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[Monday, Jun 5, 2023] The mood is still upbeat on equity markets, buoyed by economic strength in the U.S. and the latest rumor of a stimulus plan in China. However, tech stocks are still in the driving seat as we await the next monetary event, the Fed meeting on June 15.Friday&#39;s session ended with a bang on the equity markets, with gains often exceeding 1.5%. In some cases, even 2%, as on the Dow Jones. Although expected, the agreement to raise the U.S. debt ceiling was a catalyst. Investors rediscovered the optimism they had lost last year. It has to be said that, so far, the predicted catastrophes have not occurred. Above all, the promised hard landing for the U.S. economy has yet to materialize. The U.S. recession has been two months away for a year now. The market is finding it hard to believe, especially as employment and real estate continue to hold up, despite the perverse effects of higher key interest rates.But another factor must be considered to explain the color of indices. The world of finance has developed a passion for artificial intelligence. So naturally, this helps to improve the overall mood. But why? Because the presumed beneficiaries of the presumed revolution are also the champions of the last decade. So they already carry a lot of weight. And they&#39;re getting heavier. In short, it&#39;s always the same ones who win. A case in point is the S&amp;P500, which has gained 10% since the start of the year. Of this total, 8.8% is attributable to the AI-related &#34;Magnificent Seven&#34; (a term coined by Bank of America) (Apple, Microsoft, Google, Amazon, Nvidia, Meta, and Tesla).And consequently, 1.1% is attributable to the average of the other 493 stocks. Technology bets are all the rage: last week, U.S. equities recorded $13.3 billion in inflows, according to BofA calculations, including $8.5 billion in technology. The contrarians argue that A.I. is the tree that hides the forest. In the meantime, it works quite well. Admittedly, the second-largest flows of the previous week were directed toward value stocks, which are perceived as more traditional, less risky bets and still represented $2.5 billion, a sign that not all equities are comfortable with the A.I. boom underway. But for now, the winners are positioned in technology, not elsewhere.We&#39;re moving on to macroeconomics, dominated by the U.S. debt ceiling, which has been cut off until the end of 2024. On Friday, rumors of an economic support plan in China lifted indices. It&#39;s impossible to know whether these rumors are true, as they recur regularly but only amount to a little. Here&#39;s a hypothesis: a Chinese Communist Party official starts the rumor every time the market needs to bounce. It works every time.Meanwhile, central banks will continue to make noise this week. ECB head Christine Lagarde will speak today. The Bank of Canada and the Bank of Australia will also announce their key rates this week. On the other hand, there&#39;s no noise at the Fed, which will unveil its monetary policy decision on June 15. The institution&#39;s bankers must observe a period of silence before this meeting. - The blackout began on June 3rd.Over the weekend, bitter negotiations occurred between OPEC&#43; ministers, who agreed to support oil prices by reducing supply. As a result, Saudi Arabia will cut production to 9 million barrels daily in July from around 10 million.Wall Street indexes were flat at the open as investors assessed the Fed&#39;s chances to opt for a rate hike pause at its next meeting. On Friday, the U.S. job report showed the unemployment rate jumped to a higher-than-expected 3.7%, while wages growth cooled down, strengthening bets of a status quo by the Fed. As a result, investors are pricing in a 77% chance that the Fed will hold interest rates at 5%-5.25% in its June 13-14 policy meeting, according to CME&#39;s Fedwatch tool.Today&#39;s economic highlights:The week begins with the second estimate of services PMI indicators for the major economies. A speech by Christine Lagarde is scheduled. In addition to the U.S. Services PMI, there will also be the ISM Services PMI and Factory Orders.The dollar is up to EUR 0.9363 and GBP 0.8078. The ounce of gold fell back to USD 1945. Oil rebounded yesterday, with Brent North Sea crude at USD 77.94 a barrel and WTI US light crude at USD 73.58. The yield on 10-year U.S. debt climbed back to 3.71%. Bitcoin is trading at USD 26,800.<h3 id="strong-in-corporate-news-strong">In corporate news:</h3><ul><li>Chevron, Exxon Mobil - Oil groups gain more than 2% in pre-market trading, buoyed by rising oil prices following the announcement by Saudi Arabia, the world&#39;s leading exporter, of a production cut in July. </li><li>U.S. regulators are preparing to tighten capital rules for major U.S. banks, in order to bolster the strength of the financial system after a series of failures, the Wall Street Journal reported Monday. </li><li>Tesla - The American carmaker delivered 77,695 electric vehicles manufactured in China in May, a 2.4% jump on April, data from the China Passenger Car Association (CPCA) showed Monday. </li><li>Global airlines have more than doubled their profit forecasts for 2023, from $4.7 billion to $9.8 billion encouraged by strong travel demand after the COVID-19 pandemic, Willie Walsh, director general of the International Air Transport Association (IATA), said Monday. </li><li>Apple - The American giant begins its Worldwide Developers Conference on Monday, at which it is expected to present a new mixed-reality headset. Share price up 0.6% in pre-market trading. </li><li>Circor International - Private equity firm KKR announced on Monday that it had acquired the industrial machinery manufacturer in a $1.6 billion deal. Circor is up 49% in pre-market trading. </li><li>3M Company - The U.S. industrial conglomerate and the city of Stuart, Florida, are making &#34;significant&#34; progress in settling a lawsuit over water pollution linked to PFAS (per- and polyfluoroalkylated substances) toxic chemicals and have sought to delay a trial, according to a court document filed Sunday with a South Carolina court. </li><li>Cyxtera Technologies - The data center operator filed for bankruptcy protection on Sunday, two years after its IPO, as it struggles to repay its debts and faces a severe funding shortage. </li><li>Walt Disney&#39;s Pixar animation studios have cut 75 jobs, including those of two executives behind the disappointment of the animated film &#34;Buzz Lightyear&#34;, sources told Reuters on Saturday, the first significant job cuts at the studio in a decade. </li><li>Walmart still expects to double gross merchandise volume in overseas markets to $200 billion in five years, a senior group executive said on Friday, despite the uncertain economic backdrop.</li></ul>

Today On Wall Street | The Magnificent Seven

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