Stocks Rebound on Strong Data and AI Interest
2023.06.27 17:03
US stocks are bouncing back after some strong US economic data boosted consumer discretionary stocks and as investors piled back into AI trades. The losing streak had to end, but that doesn’t mean the market will resume.
US Data
There was a lot of US economic data released today and the key takeaway was that the economy is not breaking just yet. The first key reading was and that surged, but the reason behind that was due to strong aircraft orders. The overall trend is expected to be softer, going forward as higher borrowing costs and tighter lending from banks, will dampen demand.
We also got a couple of housing reports, the case Shiller report showed home prices are stabilizing as prices recover, mainly because there’s not enough supply. impressed with a buying spree that hit the highest levels in more than a year.
The main event was the Conference Board’s consumer confidence report which surged 7.2 points to 109.7, the best reading since January 2022. The strong report will likely suggest expectations are not for the labour market to deteriorate quickly, which should confirm expectations that a recession will not happen this year, but most likely next.
Consumer Confidence Index
We also saw a couple of Fed regional surveys, the Richmond Fed manufacturing index remained in negative territory, and so did the Dallas Fed’s services activity report, which is in line with the other federal regional surveys. Overall, the US economy is still chugging along, which will complicate the Fed’s disinflation process. Swap futures are still expecting one more rate hike by the Fed.
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