(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Mike Dolan
June 4 (Reuters) -
What matters in U.S. and global markets today
By Mike Dolan, Editor-at-Large, Finance and Markets
The S&P 500 failed to clock its 10th straight daily gain on
Wednesday and there are some clouds gathering in markets.
Despite the frenzy in the red-hot chip sector, Broadcom, now the
world's sixth-biggest company by market cap, stumbled after its
latest earnings release.
The chipmaker's stock dropped more than 13% overnight following
a slight miss on sales and revenue forecasts. That reaction
speaks to the high bar companies must now meet to impress
markets amid the AI boom. In the words of one analyst, the
market now demands perfection.
I'll get into that and more below.
But first, check out my latest column on why Kevin Warsh's Fed
could catch investors off guard.
And listen to the latest episode of the Morning Bid daily
podcast. Subscribe to hear Reuters journalists discuss the
biggest news in markets and finance seven days a week.
SUMMER CLOUDS
Broadcom's miss also speaks to the rising competition in the
sector, where shares of chip designers like Marvell Technology
have zoomed higher over the past week. Marvell's shares touched
a record high after Nvidia CEO Jensen Huang on Tuesday stated it
is likely to become a trillion-dollar company.
Meantime, the broader economy has shown few signs of
slowing, fuelling hawkish bets on the Federal Reserve's next
move, with futures now seeing almost a 50% chance of a rate rise
as soon as October.
The Fed's so-called Beige Book, which lays out the economic
conditions facing policymakers when they meet this month, showed
activity has picked up even as energy price pressures have
become pervasive.
That was clear in the recently released ISM business surveys
for May, as well as labor market numbers like May's
forecast-beating 122,000 rise in ADP private sector payrolls.
The May employment report will be released tomorrow, but
overall U.S. economic surprise indexes are running at their most
positive in three years.
There's been little relief on the energy front, meantime, with
oil prices still elevated as we enter a crunch month for global
crude supplies. And despite reports of a ceasefire between
Israel and Lebanon boosting hopes for a broader Iran deal,
fighting continued in southern Lebanon on Thursday.
In otherwise calm currency markets, the softening Japanese yen
continued to flirt with the 160-per-dollar level, even in the
face of warnings from BOJ sources that an interest rate rise is
likely this month - unless a sharp escalation in the Middle East
conflict upends markets.
And while investors await a wave of mega IPOs this summer, there
have been renewed jitters in private equity and credit markets.
Swiss asset manager Partners Group is facing heavy redemption
requests from some of its funds and will cap withdrawals from
its $16 billion U.S.-based fund after they exceeded the 5%
quarterly limit.
Moving into Thursday's open, U.S. stock index futures were in
the red while oil prices and Treasury yields slipped back
slightly from Wednesday's highs. And with regular tech stocks
now recording extraordinary short-term moves that once seemed
the preserve of frothier crypto markets, bitcoin seems almost
forgotten. It's shed almost 20% since mid-May and fell to its
lowest level since February on Wednesday.
Chart of the day
Even though a ceasefire deal between Israel and Lebanon
encouraged hopes for a broader agreement to end the U.S.-Israeli
war with Iran, fighting continued both there and in the Gulf
region.
Global crude prices remain about 35% higher than before the war
and concerns about dwindling reserves are rising. U.S. crude
stockpiles fell by 8 million barrels to 434 million barrels in
the week ended May 29, the Energy Information Administration
said - twice the draw analysts had expected.
Today's events to watch
* U.S. weekly jobless claims (8:30 a.m. EDT), Q1
productivity and costs (8:30 a.m. EDT)
* Fed's Michelle Bowman, Richmond Fed's Thomas Barkin,
Kansas Fed's Jeffrey Schmid and San Francisco Fed's Mary Daly
all speak
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Opinions expressed are those of the author. They do not reflect
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