The Nikkei 225, Japan’s benchmark index, saw a significant surge of 1% to reach 39,190.97. The Bank of Japan released data indicating that the services producer price index in May increased by 2.5% compared to the same period last year. However, this growth rate was slower than the 2.7% increase observed in April.
The Japanese yen continues to attract attention, as the exchange rate with the U.S. dollar remains near its lowest level in approximately 34 years. On Tuesday, the yen strengthened, reaching 159.41 to the dollar. The previous day, the dollar closed at 159.59 yen.
In Hong Kong, the Hang Seng index rose by 0.5% to 18,109.80, while the Shanghai Composite index experienced a slight decline of 0.3% to 2,953.95.
Meanwhile, Australia’s S&P/ASX 200 displayed a notable gain of 1.2% to reach 7,829.70. In South Korea, the Kospi index climbed by 0.4% to reach 2,774.54.
In other parts of Asia, Taiwan’s Taiex saw a 0.3% increase, while Bangkok’s SET advanced 0.4%.
On Monday, the S&P 500 experienced a slight decline of 0.3%, closing at 5,447.87. The drop in stocks like Nvidia, which had been benefiting from Wall Street’s artificial intelligence boom, contributed to a 1.1% decrease in the Nasdaq composite, which closed at 17,496.82. However, the Dow Jones Industrial Average managed to rise by 0.7%, reaching 39,411.21.
Among the strongest performers in the market were oil and gas companies, with 70% of stocks in the S&P 500 seeing gains. Exxon Mobil saw a 3% increase, while oilfield services provider SLB gained 4% as oil prices remained near their highest levels since April.
Financial companies also performed well, with JPMorgan Chase adding 1.3% and Wells Fargo climbing 1.6%. These companies are awaiting results later in the week for tests conducted by the Federal Reserve, which assess how well big banks would fare in a recession.
However, despite the overall gains in the stock market, the declines in a few prominent stocks offset these gains. One such stock that caught the spotlight was Nvidia, which experienced a significant drop of 6.7%. This marked the third consecutive decline for the chip company, which had previously seen a staggering 1,000% increase since the fall of 2022.
The soaring demand for Nvidia’s chips, particularly for artificial intelligence applications, has been a major driving force behind the recent record-breaking performance of the U.S. stock market. This has occurred even as the economy’s growth has slowed due to high interest rates. However, the rapid growth in the AI industry has raised concerns about a potential bubble in the stock market and overly optimistic expectations among investors.
Following its brief moment as Wall Street’s most valuable company, Nvidia’s stock has been on a downward trend. In just three days, it has dropped nearly 13%. Given Nvidia’s significant size, the movements of its stock hold considerable sway over the performance of indexes like the S&P 500. In fact, on Monday, it was the heaviest weight on the S&P 500 by a wide margin.
Other beneficiaries of artificial intelligence also experienced declines in their gains. Super Micro Computer saw a drop of 8.6%, reducing its year-to-date gain to 190.9% from above 200%.
This rotation in stocks could be seen as a positive sign for the market, as long as it remains close to its previous records. Concerns have been raised by market watchers who have noticed that Nvidia and a few other companies have been driving much of the S&P 500’s recent returns. They would prefer to see a broader participation of stocks in the market’s gains.
In the bond market, there was a slight easing of Treasury yields. The yield on the 10-year Treasury fell from 4.26% to 4.23% since Friday.
Since reaching a high of 4.70% in late April, yields have mostly been declining, relieving some pressure on the stock market. The decline in yields is driven by hopes that inflation is slowing down enough to convince the Federal Reserve to lower its main interest rate later this year.
As of late, the Federal Reserve has maintained the federal funds rate at its highest point in over two decades. The intention behind this move is to apply sufficient pressure on the economy to rein in inflation.
On another note, during Tuesday’s trading, the price of U.S. benchmark crude oil in electronic trading on the New York Mercantile Exchange experienced a slight increase of 6 cents, reaching $81.69 per barrel. Meanwhile, Brent crude saw a minimal gain of 2 cents, bringing it to $85.17 per barrel.
Additionally, the euro strengthened against the dollar, rising from $1.0732 to $1.0736.
Asian stocks experienced gains on Tuesday, following the mixed performance of U.S. indexes on Monday. Despite this, the majority of stocks rallied. U.S. futures showed an upward trend, while oil prices remained relatively stable.
The Nikkei 225, Japan’s benchmark index, saw a significant surge of 1% to reach 39,190.97. The Bank of Japan released data indicating that the services producer price index in May increased by 2.5% compared to the same period last year. However, this growth rate was slower than the 2.7% increase observed in April.
The Japanese yen continues to attract attention, as the exchange rate with the U.S. dollar remains near its lowest level in approximately 34 years. On Tuesday, the yen strengthened, reaching 159.41 to the dollar. The previous day, the dollar closed at 159.59 yen.
In Hong Kong, the Hang Seng index rose by 0.5% to 18,109.80, while the Shanghai Composite index experienced a slight decline of 0.3% to 2,953.95.
Meanwhile, Australia’s S&P/ASX 200 displayed a notable gain of 1.2% to reach 7,829.70. In South Korea, the Kospi index climbed by 0.4% to reach 2,774.54.
In other parts of Asia, Taiwan’s Taiex saw a 0.3% increase, while Bangkok’s SET advanced 0.4%.
On Monday, the S&P 500 experienced a slight decline of 0.3%, closing at 5,447.87. The drop in stocks like Nvidia, which had been benefiting from Wall Street’s artificial intelligence boom, contributed to a 1.1% decrease in the Nasdaq composite, which closed at 17,496.82. However, the Dow Jones Industrial Average managed to rise by 0.7%, reaching 39,411.21.
Among the strongest performers in the market were oil and gas companies, with 70% of stocks in the S&P 500 seeing gains. Exxon Mobil saw a 3% increase, while oilfield services provider SLB gained 4% as oil prices remained near their highest levels since April.
Financial companies also performed well, with JPMorgan Chase adding 1.3% and Wells Fargo climbing 1.6%. These companies are awaiting results later in the week for tests conducted by the Federal Reserve, which assess how well big banks would fare in a recession.
However, despite the overall gains in the stock market, the declines in a few prominent stocks offset these gains. One such stock that caught the spotlight was Nvidia, which experienced a significant drop of 6.7%. This marked the third consecutive decline for the chip company, which had previously seen a staggering 1,000% increase since the fall of 2022.
The soaring demand for Nvidia’s chips, particularly for artificial intelligence applications, has been a major driving force behind the recent record-breaking performance of the U.S. stock market. This has occurred even as the economy’s growth has slowed due to high interest rates. However, the rapid growth in the AI industry has raised concerns about a potential bubble in the stock market and overly optimistic expectations among investors.
Following its brief moment as Wall Street’s most valuable company, Nvidia’s stock has been on a downward trend. In just three days, it has dropped nearly 13%. Given Nvidia’s significant size, the movements of its stock hold considerable sway over the performance of indexes like the S&P 500. In fact, on Monday, it was the heaviest weight on the S&P 500 by a wide margin.
Other beneficiaries of artificial intelligence also experienced declines in their gains. Super Micro Computer saw a drop of 8.6%, reducing its year-to-date gain to 190.9% from above 200%.
This rotation in stocks could be seen as a positive sign for the market, as long as it remains close to its previous records. Concerns have been raised by market watchers who have noticed that Nvidia and a few other companies have been driving much of the S&P 500’s recent returns. They would prefer to see a broader participation of stocks in the market’s gains.
In the bond market, there was a slight easing of Treasury yields. The yield on the 10-year Treasury fell from 4.26% to 4.23% since Friday.
Since reaching a high of 4.70% in late April, yields have mostly been declining, relieving some pressure on the stock market. The decline in yields is driven by hopes that inflation is slowing down enough to convince the Federal Reserve to lower its main interest rate later this year.
As of late, the Federal Reserve has maintained the federal funds rate at its highest point in over two decades. The intention behind this move is to apply sufficient pressure on the economy to rein in inflation.
On another note, during Tuesday’s trading, the price of U.S. benchmark crude oil in electronic trading on the New York Mercantile Exchange experienced a slight increase of 6 cents, reaching $81.69 per barrel. Meanwhile, Brent crude saw a minimal gain of 2 cents, bringing it to $85.17 per barrel.
Additionally, the euro strengthened against the dollar, rising from $1.0732 to $1.0736.