Markets Defy Economic Data, Rally on Corporate America's Bright Spots

Strategic Insights -

Wall Street and European markets rallied yesterday in the face of worrying US economic data, with investors looking beyond the numbers to positive news from Corporate America. Despite a surprise rise in US jobless claims and higher import prices fueled by surging oil costs, major indices closed higher, driven by a forecast from the US Semiconductor Industry Association that buoyed Intel. European markets extended their winning streak to seven consecutive trading sessions, but Asian markets were mixed, weighed down by concerns over potential US interest rate hikes.

Key Takeaways:

  • US jobless claims rose unexpectedly last week, with 357,000 new claims filed, according to the Bureau of Labor Statistics.
  • Import prices in the US rose 1.3% in May, with oil costs surging 3.1% on the month, as reported by the US Bureau of Labor Statistics.
  • The market is anticipating a 25 basis point rise in Fed funds from their current 46-year low of 1% at the Fed's next rate-setting meeting on June 30.
  • The Dow Jones Industrial Average rose 0.4% to close higher, with Intel supported by a positive forecast from the US Semiconductor Industry Association.
  • The Nasdaq Composite Index put on 0.5% to close higher, marking a gain of 2.2% for the week.
  • European markets, led by the FTSE Eurotop 300, rose 0.3% to close higher, marking a gain of 2.7% since the close of business on July 1.
  • Tokyo's Nikkei 225 index rose 1.1% to a six-week high, driven by further signs of a strengthening Japanese economy.
  • US crude oil prices rose 91 cents to close at $38.45 a barrel, as the International Energy Agency revised its 2004 demand growth forecast higher.

Statistics:

  • US jobless claims: 357,000 (Bureau of Labor Statistics)
  • Import prices in the US (May): 1.3% (US Bureau of Labor Statistics)
  • Oil costs (May): 3.1% (US Bureau of Labor Statistics)
  • Fed funds rate (current): 1% (Federal Reserve)
  • Dow Jones Industrial Average gain (June 29): 0.4%
  • Nasdaq Composite Index gain (June 29): 0.5%
  • FTSE Eurotop 300 gain (since July 1): 2.7%
  • Nikkei 225 gain (June 29): 1.1%
  • US crude oil price close (June 29): $38.45 per barrel

Sources:

  • Bureau of Labor Statistics
  • US Bureau of Labor Statistics
  • Federal Reserve
  • Dow Jones Industrial Average
  • Nasdaq Composite Index
  • FTSE Eurotop 300
  • Nikkei 225
  • International Energy Agency