ASX set to rise as Wall Street edges higher; Trump Media slumps

US stock indexes drifted higher Tuesday to set more records following another quiet day of trading.

The S&P 500 rose 0.3 per cent and surpassed its record set last week. The Nasdaq composite added 0.2 per cent, a day after setting its latest all-time high. The Dow Jones rose 0.2 per cent and is sitting just below its high set last week. The Australian sharemarket is set to rise, with futures at 5.01am AEST pointing to a gain of 21 points or 0.3 per cent, at the open. The ASX lost 0.2 per cent on Tuesday.

It has been another quiet day of trading on Wall Street.Credit: Bloomberg

Wall Street’s indexes have climbed to records recently largely on expectations for the Federal Reserve to cut interest rates later this year as inflation hopefully cools. More reports showing big US companies earning fatter profits than expected have also boosted the market.

Macy’s joined the chorus line of companies delivering a stronger profit for the latest quarter than analysts expected, and its stock jumped 5.1 per cent following some early fluctuations. The company, which runs Bloomingdale’s in addition to its namesake stores, raised the bottom ends of its forecasts for upcoming sales and profit.

Lam Research also helped support the market after the supplier for the semiconductor industry announced a program to buy back up to $US10 billion ($15 billion) of its own stock. The company said it will undergo a 10-for-one stock split, which would bring down each share’s price and make it more affordable to more investors. Its stock rose 2.3 per cent.

That helped offset a 3.7 per cent drop for Palo Alto Networks. The cybersecurity company delivered a better profit report than expected, but it gave a forecasted range for revenue in the current quarter whose midpoint was a hair below analysts’ expectations.

Trump Media & Technology Group, the company behind Donald Trump’s Truth Social network, sank 8.7 per cent after disclosing a net loss of $US327.6 million in its first quarterly report as a publicly traded company.

Lowe’s fell 1.9 per cent despite reporting better results for the latest quarter than analysts had feared. It said it’s maintaining its forecast for revenue this year, including a dip of up to 3 per cent for an important underlying sales figure as high interest rates keep a lid on customer activity.

Rates for mortgages, credit cards and other payments have become more expensive because the Federal Reserve has been keeping its main interest rate at the highest level in more than two decades. It’s trying to pull off a tightrope walk where it grinds down on the economy just enough through high interest rates to snuff out high inflation but not so much that it causes a painful recession.

An encouraging report released last week showing inflation may finally be heading back in the right direction following a discouraging start to the year raised hopes that such a “soft landing” for the economy may be possible. It also strengthened hopes that the Federal Reserve will cut its main interest rate once or twice this year.

A top Fed official, Governor Christopher Waller, said in a speech Tuesday that he’s expecting to see moderation in economic data after reports recently came in weaker than expected on sales at US retailers and on the strength of US services businesses. That in turn should help put downward pressure on inflation.

But he said that he would “need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” unless the job market weakened significantly before then.

Hopes for coming cuts to rates have sent Treasury yields lower, which eases the pressure on the stock market. The yield on the 10-year Treasury slipped to 4.41 per cent from 4.48 per cent late Monday. The two-year yield, which more closely tracks expectations for Fed actions, slipped to 4.83 per cent from 4.85 per cent.

This week doesn’t have many top-tier economic reports, and the biggest potential for sharp moves in the market will likely come from upcoming profit reports.

The week’s headliner is Nvidia, whose stock has rocketed higher amid a frenzy around artificial-intelligence technology. It will report its latest quarterly results on Wednesday, and expectations are high.

Target also reports on Wednesday with Ross Stores following Thursday. They could offer more details on how well spending by US households is holding up. Pressure has been rising on them amid still-high inflation, and it seems to be the highest on the lowest-income customers.

In stock markets abroad, indexes were lower across much of Europe and Asia.

Indexes fell 2.1 per cent in Hong Kong and 0.4 per cent in Shanghai after S&P Global Market Intelligence raised its forecast for Chinese economic growth this year to 4.8 per cent from 4.7 per cent in April, but stressed it was not overly optimistic.

“The overall outlook of a tepid economic recovery remains unchanged, with the expansion supported by enhanced policy stimulus, strengthening external demand and gradually improving private-sector confidence,” it said in a report.

AP

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