06/02/2023
The US stock market closed higher on Thursday. The House of Representatives passed the debt ceiling bill, taking an important step to avoid a US debt default. Chuck Schumer, the Senate Majority Leader, expressed his hope for swift progress of the bill in the Senate and its prompt submission to the President's desk. Most traders now believe that there is no default risk in the US, and their attention has shifted to other uncertain factors that could affect economic growth, such as the possibility of the Federal Reserve raising interest rates again.
In May, driven by the surge in AI-related stocks, the Nasdaq Composite Index rose by a cumulative 5.8%. However, apart from the technology stocks, there were few other stocks that saw significant gains. Due to the drag from stocks such as Nike, Disney, and Chevron, the Dow Jones Industrial Average fell by nearly 3.5% in May. Therefore, at first glance, the stock market seems prosperous. However, it is not easy to achieve stable investment returns in the market. One must be adept at seizing opportunities in hot sectors while avoiding getting trapped in chasing high prices.
Recently, we have also been closely monitoring the Federal Reserve's meeting on June 13th and 14th. This meeting could become another catalyst for the market. Patrick Harker, the President of the Federal Reserve Bank of Philadelphia, indicated that he is inclined not to raise rates at the upcoming meeting. However, he added that his stance may change based on Friday's nonfarm payroll data. James Bullard, the President of the Federal Reserve Bank of St. Louis, stated that the Fed may need to raise rates twice more this year but is uncertain about the specific target level. Some Fed officials have also hinted at the possibility of no rate hike in June. They believe that skipping a rate increase would allow the Fed to gather more data before making a decision.
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