OP Wire 6/15 (OP – Lite)

Market Update: Mixed Futures, Fed Signals, and Key Stock Movements

June 15, 2024

Futures Mixed

U.S. stock futures displayed a mixed performance on Thursday as investors processed the Federal Reserve’s updated outlook for potential interest rate cuts this year. Both the S&P 500 and the Nasdaq Composite recorded fresh record highs for a third consecutive session on Wednesday, buoyed by Labor Department data indicating easing inflationary pressures in May. However, trading turned choppy after the Fed’s rate-setting committee suggested that only one interest rate cut is expected in 2024.

Adding to the market’s positive momentum were shares of Oracle, which surged over 13% following an impressive double-digit annual revenue guidance from the software provider.

Fed Signals One Rate Cut in 2024

The Federal Reserve has signaled plans to implement just one interest rate cut in 2024, maintaining a hawkish stance by keeping borrowing costs at more than two-decade highs. Initially, officials had projected up to three cuts this year, but persistent inflation above the Fed’s 2% target has led to a more conservative approach.

Fed Chair Jerome Powell noted that while May’s cooler-than-expected consumer price index (CPI) reading was encouraging, the Fed prefers to see more sustained evidence of inflation easing before reducing rates. Financial markets are now pricing in a 56.7% chance of a 25-basis-point rate cut in September, up from 46.8% the previous day, according to CME’s FedWatch Tool. Analysts at Goldman Sachs indicated that if the next three rounds of inflation data remain within a similar range, a rate cut in September is likely.

Tesla Shareholders to Vote on Musk’s $56 Billion Pay Package

Tesla shareholders are expected to approve CEO Elon Musk’s $56 billion pay package and the company’s move to reincorporate in Texas from Delaware by significant margins. Musk announced on social media that early voting shows both resolutions passing by wide margins, with final results to be unveiled at Tesla’s Texas headquarters meeting on Thursday.

Broadcom Shares Spike After Revenue Forecast Boost

Broadcom shares surged in after-hours trading following an upgrade to its annual revenue guidance for AI-optimized chips, now projected at $11 billion, up from $10 billion. This boost comes as Broadcom’s networking processors play a crucial role in AI applications like OpenAI’s ChatGPT. The company also announced a ten-for-one stock split, aiming to make its soaring shares more affordable for retail investors.

Crude Prices Slip

Crude prices fell on Thursday after a surprise build in U.S. crude inventories and a trimmed oil demand growth forecast from the International Energy Agency (IEA). U.S. government data revealed a 3.7 million barrel increase in crude inventories for the first week of June, contrary to expectations of a draw. The IEA also reduced its 2024 oil demand growth forecast by 100,000 barrels per day to 960,000 bpd.

Hey OP. Today I’ll be eyeing BABA for call scalp while adding to my long position there (Jan calls)

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