The Dow Jones Industrial Average rose 3.8% in the first six months of the year, trailing the Nasdaq, which rose 18.1%, and the S&P 500, which jumped 14.5% â as investors flocked to artificial intelligence-related stocks.
Brendan McDermid | Reuters
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What you need to know today
Dow lags tech rally
The Dow Jones Industrial Average rose about 3.8% in the first six months of the year, trailing the Nasdaq, up 18.1%, and the S&P 500, which rose 14.5% â as investors plowed into artificial intelligence-related stocks. On Friday, the S&P 500 and Nasdaq hit record highs before pulling back. Yield on 10-year Treasury rise as investors digest the latest inflation data. US oil prices rose for a third week in a row on fears of war between Israel and the Iran-backed Hezbollah militia.
Boeing âadmits wrongdoingâ
US prosecutors plan to seek guilty pleas from Boeing on charges related to two fatal 737 Max crashes in 2018 and 2019, lawyers for family members of the victims said. The Justice Department is investigating whether Boeing violated a 2021 settlement that protects the company from federal charges. Boeing later agreed to pay a $2.5 billion fine for conspiracy charges related to the crash. The DOJ is re-examining the agreement after a door panel came off the new 737 Max 9 in January, sparking a new safety crisis.
In the fire
Nike CEO John Donahoe faced discontent as the companyâs stock fell 20% on Friday, its worst day since 1980, after forecasting a significant drop in sales. As Wall Street digested the gloomy outlook of the worldâs largest sports company, at least six investment banks downgraded Nike shares. Analysts at Morgan Stanley and Stifel took it a step further, specifically calling the companyâs management into question.
Bitcoin fortune
Mt. Gox, the bankrupt Japanese bitcoin exchange, is set to repay creditors nearly $9 billion worth of Bitcoin after a 2011 hack. The court-appointed trustee overseeing the exchangeâs bankruptcy proceedings said distributions to the companyâs roughly 20,000 creditors will begin this month. The payout could be a fortune for those who have waited a decade, with the value of Bitcoin rising from $600 in 2014 to more than $60,000 today. One claimant, Gregory Greene, could potentially receive $2.5 million for a $25,000 investment.
Cooling inflation
The main measure of inflation, closely watched by the Federal Reserve, fell to its lowest annual rate in three years in May, with the core personal consumption expenditure price index rising 2.6% from a year ago. âItâs just additional news that as monetary policy works, inflation is cooling,â San Francisco Fed President Mary Daly told CNBCâs Andrew Ross Sorkin during a âSquawk Boxâ interview. âItâs a relief for businesses and households that have been struggling with persistently high inflation. Itâs good news for how policy works.â
(PRO) Rally will expand
The technology sector has driven the marketâs performance in 2024, with the S&P 500 technology group up 28% and Nvidia up 149%, while small caps have lagged behind. Oppenheimer chief market strategist John Stoltzfus believes the rally will widen. CNBCâs Lisa Kailai Han looks at the reasoning behind the call.
Bottom line
The New York Times editorial board has lost faith in President Joe Biden, calling for his resignation. Iran will need more to elect a new president, French voters gave their votes in the first round of snap elections that saw a big result for Marie Le Penâs right-wing party and the Brits will go to the polls on Friday.
Itâs a busy political environment in which to navigate the market. Wall Street has shown remarkable resilience thanks to its AI-powered rally in the first half of the year, which has seen the Nasdaq rise 18% year to date. Nvidia is up almost 150%. There may be more to come; Bank of America believes Nvidia and Apple can still deliver âsuperior returns.â
While one of the Streetâs biggest bulls expects the rally to outpace megacaps, Wall Street isnât feeling the love for Nikeâs CEO. The company had its worst trading day since its December 1980 IPO, losing $28 billion in market cap on Friday after missing sales forecasts.
John Donahoe was brought in from eBay to transform the athletic apparel giantâs digital channel. The company shed its retail partners, becoming heavily reliant on its aging range of trainers and losing out to new rivals Hoka and On. It would certainly make an interesting case study for an MBA program for all the wrong reasons. When Wall Street questioned Donahoeâs position, he still had approval from the founders.
Friday also saw the Fedâs preferred inflation measure come in line with expectations, raising the prospect of an interest rate cut later this year.
âI really think the Fed should issue a cut at the July 31st meeting, confirm it in Jackson Hole in August and do it in September,â Wharton finance professor Jeremy Siegel told CNBCâs âSquawk on the Street.â He added that one or maybe one and a half rate cuts have been priced.
âI actually think there will be more because there is also a little more softness in the economy and more inflation numbers, both of which are feeding higher rates,â he continued. Siegel also said itâs âhard to sayâ where the bull marketâs trajectory is right now.
In a four-day trading week â markets are closed for the July 4 Independence Day holiday â the big economic number to watch is Fridayâs June unemployment data. CNBCâs Sarah Min has more on what to expect.
â CNBCâs Lisa Kailai Han, Yun Li, Jeff Cox, Leslie Josephs, Gabrielle Fonrouge, Hakyung Kim, Brian Evans, Spencer Kimball, Ryan Browne and MacKenzie Sigalos contributed to this report.