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Market Fluctuates Near Highs as Tech Boost Fades, Regional Banks Surge, and Trade Deficit Widens


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

On Wednesday, both the S&P 500 and Nasdaq Composite closed lower, hovering near their highest closing levels since August 2022. The S&P 500 slipped by 0.38%, settling at 4,267.52, while the Nasdaq Composite declined by 1.29%, ending at 13,104.89. However, the Dow Jones Industrial Average stood out among the major averages, adding 91.74 points or 0.27% and closing at 33,665.02.

Energy emerged as the best-performing sector in the S&P 500, experiencing a rise of approximately 2.6%. Notably, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and First Trust Natural Gas ETF (FCG) both gained over 3%. Regional banks also saw continued growth, with the SPDR S&P Regional Banking ETF (KRE) rising more than 3%. PacWest Bancorp’s shares surged by 14.4%, while Zions Bancorporation added 4.5%.

Despite the recent market rally driven by the promise of artificial intelligence and a 7% increase in the S&P 500 over the past three months, Bob Doll, Chief Investment Officer at Crossmark Global Investments, cautioned about the future impact of the Federal Reserve’s interest rate hikes. Doll pointed to ongoing concerns such as leading economic indicators declining for 13 consecutive months, an inverted yield curve, and liquidity issues. He advised caution and urged investors not to get carried away by the current rally.

Meanwhile, the U.S. trade deficit continued to rise in April, although it came in slightly below economists’ expectations. This deficit could potentially lead to lower GDP growth in the second quarter.

Data by Bloomberg

On Wednesday, the overall performance of sectors in the market showed a slight decline, with all sectors experiencing a decrease of 0.38%. However, some sectors managed to outperform the market. Energy was the best-performing sector, with a positive price change of 2.65%. Real estate and utilities also had a good day, with gains of 1.75% and 1.70% respectively. Industrials and materials followed suit with increases of 1.59% and 1.18%. Financials had a modest gain of 0.33%. On the other hand, several sectors faced declines. Consumer staples and healthcare experienced small decreases of 0.33% and 0.41% respectively. Consumer discretionary had a larger decline of 0.91%. The worst performers were information technology and communication services, both with significant decreases of 1.62% and 1.87% respectively.

Major Pair Movement

The US Dollar Index (DXY) is facing downward pressure around 104.00 as the market balances hawkish Federal Reserve expectations with concerns about US economic growth. Despite the strong performance of US Treasury bond yields and the dollar’s safe-haven status, the index fails to reflect these positive factors. At the same time, the EUR/USD pair is trading within a week-long Pennant formation near 1.0700, with bullish and bearish forces in contention due to fears of an economic slowdown, higher interest rates, and weaker Eurozone data.

In other currency developments, the GBP/USD pair experiences a slight upward movement but remains significantly below the previous day’s weekly peak around the key level of 1.2500. The pair finds support from the subdued performance of the US Dollar. Similarly, AUD/USD remains low at approximately 0.6650 after retreating from a one-month high, as concerns about the Reserve Bank of Australia’s hawkish stance and worries about economic growth weigh on the Australian dollar. Additionally, USD/CAD initially dropped to a low of 1.3318 following an unexpected interest rate hike by the Bank of Canada, marking the lowest level since May 8. However, the pair later rebounded to around 1.3400, erasing its losses, due to the overall strength of the US dollar supported by higher US yields.

Economic Data
CurrencyDataTime (GMT + 8)Forecast
USDUnemployment Claims20:30236K

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