Stocks hit all-time highs for the first time since May 2015 during an otherwise quiet day on the US economic front.
First, let’s head to the scoreboard:
- Dow: 18,225.70 (+0.4%)
- S&P 500: 2,130.00 (+0.4%)
- Nasdaq: 4,547.12 (+0.7%)
- WTI crude oil: $44.44 (-2.1%)
- 10-year Treasury yield: 1.434 (+5.03%)
1. Stocks are at all-time highs. The benchmark S&P 500 index crossed the previous intraday record of 2,134.72, which it touched on May 20, 2015. Tech, industrials, and materials led gains. “With the economy averaging a little over 2% growth per year on average since the recession ended in 2009 a combination of modest growth, low interest rates and improvements in jobs, housing and autos could help keep the stock market grinding higher,” John Stoltzfus, Oppenheimer chief investment strategist, wrote in a note on Monday.
2. But this stock market rally might not be like the others. Dominic Konstam and his team argued in a note on Friday that the current rally is about the declining equity risk premium, which is simply the excess return the stock market provides over a risk-free rate like bond returns.
3. Dutch 10-year government bond yields dropped below zero for the first time ever, making them the latest to join the negative yield club. Amazingly, there’s nearly half a millennium of records to compare that against, as record keeping began in 1517. As a historical reference point, that’s the same year that Marin Luther published his 95 Theses. On a larger scale, there’s roughly $13 trillion of global negative-yielding debt now. By comparison, there was about $11 trillion ahead of the UK’s vote on EU referendum.
4. Starbucks is giving every US employee a raise of at least 5%. Business Insider’s Myles Udland noted that Starbucks’ preemptive wage increase reflects the clear competition for labour in the larger services economy. And, arguably, the easiest way to retain your talent is to throw more money at them.
5. Earnings season is just starting, but companies are already talking about Brexit. “Of the 13 S&P 500 companies that have reported earnings after the results of the ‘Brexit’ vote were announced (after June 23), 6 discussed ‘Brexit’ or ‘UK referendum’ during their earnings conference calls,” wrote John Butters of FactSet.
6. The Japanese yen plunged after Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending. The currency was weaker against the US dollar by 2.2% at 102.81 per dollar as of 3:18 p.m. ET.
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