Wall Street mixed as Fed decision looms; SpaceX keeps flying

Stocks on Wall Street were mixed, with chipmakers and semiconductor firms out of favour and old-style financials and industrials the sectors of the day ahead of the Federal Reserve’s first policy review under the chairmanship of Kevin Warsh.

SpaceX continued its strong debut, passing Amazon’s market capitalisation on the way, after exercising its right to buy artificial intelligence coding firm Cursor for US$60 billion.

Oil prices continued to ease amid reports that Iran can start selling fuel once the peace deal with the US is signed, providing a tailwind for carriers such as American Airlines and keeping energy majors such as Chevron under pressure.

And milk prices fell at the latest Global Dairy Trade auction, coming after soft Chinese retail sales figures weighed on dairy exporters such as a2 Milk Co and Fonterra Cooperative Group, while Statistics New Zealand’s balance of payments figures today will lay out the nation’s international position.

Rotating themes

The Dow Jones Industrial Average was up 0.7% in late trading, with JPMorgan Chase, 3M and Visa leading the blue-chip index higher as investors shifted out of semiconductors and chipmakers in a mixed session on Wall Street. The S&P 500 was down 0.4% and the tech-heavy Nasdaq Composite dipped 0.7%.

The Fed’s open market committee is expected to keep the federal funds rate in a range of 3.5% and 3.75% when it announces its review on Wednesday in Washington, with Warsh’s commentary the key focus for investors.

“The key question is whether Warsh signals a willingness to tolerate lower inflation pressures from AI-driven productivity gains and falling energy prices, or whether he maintains a hawkish bias that leaves the door open to further tightening later this year,” Moomoo market strategy consultant Greg Boland said in a note. “His rhetoric is likely to shape market expectations far more than the rate decision itself.”

The Reserve Bank of Australia kept its key rate unchanged on Tuesday, while the Bank of Japan hiked a quarter-point to 1%, both meeting market expectations. The Bank of England and Swiss National Bank are also due to review policies this week.

Meanwhile, Brent crude oil futures fell 4.7% to US$79.23 a barrel with the Wall Street Journal reporting that Iran can start selling oil and fuel immediately as part of the peace deal with the US. Airlines were broadly stronger on both sides of the Atlantic on the prospect of easing jet fuel prices.

Still flying

SpaceX rose 7.8% in its third day of trading, and pressed ahead with the all-stock acquisition of Cursor, which was flagged as an option in the conglomerate’s prospectus.

Local space favourite Rocket Lab fell 2.3% to US$106.74 in late trading.

Stock markets across the Atlantic were stronger, with the UK’s FTSE 100 up 0.6%, Germany’s DAX nudging up 0.1% and France’s CAC 40 advancing 0.8%.

Germany’s Thyssenkrupp dipped after it announced plans to spin off its materials trading division, which accounts for about a third of the group’s sales.

The mixed tone is set to carry through into the Asian trading session, with futures pointing to a 0.1% decline for the S&P/ASX 200 index when trading opens across the Tasman and indicating a 0.5% dip for Japan’s Nikkei 225.

The kiwi dollar climbed to 58.37 US cents at 7am in Auckland from 58.08 cents.

Milk prices fell at the latest GDT event, with the GDT price index falling 2.8% for an average winning price of US$3,979 a tonne. Whole milk powder prices dropped 3.1% to US$3,589/tonne.

Local data today include Stats NZ’s balance of payments, which is expected to show an unchanged current account deficit, and Westpac’s quarterly consumer confidence survey.

And retirement village operators Oceania Healthcare, Ryman Healthcare and Summerset Group Holdings will be in view after the government announced a 4% increase in funding for aged care providers.

Reporting by Paul McBeth. Image from Aditya Vyas on Unsplash.