As the week comes to a close, let’s recap some key financial headlines that impacted the markets. From the decline in US stocks amid the "Magnificent 7" sell-off to the Fed's potential rate cut in September, here are the standout stories that you need to know 👇
The Fed looks on track for a September rate cut
The latest sign that inflation is cooling makes it more likely the Federal Reserve will be able to gain enough confidence to cut interest rates this fall.
The odds of a cut in September jumped Thursday after the release of favorable new numbers from the Consumer Price Index (CPI), with traders now pricing in an 83% probability of an easing at the Fed's meeting on Sept. 17-18.
Some Fed watchers even think that a cut at the Fed's July 30-31 meeting is now a possibility if some other pieces fall into place.
Trading involves significant risk of loss.
Stocks fall from records amid 'Mag 7' sell-off
US stocks declined on Thursday as investors shifted away from tech stocks following an unexpected drop in consumer prices month-over-month for the first time since 2020.
The S&P 500 fell 0.9%, dipping below 5,600 after reaching that level for the first time on Wednesday. The Dow Jones inched up nearly 0.1%. The tech-heavy Nasdaq led the decline, plunging nearly 2%.
Major tech stocks were hit hard, with Nvidia losing over 5%, and the entire "Magnificent 7" group experiencing its worst day in nearly a year. Tesla shares ended an 11-day winning streak, plummeting more than 8% in its worst day since January, following a Bloomberg report that the EV maker will delay the unveiling of its robotaxi.
Trading involves significant risk of loss.
Gold price pulls back from multi-week top, downside potential seems limited
Gold prices edged lower, reversing part of Thursday's gains that were driven by softer US CPI data. An increase in US bond yields has bolstered demand for the USD, putting pressure on the XAU/USD pair. However, growing expectations of a Fed rate cut in September should provide support for gold and help mitigate losses.
The short-term technical outlook for gold remains bullish, with a potential retest of the all-time high at $2,450. The 14-day Relative Strength Index (RSI) is holding strong above the 50 level, indicating continued momentum.
To reach record highs of $2,450, gold buyers need to achieve a decisive break above the two-month high of $2,425.
Trading involves significant risk of loss.
US Dollar unable to recover losses with Japan intervening
The US Dollar (USD) fell sharply on Thursday following the June Consumer Price Index (CPI) report, which showed a significant drop in inflation. This suggests the Federal Reserve may no longer need to worry about the disinflationary trend, causing the US Dollar Index to approach 104.00.
Retail sales also declined by 0.1%, indicating consumers are waiting for lower prices before making purchases. Additionally, softer housing and rent figures show the Fed's measures are starting to take effect.
Trading involves significant risk of loss.
This concludes our weekly recap. Have a great weekend and see you next week! 👋
