Daily Market Analysis from ForexMart

The main events by the morning: May 30

Russia and China can withdraw their financial operations from the influence of the West. The countries are able to develop independent transaction mechanisms among themselves. For example, through regional banks, sanctions against which do not interfere with their work. Moreover, American bankers are afraid of the isolation of the Russian economy, which could push other countries to accelerate the abandonment of the dollar.

The United States plans to increase sanctions pressure on Russia. America seeks to limit Russia's access to foreign components for the military-industrial complex, said Deputy Head of the US Treasury Department Adeyemo. However, according to him, in order to achieve this goal, the United States will need the support of its allies.

Russian diamonds have found new markets. In January-April, Hong Kong increased purchases of Russian diamonds by more than 15 times, to $527 million. Thanks to this, Hong Kong's total imports from Russia reached $1.1 billion, which is the highest since 2011.

The world's central banks continue to buy gold, but prefer not to store it in the United States. The economies of Africa and the Middle East are actively exporting their gold from American vaults. According to Roscongress, 68% of countries already store their gold reserves on their territory, whereas in 2020 this figure was 50%. The trend for the sale of US Treasury bonds is also increasing.

In Thailand, payment with «Mir» cards can be launched, but this may not happen soon. The Russian embassy in the country stated that negotiations on this issue are already underway. However, due to the sanctions pressure on Thailand from the West, the parties are not yet ready to give clear deadlines.
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Nasdaq red flags: Salesforce drops index 1%

U.S. stock indexes ended lower on Thursday, with the Nasdaq losing more than 1% and tech stocks leading the decline after a disappointing outlook from Salesforce.

Investors also weighed data showing the U.S. economy grew more slowly than expected in the first quarter. A separate report showed weekly jobless claims rose more than expected. Salesforce (CRM.N) shares fell 19.7% a day after the company forecast second-quarter profit and revenue below market expectations, citing weak customer spending on its cloud and enterprise products.

The S&P 500's technology sector (.SPLRCT) fell 2.5%, leading the decline in the benchmark index. The communications services sector (.SPLRCL) fell 1.1%, while other S&P 500 sectors ended the day higher.

The Commerce Department's report showed that first-quarter economic growth was revised down as consumer spending and equipment investment slowed, as well as a key inflation measure fell ahead of the April personal consumption expenditure report.

"Typically, a downward revision to GDP would be expected to lift the market, as it would signal that the economy is slowing and signal that the Fed has accomplished its mission, which could lead to rate cuts. "But today we're seeing a different reaction," said Mark Hackett, head of investment research at Nationwide. "I'm a little surprised, but not too surprised, given that after six weeks of rallying, the situation looks pretty healthy.

The expectation is that we'll see some consolidation or sideways movement in the market in the near term." The S&P 500 (.SPX) fell 31.47 points, or 0.60%, to end the session at 5,235.48. The Nasdaq Composite (.IXIC) lost 183.50 points, or 1.08%, to end at 16,737.08.

The Dow Jones Industrial Average (.DJI) fell 330.06 points, or 0.86%, to 38,111.48. U.S. Treasury yields fell after the data, while the chance of a rate cut of at least 25 basis points in September rose to 50.4% from 48.7%, according to CME's FedWatch tool. Bond yields hit multi-week highs earlier in the week.

In after-hours trading, Dell Technologies (DELL.N) shares fell more than 12% after the company reported its quarterly results. The stock ended the session down 5.2%.

HP (HPQ.N) shares rose 17% in the regular session after second-quarter revenue beat expectations. Tesla (TSLA.O) shares added 1.5% after it said it was preparing to register its self-driving software in China.

Best Buy (BBY.N) shares jumped 13.4% after the company beat quarterly profit estimates. Meanwhile, shares of department store chain Kohl's (KSS.N) fell 22.9% after cutting its full-year sales and profit forecasts.

Advancing stocks outnumbered decliners 2.57-to-1 on the NYSE and 1.41-to-1 on the Nasdaq. The S&P 500 posted 14 new 52-week highs and 10 new lows, while the Nasdaq Composite posted 51 new highs and 95 new lows.

U.S. exchanges reported trading volume of 12.10 billion shares, slightly below the 20-day average of 12.39 billion shares.

The U.S. economy grew more slowly than expected in the first quarter, according to a Commerce Department report that showed consumer spending weakened. Gross domestic product increased 1.3% year-over-year, compared with initial estimates of 1.6%.

The U.S. dollar index weakened after hitting a two-week high the day before. U.S. Treasury yields also fell Thursday after two days of gains on weak debt auction results.

"The initial reaction to the data was that the likelihood of a Fed rate cut has increased as the slowdown in the economy and consumption could help ease inflation," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. However, he views rates as one of many factors weighing on the market.

The MSCI World Equity Index (.MIWD00000PUS) was down 3.22 points, or 0.41%, at 780.94.

While investors digested the GDP data, they were eagerly awaiting Friday's April report on the core U.S. personal consumption expenditures (PCE) price index, a key inflation gauge for the Fed.

Earlier in Europe, the STOXX 600 (.STOXX) rose 0.6% after a big drop on Wednesday, driven by data showing German inflation rose more than expected in May. Investors were eyeing key euro zone inflation data due on Friday.

The yield on 10-year U.S. Treasury notes fell 7.6 basis points to 4.548%, from 4.624% late Wednesday. The yield on 30-year notes fell 6.3 basis points to 4.6814% from 4.744%, and the yield on 2-year notes, which typically reflects interest rate expectations, fell 5.6 basis points to 4.929% from 4.985%. In the foreign exchange market, the dollar index, which measures the dollar against a basket of currencies including the yen and the euro, fell 0.34% to 104.77.

The euro gained 0.26% to $1.0828, while the dollar weakened 0.47% against the Japanese yen to 156.86 yen.

In energy, oil prices fell for a second day after the U.S. government reported weak fuel demand and an unexpected increase in gasoline and distillate inventories.

U.S. crude fell 1.67% to $77.91 a barrel, while Brent crude futures fell 2.08% to $81.86 a barrel. Spot gold prices rose 0.13% to $2,341.94 an ounce, led by lower dollar and Treasury yields.
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Wall Street Warning Signs: Dow Transportation Stocks, Treasuries Fall

The Dow Jones Transportation Average (.DJT) is down about 5% this year, in stark contrast to the S&P 500's (.SPX) 9% year-to-date gain and the Dow Jones Industrial Average's (.DJI) 1% gain, which topped 40,000 for the first time this month.

While major indexes like the S&P 500, Nasdaq Composite (.IXIC), and Dow have all hit new all-time highs this year, the Dow Transportation Average has yet to surpass its November 2021 record and is currently down about 12% from that level.

Some investors believe that the continued decline in the 20-component transportation index, which includes railroads, airlines, trucking companies and trucking firms, could signal weakness in the economy. It could also prevent further strong gains in the broader market if these companies fail to recover.

Other struggling sectors include small-cap stocks, which some analysts say are more sensitive to economic growth than larger companies. Also in trouble are real estate stocks and some large consumer companies such as Nike (NKE.N), McDonald's (MCD.N) and Starbucks (SBUX.O).

Data this week showed that the U.S. economy grew at an annualized rate of 1.3% in the first quarter, well below the 3.4% growth rate seen in the fourth quarter of 2023. A major test of the strength of the economy and markets will be the release of the monthly U.S. jobs report on June 7.

Among the Dow transportation companies, the biggest year-to-date losers have been car rental company Avis Budget (CAR.O), down 37%, trucking company J.B. Hunt Transport (JBHT.O), down 21%, and airline American Airlines (AAL.O), down 17%.

Package delivery giants UPS (UPS.N) and FedEx (FDX.N) also lost ground, falling 13% and 1%, respectively. Railroads Union Pacific (UNP.N) and Norfolk Southern (NSC.N) are down about 7%. Only four of the 20 transportation components have outperformed the S&P 500 this year.

Stock markets have also been lower this week, with the S&P 500 down more than 2% from its record high hit earlier in May. Rising bond yields have raised concerns about the future performance of stocks.

Not all investors agree that the transportation index accurately reflects the health of the broader economy. The index, like the Dow Industrials, is weighted by price rather than market value and includes just 20 stocks.

Meanwhile, another important group of companies that is also considered an economic indicator — semiconductor makers — are doing much better.

The Philadelphia SE Semiconductor Index (.SOX) is up 20% this year. Investors are pouring in Nvidia and other chip companies that could benefit from growing interest in the business opportunity of artificial intelligence.

The overall market trend remains bullish for Horizon's Carlson, who tracks both the transportation and Dow Industrials to gauge market trends according to "Dow Theory."

The MSCI Global Equity Index rose Friday afternoon as investors reassessed their month-end positions. Meanwhile, the dollar and Treasury yields fell as data showed a modest rise in U.S. inflation in April.

After trading heavily lower for much of the session, the MSCI All Country World Price Index (.MIWD00000PUS) turned positive ahead of the index rebalancing.

When trading ended on Wall Street, the global index was up 0.57% to 785.54 after earlier falling to 776.86.

Before the market opened on Friday, the Commerce Department announced that the personal consumption expenditure (PCE) price index, often seen as the Federal Reserve's preferred inflation gauge, rose 0.3% last month. That was in line with expectations and an increase for March.

Meanwhile, the core PCE index increased 0.2%, compared with 0.3% in March.

The Chicago Purchasing Managers' Index (PMI), which measures manufacturing in the Chicago region, fell to 35.4 from 37.9 in the previous month, well below economists' forecasts of 41.

The MSCI index posted its second straight weekly decline, but still ended the month up.

On Wall Street, the Dow Jones Industrial Average (.DJI) added 574.84 points, or 1.51%, to 38,686.32. The S&P 500 (.SPX) rose 42.03 points, or 0.80%, to 5,277.51, while the Nasdaq Composite (.IXIC) lost 2.06 points, or 0.01%, to 16,735.02.

Earlier, Europe's STOXX 600 (.STOXX) closed up 0.3%. The index is up 2.6% for the month but down 0.5% for the week, its second straight weekly decline.

Data showed eurozone inflation beat expectations in May, although analysts say it's unlikely to stop the European Central Bank from cutting rates next week. However, it could strengthen the case for a pause in July.

The dollar index, which measures the greenback against a basket of currencies including the yen and euro, was down 0.15% at 104.61, its first monthly decline in 2024 since the data was released.

The euro was up 0.16% at $1.0849, while the dollar was up 0.27% at 157.24 against the Japanese yen.

Treasury yields fell amid signs that inflation was stabilizing in April, suggesting a possible Fed rate cut later this year.

The 10-year U.S. Treasury yield was down 5.1 basis points to 4.503% from 4.554% late Thursday, while the 30-year yield was down 3.4 basis points to 4.6511% from 4.685%.

The yield on the two-year note, which typically reflects interest rate expectations, fell 5.2 basis points to 4.8768% from 4.929% late Thursday.

In the energy sector, oil prices fell as traders focused on the upcoming OPEC+ meeting on Sunday to decide on further output cuts.

U.S. crude fell 1.18% to $76.99 a barrel, while Brent crude fell 0.29% to $81.62 a barrel.

Gold also lost ground, falling 0.68% to $2,326.97 an ounce on the day. However, the precious metal still posted its fourth straight monthly gain.
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The main events by the morning: June 4

The Ministry of Finance in the Russian Federation intends to officially recognize mining. The agency advocates the definition of cryptocurrency mining as a type of economic activity, as well as the assignment of the code of the all-Russian classifier. The Ministry of Industry and Trade also considers it necessary to legislate the definition of mining, as well as the establishment of rules for the issuance of accounting and circulation of cryptocurrencies.

The Italian bank UniCredit has no plans to leave Russia. The group's chief executive officer stated that the probability of the bank's withdrawal from the Russian market in the current conditions is quite low. At the moment, there are certain difficulties with the sale of the business, including political ones. However, the bank continues to look for options.

In May alone, Trump raised $300 million in donations for his re-election campaign. Almost half of this amount was donated by 2 million ordinary Americans. Another $150 million was sent by companies and organizations supporting the ex-president. On the day after the guilty verdict against Trump, $53 million was raised.

The number of purchases by Russians on foreign marketplaces is decreasing. According to the forecast of Data Insight and GBS, the volume of direct online purchases by Russians will decrease by 9.6% in 2024. The number of orders, on the contrary, may grow by 4% after falling by 22% in 2023. Domestic marketplaces are becoming increasingly popular among Russians.

More than 50% of Russian companies have lost access to Microsoft cloud products. The wave of blackouts began on May 15-16 and continues to this day. This affected Visio Online, Project Online, Power BI and other products. Softline stated that more than 50% of businesses faced restrictions from Microsoft.

Gazprom has problems with China: the Power of Siberia-2 agreement has reached an impasse due to new demands from Beijing. China demands that Gazprom sell gas to the country at domestic prices. Moreover, China is ready to buy only a part of the planned annual capacity of the gas pipeline.
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GBP/USD: trading plan for the US session on June 5th (analysis of morning deals). Sellers managed to protect 1.2779, but what's next

In my morning forecast, I drew attention to the level of 1.2779 and planned to make market entry decisions based on it. Let's look at the 5-minute chart and see what happened. The rise and formation of a false breakout there led to a sell signal, but after moving down by 12 points, the pressure on the pound decreased. As long as trading remains below 1.2779, the signal can be expected to work, but everything will depend on US data. The technical picture for the second half of the day still needs to be revised.

To open long positions on GBP/USD:

Only very strong data on the increase in employment from ADP, exceeding economists' forecasts, and an increase in business activity in the US services sector from ISM will lead to a decline in the pound and a return to yesterday's low, which I plan to take advantage of. A decline and formation of a false breakout around the new support at 1.2746 will provide an entry point for long positions, anticipating a return and update of 1.2779, which could not be surpassed in the first half of the day. Only a breakout and a reverse top-down test of this range will provide a suitable entry point for buying the pound, leading to an update of the next resistance at 1.2810, the month's high. The furthest target will be the 1.2853 area, where I plan to take profit. In the scenario of GBP/USD declining and a lack of bullish activity around 1.2746 amid strong US statistics, all buyers' efforts from yesterday will be negated. This will also lead to a decline and an update of the next support at 1.2721, formed at the end of last week. Only a false breakout formation will be suitable for opening long positions. I plan to buy GBP/USD immediately on a rebound from the 1.2695 minimum with the goal of a 30-35 point correction within the day.

To open short positions on GBP/USD:

The advantage will stay with the sellers as long as trading remains below 1.2779. This will allow the morning sell signal to materialize, but as mentioned above, much depends on the US statistics. In case of weak data, the bears will have to prove their advantage again around 1.2779. A false breakout formation there, similar to what I discussed above, will confirm the presence of large sellers in the market and provide an entry point for short positions with the goal of further GBP/USD decline towards the support at 1.2746. A breakout and reverse bottom-up test of this range will give the bears an advantage and another entry point for a sale to update 1.2721, where I expect more active buyer presence. The furthest target will be the 1.2695 minimum, which will trap the pair in a wide sideways channel. There, I will take profit. With GBP/USD rising and no bears at 1.2779 in the second half of the day, buyers will regain the initiative, having the opportunity to update 1.2810. I will also sell there only on a false breakout. If there is no activity, I advise opening short positions on GBP/USD from 1.2853, anticipating a 30-35 point downward correction within the day.

EUR/USD. June 6th. Traders calmly await ECB decisions

On Wednesday, the EUR/USD pair rebounded from the corrective level of 76.4%–1.0892, a slight decline, and today—a new return to this level and a new rebound. Trader activity yesterday was quite low, but it may sharply increase today. The decline in quotes may continue towards the Fibonacci level of 61.8%–1.0837. Consolidating the pair's rate below the ascending trend corridor may end the bulls' dominance.

The wave situation remains clear. The last completed upward wave did not break the peak of the previous wave, and the last downward wave broke the low from May 23, but only by a few pips. Thus, we got the first sign of a trend change from "bullish" to "bearish," but it soon became clear that we would not see or get any downward reversal. The next upward wave then broke the peaks of the previous two waves. Therefore, for a prolonged decline in the euro, we must now wait for a new sign of a trend change. Such a sign could be close to 1.0785 or below the ascending corridor.

The information background on Wednesday again did not support bear traders as they would have liked. Currently, the European currency is moderately declining, but soon, the results of the ECB meeting will be known, and ECB President Christine Lagarde will speak in half an hour. The rate cut is already priced into the EUR/USD pair, but it is possible that the regulator will not soften monetary policy today. I do not rule out such an option. If rates are not lowered today, then bull traders will again go on the offensive. If Christine Lagarde adheres to "hawkish" rhetoric today, it will also support the euro. And what could be "hawkish" rhetoric? Lagarde may say that the next rate cut will not happen soon and that ensuring the continuation of the inflation decline is necessary.

On the 4-hour chart, the pair rebounded from the Fibonacci level of 50.0%–1.0794 and reversed in favor of the European currency. A new "bullish" trend line has formed, so the upward process may continue toward the next corrective level of 23.6%–1.0977. Now, declines in the European currency can be expected after the quotes are consolidated below the trend line. No emerging divergences were observed today for any indicator.
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Wall Street Sliding: S&P 500, Nasdaq Fall Ahead of Jobs Data

The S&P 500 and Nasdaq Composite ended Thursday with small losses ahead of a major jobs report, retreating from record highs hit the day before. The Dow, however, edged up slightly.

The S&P 500 and Nasdaq started the day higher and hit intraday records, but then retreated as tech stocks slid.

Utilities and industrials also contributed to the S&P 500's decline, with consumer discretionary and energy leading the gains.

Nvidia shares fell 1.1%, falling to third place in the world's most valuable companies, behind Apple, which regained the second spot.

Investors are eyeing a key U.S. nonfarm payrolls report on Friday. The latest weekly jobless claims report points to a softening labor market that could allow the Federal Reserve to begin cutting interest rates. The European Central Bank cut its interest rate for the first time since 2019.

The Dow Jones Industrial Average gained 78.84 points, or 0.20%, to 38,886.17. The S&P 500 lost 1.07 points, or 0.02%, to 5,352.96, while the Nasdaq Composite fell 14.78 points, or 0.09%, to 17,173.12.

Among the Dow Jones components, Salesforce Inc. was the top gainer, up 6.23 points (2.63%) to close at 242.76. Amazon.com Inc. was up 3.72 points (2.05%) to close at 185.00.

Nike Inc. was up 1.40 points (1.48%) to close at 95.72.

Intel Corporation was the top loser, down 0.36 points (1.17%) to 30.42. 3M Company shares added 0.84 points (0.85%) to close at 98.22, while Goldman Sachs Group Inc shares fell 3.58 points (0.78%) to end at 458.10.

Among the S&P 500 index's top gainers were Illumina Inc shares, which rose 7.42% to close at 114.72. PayPal Holdings Inc shares rose 5.49% to close at 67.02, while MarketAxess Holdings Inc shares increased 4.86% to end at 205.97.

NRG Energy Inc shares showed the biggest decline, losing 4.56% to close at 77.83. Hubbell Inc shares fell 4.11% to end at 365.94. Eaton Corporation PLC fell 4.02% to 313.46.

The biggest gainers on the NASDAQ Composite were Virax Biolabs Group Ltd, up 85.85% to 1.97. SilverSun Technologies Inc rose 68.61% to close at 220.00, while Fibrobiologics Inc rose 53.88% to 10.31.

Cue Health Inc was the worst performer, down 79.95% to 0.01. Plutonian Acquisition Corp fell 58.10% to close at 2.43. Actelis Networks Inc fell 47.04% to 1.97.

The rise of Nvidia and other AI-related stocks has been a key factor in supporting Wall Street's rally this year. The chipmaker has contributed significantly to the S&P 500's gain of more than 12% for the year.

Traders are pricing in a 68% chance of a rate cut in September, according to CME's FedWatch tool, and are pricing in two rate cuts this year, according to LSEG data. Forecasters polled by Reuters also expect two rate cuts.

"We're in a period of uncertainty between now and tomorrow," said Thomas Hayes, chairman of Great Hill Capital in New York. "But overall, we're seeing the beginning of a global, coordinated easing policy from central banks in the West, with the exception of Japan, which is tightening," he added.

GameStop shares jumped 47% after a popular online influencer known as "Roaring Kitty" announced on YouTube that she would be livestreaming on Friday.

Lululemon Athletica shares rose 4.8% after the company beat first-quarter earnings and revenue estimates.

U.S.-listed shares of Chinese electric vehicle maker NIO (9866.HK) fell 6.8% after reporting a quarterly net loss.

Five Below shares fell 10.6% after the discount store operator lowered its full-year net sales forecast.

Advancing stocks outnumbered declining stocks on the NYSE by a 1.05-to-1 ratio. On the Nasdaq, 1,729 stocks ended higher and 2,445 ended lower, for a 1.41-to-1 ratio in favor of decliners.

The S&P 500 posted 25 new 52-week highs and five new lows, while the Nasdaq Composite posted 57 new highs and 110 new lows. Total equity trading volume on U.S. exchanges was about 10.4 billion, below the 20-day average of 12.7 billion.

August gold futures rose 0.69%, or 16.50, to $2.00 a troy ounce. WTI crude oil futures for July delivery rose 2.01%, or 1.49, to $75.56 a barrel. Brent crude futures for August delivery rose 1.87%, or 1.47, to $79.88 a barrel.
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Investors disappointed as no U.S. rate cut expected

Wall Street stocks ended slightly lower on Friday amid turbulence after strong U.S. jobs data confirmed the resilience of the economy but also raised concerns that the Federal Reserve may keep interest rates high longer than many investors had expected.

The U.S. Labor Department said it added about 272,000 jobs in May, well above analysts' forecasts of 185,000. The unemployment rate rose to 4%.

The S&P 500 (.SPX) fell sharply after the report, while Treasury yields rose as traders revised down their expectations for a rate cut in September. The index then rebounded and briefly hit a new intraday record as investors viewed the data as confirmation of a healthy economy.

Utilities (.SPLRCU), materials (.SPLRCM) and communications (.SPLRCL) were the biggest losers. Financials (.SPSY) and technology (.SPLRCT) were the best performers.

For the week, the S&P 500 rose 1.32%, the Nasdaq gained 2.38% and the Dow Jones gained 0.29%.

"This shows that a rate cut is not coming anytime soon. Rising bond yields are putting significant pressure on risk assets, including small-caps," said Sandy Villere, a portfolio manager at Villere & Co in New Orleans.

"It's all about interest rates. They may stay higher longer than expected, and investors will have to adjust to the new environment," he added.

Markets reacted to the employment data by changing expectations for the timing of the Fed's rate cut. After the data was released, traders speculated that the Fed's rate cut from the current level of 5.25% to 5.5% may not begin until November. According to Fedwatch LSEG, the probability of the Fed cutting rates by 25 basis points in September has fallen to 56% from about 70% the day before.

The Dow Jones Industrial Average (.DJI) fell 87.18 points, or 0.22%, to 38,798.99, the S&P 500 (.SPX) lost 5.97 points, or 0.11%, to 5,346.99, and the Nasdaq Composite (.IXIC) fell 39.99 points, or 0.23%, to 17,133.13.

GameStop (GME.N) shares fell 39% in volatile trading that coincided with popular blogger Roaring Kitty's first livestream in three years. The company announced a possible stock offering and a cut in quarterly sales.

Other names popular with retail investors, such as AMC Entertainment (AMC.N) and Koss Corp (KOSS.O), also suffered significant losses, falling 15.1% and 17.4%, respectively.

Nvidia (NVDA.O) shares extended their losses from the previous session, pushing their market cap back below the $3 trillion mark.

Lyft (LYFT.O) shares rose 0.6% after the company forecast 15% growth in total bookings by 2027, announced after the close of trading on Thursday.

Declining stocks outnumbered advancing stocks on the New York Stock Exchange (NYSE) by a 2.72-to-1 ratio. On the Nasdaq, 1,177 stocks advanced and 3,064 declined, giving decliners a 2.6-to-1 ratio.

The S&P 500 posted 17 new 52-week highs and five new lows, while the Nasdaq Composite posted 34 new highs and 149 new lows. Total volume of shares traded on U.S. exchanges was about 10.75 billion, compared with an average of 12.7 billion over the past 20 trading days.

Lower expectations for quick Fed action weighed on stocks, which ended lower. The MSCI World Share Index (.MIWO00000PUS) was down 0.3% after hitting a record high of 797.48.

The yield on two-year notes, a proxy for interest rate expectations, rose nearly 17 basis points to 4.8868% after six straight days of declines. The rise in yields comes as bond prices have fallen.

Rate changes had been expected in September, especially after the European Central Bank cut its deposit rate to 3.75% from a record 4% on Thursday, in line with expectations.

The Bank of Canada on Wednesday became the first G7 bank to cut its key rate, following Sweden's Riksbank and the Swiss National Bank.

The employment report also changed the dynamics of eurozone rate expectations, with traders now forecasting a 55 basis point cut this year, up from 58 bps before the data.

The European Stoxx 600 (.STOXX), which has gained almost 10% since the start of the year, fell 0.2%.

The euro zone bond market also showed weakness, with German 10-year yields up 8 basis points to 2.618%.

In currency markets, the U.S. dollar rose 0.8% against a basket of major currencies, reversing a week of losses ahead of the employment data. The euro fell 0.8% to $1.0802 after a small gain the previous day.

Brent crude futures fell 0.6% to $79.36 a barrel. The stronger dollar weighed on spot gold, which fell 3.6% to $2,290.59 an ounce.
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S&P 500, Nasdaq hit new highs: What to expect from Fed meeting, CPI data

The S&P 500 and Nasdaq both hit new record closing highs on Monday, despite investor caution ahead of consumer price data and the Federal Reserve's policy announcement this week.

Nvidia (NVDA.O) shares provided some support to the Nasdaq and S&P 500, rising 0.7% after a 10-for-one stock split. Some investors now believe the chipmaker could be added to the Dow.

The May CPI report is due Wednesday, coinciding with the end of the Fed's two-day meeting.

The central bank is expected to leave interest rates unchanged while issuing updated economic and policy forecasts. Investors will be watching closely for any hints of a possible rate cut down the road.

"It's a big week for the market in terms of Fed commentary and statements," said Quincy Crosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

"Additionally, the CPI report is due Wednesday morning. Everything related to the economy and inflation is viewed through the prism of the Fed's actions by the market," he added.

The Dow Jones Industrial Average (.DJI) rose 69.05 points, or 0.18%, to 38,868.04. The S&P 500 (.SPX) rose 13.8 points, or 0.26%, to 5,360.79, and the Nasdaq Composite (.IXIC) added 59.40 points, or 0.35%, to 17,192.53.

Traders trimmed their expectations for a September rate cut after stronger-than-expected May employment data on Friday, leaving the chance of a cut at 50%.

Apple (AAPL.O) shares fell 1.9% on the first day of its annual iPhone developer conference, with investors eagerly awaiting news on how the company will integrate artificial intelligence into its products.

Among the day's best performers were Southwest Airlines (LUV.N), which jumped 7% after activist investor Elliott Investment Management acquired a $1.9 billion stake in the company.

Diamond Offshore Drilling (DO.N) rose 10.9% after oilfield services company Noble (NE.N) announced it was buying a rival for $1.59 billion. Noble also rose 6.1%.

Advancing stocks outnumbered declining stocks 1.06-to-1 on the New York Stock Exchange, while gainers were outnumbered 1.01-to-1 on the Nasdaq.

The S&P 500 posted 19 new 52-week highs and five new lows, while the Nasdaq Composite posted 56 new highs and 177 new lows.

Trading volume on U.S. exchanges totaled 10.39 billion shares, below the 20-day average of 12.80 billion.

MSCI's global share index rose on Monday, despite investor expectations for key U.S. inflation data and an upcoming central bank meeting. The euro, however, slipped after French President Emmanuel Macron announced an early election.

U.S. Treasury yields rose as investors digested Friday's labor market data and looked ahead to consumer price data and a Federal Reserve statement this week. Eyes were also focused on the Bank of Japan's possible decisions.

Adding to the uncertainty was political instability in the euro zone's second-largest economy. Far-right gains in the European Parliament elections on Sunday prompted Macron to call a national election.

The euro hit a one-month low against the dollar, while European stocks also suffered.

"The uncertainty is coming from multiple sources. "The European elections over the weekend added volatility to the markets," said Chad Oviatt, director of investment management at Huntington National Bank.

The STOXX 600 index, which covers pan-European stocks, closed down 0.27%. France's blue-chip CAC 40 index fell 1.4%, hitting a more than three-month low.

However, the MSCI Global Equity Index (.MIWD00000PUS) turned from bearish to bullish territory by the end of the day, and Wall Street partially recouped its gains. As a result, the global index rose 0.75 points, or 0.09%, to 794.99.

Huntington National Bank's Oviatt said investors are eagerly awaiting the release of U.S. consumer price index (CPI) inflation data on Wednesday morning, ahead of the Federal Reserve's policy decision Wednesday afternoon.

Adding to the uncertainty about the impact of economic data on the Fed's interest rate policy was Friday's jobs report, which showed the U.S. economy added significantly more jobs in May than expected and annual wage growth accelerated again.

"Everyone seems to be hoping for a rate cut, but so far that hasn't been the case. "So everyone is looking to the CPI data on Wednesday morning, hoping that will give us more information and commentary from the Fed in the afternoon to clarify the situation," said Jim Barnes, director of bonds at Bryn Mawr Trust in Berwyn, Pennsylvania.

U.S. Treasury yields, which move inversely to prices, rose Monday, reflecting expectations for higher, longer-term U.S. rates.

The benchmark 10-year Treasury yield rose 4.1 basis points to 4.469%, up from 4.428% late Friday. The 30-year yield also rose, up 4.8 basis points to 4.5958%.

The 2-year yield, which typically responds to changes in interest rate expectations, rose 1.5 basis points to 4.8846% from 4.87% late Friday.

In the foreign exchange market, the euro fell to its lowest since May 9 against the U.S. dollar, down 0.37% to $1.076. Earlier, the euro hit a near two-year low against sterling.

The dollar index, which measures the greenback against a basket of currencies including the euro and the Japanese yen, rose 0.08% to 105.14. Against the Japanese yen, the dollar strengthened 0.21% to 157.03.

The Bank of Japan (BOJ) is holding a two-day monetary policy meeting this week and may offer new guidance on tapering its massive bond purchases.

In commodities, oil prices hit a one-week high on hopes for a pickup in fuel demand this summer. However, a stronger dollar and fading expectations for a U.S. rate cut capped gains.

U.S. crude rose 2.93% to $77.74 a barrel, while Brent crude rose 2.52% to $81.63 a barrel.

Gold prices pared their losses after their biggest drop in 3.5 years in the previous session, as investors awaited inflation data and a policy statement from the Federal Reserve.

Spot gold rose 0.72% to $2,309.15 an ounce.
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The main events by the morning: June 13

The United States imposed sanctions against Mosbirzhi, NCC and NSD. Starting from June 13, the dollar and the euro will stop trading on the stock exchange – transactions will take place on the over-the-counter market. The Bank of Russia will set the official exchange rate based on bank reports and over-the-counter trading.

The sanctions will not lead to a significant weakening of the ruble, limiting the fall to 10%. Bloomberg economists noted that in the event of a sharp drop in the exchange rate, the Bank of Russia and the Ministry of Finance will take measures to mitigate the shock by raising interest rates and increasing the supply of currency. It is also noted that the inflow of foreign currency to Russia through export-import channels will remain sufficient.

The exchange-traded currency market in Russia has lost dollars and euros. The sanctions have deprived Russia of the main part of the foreign exchange market. In May, more than 51% of the trading volume was accounted for transactions with the dollar and the euro. Now such transactions will move to a less liquid and transparent over-the-counter market, and you will have to focus on the official exchange rate set by the Central Bank.

The United States extended operations with the NCC until November 1. The United States has allowed energy-related transactions with the National Clearing Center (NCC) until November 1, despite sanctions against the Moscow Exchange. This decision includes transactions related to the extraction, processing, transportation and purchase of oil, petroleum products, natural gas and other energy resources.

Sanctions against the Moscow Exchange undermine confidence in the dollar. New restrictions continue to reduce the importance of the dollar as an international means of payment and reserve currency.

BRICS is developing a new monetary unit. The International Research Institute of Management Problems is working on the creation of a decentralized Unit system for settlements within the framework of the BRICS. The UNT coin will become the payment unit, which will help solve the problem of cross-border payments under sanctions.
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