U.S. stock futures experienced a slight decline on Thursday night, even as the S&P 500 reached its highest closing level of the year. Dow Jones Industrial Average futures dropped by 54 points, equivalent to 0.16%, while S&P 500 futures saw a 0.12% dip and Nasdaq 100 futures edged down by 0.08%.
In extended trading, DocuSign shares surged by 5% after the electronic agreements firm exceeded analysts’ expectations for the first quarter, both in terms of revenue and profit. During the regular trading session on Thursday, stocks continued their recent rally, resulting in the S&P 500 reaching a notable level just below 4,300. The broader index recorded a 0.62% climb to close at 4,293.93. Simultaneously, the Dow Jones Industrial Average enjoyed its third consecutive day of gains, adding 168.59 points or 0.5%. The Nasdaq Composite also performed well, rallying by 1.02%.
Investors found encouragement in the broader participation of stocks, including small-cap equities, in the ongoing market rally. However, some market participants cautioned that the gains may not be sustainable, questioning whether this is a short-lived position squeeze reminiscent of August 2022 or a more enduring trend. The current state of the market is perceived as a potential turning point, leading to uncertainty regarding its future trajectory.
While the S&P 500 is set for its fourth consecutive positive week, a feat not seen since last August, with a modest increase of nearly 0.3% as of Thursday’s close, the Dow Jones Industrial Average is on track for its second consecutive week of gains, up 0.2%—a development unseen since April. On the other hand, the Nasdaq Composite is poised to break its six-week winning streak, with a slight decline of 0.02%.
Data by Bloomberg
On Thursday, most sectors of the market experienced a positive performance. Consumer Discretionary showed the strongest gain, rising by 1.56%. Information Technology also had a notable increase of 1.20%. Consumer Staples and Health Care sectors followed with gains of 0.74% and 0.65%, respectively. Utilities and Communication Services sectors showed modest gains of 0.41% and 0.27%, while Industrials had a slight increase of 0.18%.
However, not all sectors saw gains on Thursday. Financials experienced a decline of 0.11%, while Materials and Energy sectors saw larger losses of 0.35% and 0.44%, respectively. The Real Estate sector had the largest decline, dropping by 0.62% on the day. Overall, it was a mixed day for sectors, with most sectors posting gains, but some sectors facing losses.
Major Pair Movement
The dollar experienced a decline on Thursday, accompanied by a drop in Treasury yields, causing concern among traders who held long positions ahead of the upcoming Federal Reserve meeting. Despite some policymakers hinting at a possible pause in interest rate hikes, surprise rate increases from the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) led to speculation that the Federal Reserve might follow suit. The market pricing for Fed policy did not change significantly following the report, with expectations still indicating a likelihood of no rate hike in June, a final 25 basis point hike in July, and the possibility of rate cuts starting from December onwards. The increase in initial jobless claims, along with other indicators of slowing growth, added to worries about global economic conditions.
Meanwhile, the euro gained 0.75% against the dollar, finding resistance near the daily cloud base and the 100-day moving average. The British pound also climbed 0.9% against the dollar, as the Bank of England (BoE) was expected to raise rates, bringing them closer to the levels set by the Federal Reserve. On the other hand, the USD/JPY pair declined by 0.85%, approaching its 21-day moving average and key support levels. The focus of the market now shifts to the upcoming meetings of the Federal Reserve, the European Central Bank (ECB), and the Bank of Japan (BoJ).
Overall, the dollar weakened, Treasury yields declined, and various factors, including global economic growth concerns, upcoming central bank meetings, and the performance of other major currencies, influenced the currency market on Thursday.
Picks of the Day Analysis
EUR/USD (4 Hours)
EUR/USD Surges as Weaker US Dollar Boosts Sentiment Ahead of FOMC Meeting
The EUR/USD currency pair experienced a notable upswing on Thursday, driven by a declining US Dollar and improved risk appetite. The Greenback weakened across the board following lackluster employment data from the US, which softened expectations ahead of the upcoming Federal Open Market Committee (FOMC) meeting. Although Euro area Q1 GDP saw downward revisions, it did not have a significant impact on the Euro’s performance. Despite mixed growth figures among European countries, the European Central Bank (ECB) meeting next week is still anticipated to include a 25 basis points rate hike. The rally in EUR/USD was further supported by technical factors, while the negative employment numbers in the US contributed to easing hawkish expectations from the Federal Reserve. The release of the May Consumer Price Index (CPI) on Tuesday will be a crucial report to watch before the FOMC decision. As market sentiment favors riskier assets, the US Dollar is expected to remain weak, potentially leading to further losses. However, a deterioration in sentiment could limit upward movements and facilitate a sharp correction in the currency pair.
According to technical analysis, the EUR/USD pair moved higher on Thursday as the price creating a push to the upper band of the Bollinger Bands. Currently, the EUR/USD is still running around the upper band of the Bollinger Bands showing that there’s a possibility that the market still trying to move higher. The Relative Strength Index (RSI) is currently at 66 just below the overbought area, indicating that the EUR/USD is still in the bullish trend.
Resistance: 1.0808, 1.0847
Support: 1.0757, 1.0721
XAU/USD (4 Hours)
Gold (XAU/USD) Rallies as Weaker US Dollar and Dismal Employment Report Spur Investor Sentiment
After hitting a weekly low of $1,939 per troy ounce, the XAU/USD pair staged an impressive comeback. The US Dollar initially traded with a soft tone, but its decline accelerated during American trading hours, triggered by a worse-than-expected employment-related report. Initial Jobless Claims unexpectedly surged to 261K for the week ended June 2. The disappointing data pushed investors to increase bets on a dovish Federal Reserve (Fed), with the odds of a rate hike next week surpassing 70% once again. The unexpected interest rate hikes by the Bank of Canada (BoC) and the Reserve Bank of Australia (RBA) also contributed to doubts about the US tightening cycle. Additionally, the US Dollar was influenced by a sharp retracement in government bond yields, with both the 10-year and 2-year Treasury yields experiencing a decline.
According to technical analysis, the XAU/USD pair is moving higher on Thursday and try to cover the losses on previous day, moves higher above the middle band of the Bollinger Bands. There is a possibility that the XAU/USD will continue to moves higher and try to create a push to the upper band of the Bollinger Bands. Currently, the Relative Strength Index (RSI) is at 54, suggesting that the XAU/USD is in neutral with potential bullish trend.
Resistance: $1,972, $1,982
Support: $1,955, $1,939
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