucial labor market indicators this week.

An unexpected rise in U.S. job openings for May slightly deviated from expectations, albeit this data is a month older than most upcoming employment reports. Wednesday will feature data from the ADP regarding private sector jobs for June, weekly jobless claims, and June layoffs figures, along with service sector surveys from the previous month. These events will lead up to the release of minutes from the latest Federal Reserve policy meeting.

This wave of economic data is expected to come as trading volumes decrease in anticipation of the holiday on Thursday.

Wall Street futures remained steady before the market opened, while the dollar experienced slight weakness against the euro and sterling, amid ongoing elections in the U.K. and France. Tactical voting in the second round of France’s assembly elections, scheduled for Sunday, is projected to prevent a far-right majority, leading to a decline in French government debt premiums over Germany, now below 70 basis points for the first time since mid-June.

In Asia, the situation was different, with the dollar reaching a 38-year high just shy of 162 Japanese yen—still no response from Japanese authorities—and hitting 2024 highs against other currencies. The latter was influenced by unexpectedly poor results from June’s service sector survey, which also caused a ripple effect on mainland Chinese stocks, which have risen less than 1% this year.

Key developments to watch for that could guide U.S. markets include:

• U.S. June ADP private sector jobs report, weekly jobless claims, June Challenger layoffs, ISM and S&P Global June service sector survey, May factory goods orders, and May international trade balance.
• Minutes from the latest Federal Reserve policy meeting; remarks from New York Federal Reserve President John Williams, European Central Bank President Christine Lagarde, and ECB Chief Economist Philip Lane at the ECB’s annual forum in Sintra, Portugal.
• U.S. corporate earnings, including Constellation Brands.
• U.S. Treasury 4-week bill auction.

Stay tuned for these important updates that will shape market sentiments moving forward.