Treasury Yields Dip as Investors Consider Monetary Policy Outlook
Investors are closely monitoring the outlook for monetary policy and interest rates ahead of the Federal Reserve’s meeting next week, causing U.S. Treasury yields to fall slightly on Friday. At 4:32 a.m. ET, the yield on the 10-year Treasury was down by over one basis point to 3.8428%. The 2-year Treasury yield was trading less than one basis point lower at 4.8372%.
This comes as investors speculate on the potential trajectory of monetary policy and how it could impact the economy. With the Federal Reserve meeting just around the corner, market participants are hoping for further clarity on future rate hikes and potential tapering of asset purchases.
TSMC Shares Fall 3% After Reporting First Profit Drop in 4 Years
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker, saw its shares fall 3.11% in morning trade on Friday. This drop comes after the company reported its first quarterly net income decline in four years.
TSMC’s second quarter revenue dropped by 10% from a year ago to NT$480.84 billion, while net income fell 23.3% to NT$181.8 billion. Despite surpassing market expectations, the company’s shares still took a hit.
TSMC cited macroeconomic conditions as a key factor affecting its business, resulting in decreased demand for electronics. The company, which produces chips for major smartphone and laptop manufacturers, is feeling the impact of a slowdown in the sector.
South Korean Producer Prices Fall for the First Time Since November 2020
South Korea’s producer price index fell 0.2% year on year in June, marking the first month since November 2020 that the index has contracted. The producer price index measures the average change in the price of goods and services sold by manufacturers and producers in the wholesale market.
On a month-on-month basis, the PPI saw a 0.2% decrease in June, compared to a 0.4% fall in May, according to the Bank of Korea. The decline was driven by lower prices of coal and petroleum products, which dropped by 3.7% compared to the previous month. Agricultural products also saw a decline of 1.3%, while utility prices rose by 1.8% in June.
Japan’s Core Inflation Rate Climbs Slightly to 3.3% in June
Japan’s core consumer price index rose by 3.3% year on year in June, in line with economists’ expectations and slightly higher than the previous month’s reading of 3.2%. The core inflation rate excludes prices of fresh food from the general consumer price index.
The country’s headline inflation rate also increased to 3.3% in June, maintaining its level above the Bank of Japan’s 2% target for the 15th consecutive month. However, Bank of Japan Governor Kazuo Ueda indicated that the central bank’s ultra-loose monetary policy could be maintained, citing room for improvement in achieving the inflation target.
Dow Industrials Shine with 9-Day Rally, Reaching Highest Levels in Over a Year
The Dow Jones Industrial Average enjoyed its longest winning streak since September 2017, wrapping up its ninth consecutive day of gains on Thursday. This performance was paired with the index reaching its highest closing level since March 2022, and its highest intraday level since April of last year.
Big Tech stocks took a backseat this week, allowing the Dow to take the spotlight. With its impressive rally, the index has shown significant strength and resilience.
Major Indexes on Track for Mixed Week
The three major indexes have diverged in performance this week. As the week comes to a close, the Dow and S&P 500 are on track for a second straight positive week. The Nasdaq, however, is facing some pressure.
Investors will be closely monitoring market movements on the final day of trading to see how the indexes ultimately fare for the week.
Stocks Making the Biggest Moves After Hours
Several stocks have experienced significant movement after hours. CSX, the transportation company, saw its shares drop 5% after missing Wall Street expectations for revenue. Intuitive Surgical, a healthcare stock, declined by 4.7% despite beating earnings expectations. On the other hand, Scholastic, a publisher, advanced 8% after exceeding expectations for earnings per share and announcing an increase in its share repurchase amount.
Stock Futures Little Changed
U.S. stock futures remained largely unchanged shortly after 6 p.m. ET. Futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 were all trading near flat.
Investors will be keeping a close eye on market developments to gauge the direction of the stock market in the coming days.
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