June’s softer-than-expected US inflation data has bolstered the case for interest rate cuts as early as September, providing welcome relief for investors amid a difficult economic landscape.
Meanwhile, this week proved challenging for Elon Musk, and US Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam advocated for expanded regulatory authority over cryptocurrencies.
1. S&P 500, Nasdaq Composite close at all-time highs
The S&P 500 (INDEXSP:.INX) and Nasdaq Composite (INDEXNASDAQ:.IXIC) notched several record-high closes this week, driven by gains in semiconductor and mega-cap technology stocks.
The indexes were also buoyed by comments from US Federal Reserve Chair Jerome Powell. Speaking before Congress on Tuesday (July 9), Powell said the US economy is no longer ‘overheated,’ and cautiously indicated that interest rate cuts may not be far off, although he was careful not to suggest when they may come.
On Wednesday (July 10), the Nasdaq achieved its seventh consecutive all-time high close, while the S&P 500 accomplished its sixth, surpassing 5,600. These moves were fueled by gains in NVIDIA (NASDAQ:NVDA), which advanced 2.7 percent; Micron Technology (NASDAQ:MU), which saw a 4 percent increase; Advanced Micro Devices (NASDAQ:AMD), which was up 3.9 percent; and Apple (NASDAQ:AAPL), which saw its share price move 1.9 percent higher. Apple’s close of US$232.98 was also a record, bringing the firm’s market value to US$3.6 trillion.
Taiwan Semiconductor Manufacturing (NYSE:TSM,TPE:2330) saw a more than 2 percent increase in its share price on Thursday (July 11), bringing it to 1,080 New Taiwan dollars and taking the company’s market value to 28 trillion New Taiwan dollars (US$861 billion); that gave it the distinction of being Asia’s most valuable public company.
Also on Thursday, MicroStrategy (NASDAQ:MSTR) announced a 10-for-1 stock split of its Class A and Class B common stock, sending shares of the software company up 4 percent before market close. Meanwhile, news of Tesla’s (NASDAQ:TSLA) postponed robotaxi unveiling contributed to an 8.4 percent share price drop. NVIDIA and Apple also saw losses at the end of the day as investors turned to smaller-cap companies following a softer-than-expected US consumer price index report, which brought the Nasdaq and S&P 500 down 2 percent and 0.88 percent, respectively.
In contrast, Canada’s S&P/TSX Composite Index (INDEXTSI:OSPTX) reached a record high on Friday (July 12).
2. Crypto prices rise on positive sentiment
Amid investor optimism triggered by Powell’s congressional testimony, the Bitcoin price trended up mid-week, reaching a notable value of US$59,322 on Tuesday. Ethereum’s valuation reached US$3,184 on Thursday.
Global exchange-traded products (ETPs) with digital assets as underlying collateral have seen a 77 percent increase in assets under management year-to-date, reaching US$87.9 billion and outpacing the increase in the value of their underlying digital assets, according to data from Fineqia International (CSE:FNQ,OTC Pink:FNQQF).
The total number of ETPs has grown by 20 percent to reach 194. Fineqia attributes the growth to the approval of spot Bitcoin exchange-traded funds (ETFs) in the US, with the trend expected to continue following the launch of spot Ethereum ETFs in July. On Monday (July 8), spot Bitcoin ETFs saw inflows of US$294.8 million, their highest since June 6.
Elsewhere in the crypto space, PayPal’s (NASDAQ:PYPL) PYUSD stablecoin has experienced significant growth in recent months, reaching over 533 million tokens since its expansion to the Solana network in May. The Solana network has seen its total value locked for liquid staking increase to US$3.73 billion from US$244 million this past October. Liquid staking now comprises 7 percent of the network’s entire market capitalization.
Meanwhile, Goldman Sachs (NYSE:GS) said on Wednesday that it plans to launch three tokenization projects by the end of 2024, including its first in the US, and Grayscale announced on Monday that it plans to create and distribute the Grayscale Ethereum Mini Trust, known as the ETH Trust, on July 18.
3. Elon Musk’s rough week
During an unfortunate week for Musk, xAI, Tesla and SpaceX faced setbacks and delays, while Cox Automotive’s latest electric vehicle (EV) sales report found that Tesla’s share of EV sales in the US has dipped below 50 percent.
On Tuesday, the Information reported that talks between Musk’s AI startup xAI and tech giant Oracle (NYSE:ORCL) had fallen through; the companies were discussing the possibility of expanding a current arrangement under which xAI rents NVIDIA chips needed to build its own server from Oracle. The deal would have reportedly been worth US$10 billion, but it broke down due to power supply constraints and disagreements about a timeline for completion.
Later, on Thursday, Bloomberg reported that Tesla’s self-driving robotaxi, which was scheduled to be released on August 8, has been delayed by two months, with the unveiling now anticipated in October. According to the news outlet, the delay will allow the company more time to build additional prototypes.
Finally, on Friday, Reuters reported that SpaceX’s Falcon 9 rocket had suffered its first failure in more than seven years when the rocket’s second stage in space failed to reignite roughly an hour after launching on Thursday evening. As a result, 20 Starlink satellites were deployed into a much lower orbit than planned, increasing the risk of incineration; in response, the US Federal Aviation Administration grounded the aircraft.
4. Apple has high hopes for iPhone 16
Inside sources told Bloomberg on Wednesday that Apple expects shipments of its newest iPhone model, the iPhone 16, to be about 10 percent higher than shipments in 2023.
The company reportedly said it’s targeting at least 90 million shipments in the second half of 2024, confident that the addition of Apple Intelligence features, showcased at its World Wide Developers Conference on June 10, will boost demand despite competition from other tech companies focused on artificial intelligence.
Meanwhile, market researchers for IDC found that sales of the Apple Vision Pro headset have not surpassed 100,000 since it was released on February 2. Sales in the US are projected to fall a further 75 percent by the end of the quarter.
IDC told Bloomberg that a more affordable version, which is expected to be released in 2025, could boost sales, but reiterated that the success of the Vision Pro will depend on the variety and quality of content available.
5. CTFC makes its case
In regulatory news, the CFTC’s Behnam testified before the US Senate Committee on Agriculture, Nutrition and Forestry’s Hearing on the Oversight of Digital Commodities on Wednesday.
Benham reiterated his opinion that at least 70 percent of cryptocurrencies, including Bitcoin and Ethereum, should be considered commodities rather than securities, making the CFTC a more appropriate regulatory agency to oversee crypto than the US Securities and Exchange Commission (SEC). Benham cited a recent decision from an Illinois district court judge, who sided with the CFTC and denoted two alt coins as commodities, not securities.
While the hearing did not lead to any immediate legislative action, it provided an opportunity for lawmakers to engage with Behnam on the complex issues surrounding cryptocurrency regulation.
On Thursday, US lawmakers failed in an attempt to override President Joe Biden’s veto of the legislative measure to overturn SEC Staff Accounting Bulletin No. 121, which the Senate passed on May 21. The House of Representatives held a vote, but fell short of the two-thirds majority required; the final tally was 228 to 184.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.