The US equity market experienced mostly positive gains on Thursday, supported by an unexpected improvement in existing home sales for May, while investors assessed the latest statements from Federal Reserve Governor Michelle Bowman.
The Nasdaq Composite surged by nearly 1% to reach 13,630.6, while the S&P 500 registered a 0.4% increase, closing at 4,381.9. The Dow Jones Industrial Average remained relatively unchanged at 33,946.7. Among the sectors, consumer discretionary stocks led the gainers, while real estate stocks experienced the sharpest decline.
According to the National Association of Realtors, the pace of existing home sales in the US rose by 0.2% sequentially in May, reaching a seasonally adjusted annual rate of 4.3 million units. This unexpected improvement was attributed to the relatively stable mortgage rates, resulting in consistent home sales in recent months, as stated by NAR Chief Economist Lawrence Yun.
However, manufacturing activity in the US Midwest region continued to deteriorate in June, with declining production and a worsening outlook, as reported by the Kansas City Fed data.
On the interest rate front, the US 10-year yield rose by 7.4 basis points to 3.8%, while the two-year rate advanced by 8.4 basis points to 4.79%.
Governor Bowman expressed her support for the Federal Open Market Committee’s decision to maintain steady interest rates but emphasized the need for additional rate increases to achieve the target inflation rate over time. She acknowledged that the central bank’s rate hikes have had some impact on economic activity and inflation but believed that further increases in the federal funds rate are necessary to achieve a sufficiently restrictive monetary policy stance.
Separately, Fed Chair Jerome Powell stated that the committee would approach interest rate adjustments at a “careful pace,” ensuring a cautious approach to policy changes.
In company news, Amazon.com (AMZN) experienced a 4.3% jump, securing the second-largest gain on both the S&P 500 and the Nasdaq. The company’s Amazon Web Services cloud-computing unit announced plans to invest $100 million in establishing a new generative artificial intelligence center.
Conversely, Boeing (BA) shares declined by 3.1%, reflecting the steepest drop on the Dow, due to a work stoppage at supplier Spirit AeroSystems (SPR). The machinist and aerospace workers union at Spirit rejected a new labor contract, resulting in a shutdown of operations, and causing a 9.4% decrease in Spirit’s stock price.
Gold prices fell by 1.1% to $1,924.50 per troy ounce, while silver prices retreated by 1.9% to $22.58 per ounce.
Overall, despite hawkish remarks from the Federal Reserve, the equity market received a boost from the unexpected improvement in existing home sales, with investors closely monitoring developments and adjusting their positions accordingly.
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