Nasdaq 100 Hits All-Time High Despite 2% Gold Drop

The Nasdaq 100 index reached a new all-time high during morning U.S. trading, while gold prices experienced a 2% decline for the day and were approximately 7% below their record high. Bitcoin, on the other hand, saw a modest decrease, trading at around $106,700. This movement occurred despite the release of nearly two-month-old U.S. macroeconomic data, which included disappointing inflation numbers for May.

Personal income in May decreased by 0.4%, falling short of the expected increase of 0.3%. Additionally, personal spending for the month showed a decline of 0.1%, missing the forecasted increase of 0.1%. The core PCE price index, which excludes volatile food and energy prices and is a key gauge of underlying inflation for the Federal Reserve, rose by 0.2% in May, surpassing the expected increase of 0.1%. On a year-over-year basis, core PCE prices increased by 2.7%, higher than the anticipated 2.6%.

These economic indicators suggest that the economy may be heading towards stagflation, a condition characterized by slow economic growth and relatively high unemployment or economic stagnation, accompanied by rising prices or inflation. This economic environment is typically unfavorable for risk assets like stocks and commodities, which may explain the modest decline in Bitcoin and the significant drop in gold prices. Despite the negative economic data, the Nasdaq 100 index continued to rise, indicating that investors may be focusing on other factors, such as strong corporate earnings or optimism about future economic growth.

The divergence between the performance of the Nasdaq 100 index and the decline in Bitcoin and gold prices highlights the complex interplay between different asset classes and the various factors that influence their performance. While the disappointing inflation numbers and weak economic data may have contributed to the decline in Bitcoin and gold prices, the Nasdaq 100 index continued to rise, suggesting that investors may be taking a more nuanced view of the economic outlook. Overall, the recent market movements underscore the importance of staying informed about the latest economic developments and their potential impact on different asset classes.