Oracle Surges 13% on Earnings, U.S. Stocks Rise Slightly

On the evening of June 13, U.S. stocks closed slightly higher, with Oracle leading the tech sector. The U.S. President threatened to impose unilateral tariffs on trading partners within two weeks. Following the global first crash of a Boeing 787 in India, Boeing's stock price plummeted. The U.S. May Producer Price Index (PPI) rose less than expected.

The Dow Jones Industrial Average rose 48.60 points, or 0.11%, to 42,914.37. The Nasdaq Composite Index rose 31.13 points, or 0.16%, to 19,647.01. The S&P 500 Index rose 14.59 points, or 0.24%, to 6,036.83.

Oracle's stock price surged more than 13% as its fourth-quarter earnings exceeded expectations and indicated continued growth in its cloud computing business. The company announced that it would provide up to 131,000 AMD MI355X chip clusters in Oracle Cloud.

The U.S. President's threat to impose unilateral tariffs on trading partners within two weeks has kept Wall Street focused on trade developments, particularly the direction of U.S.-China trade talks. This week, the two countries held trade talks in London, which remained the market's focus.

The U.S. President stated that while he was willing to extend the deadline for reaching a trade agreement before the U.S. imposes new tariffs on July 8, it might not be necessary. He mentioned that significant agreements had been reached with China and that negotiations were ongoing with countries like Japan and South Korea. He also indicated that within the next one to two weeks, the U.S. would send letters to various countries outlining the agreements, similar to what was done with the European Union.

Market concerns about the U.S. President's trade war potentially reigniting inflation and weakening global demand for U.S. assets, particularly affecting long-term government bonds, have led investors to be more cautious about providing such long-term loans to the U.S. government. This has resulted in higher yield requirements, pushing up the term premium.

The U.S. May PPI rose modestly, as the cost of goods and services increased only slightly. The U.S. Bureau of Labor Statistics reported that the PPI rose 0.1% month-over-month, below the median estimate of 0.2% among surveyed economists. The PPI excluding food and energy also rose 0.1%. Goods prices excluding food and energy rose 0.2%, while service prices rose 0.1%, reflecting an increase in wholesale profit margins.

The number of people continuing to claim unemployment benefits in the U.S. rose to its highest level since the end of 2021, further indicating that the time it takes for U.S. unemployed individuals to find new jobs is increasing. According to data released by the U.S. Department of Labor, the number of people continuing to claim unemployment benefits rose to 1.96 million as of the week ending May 31. This figure exceeded the expectations of all analysts surveyed by the media. Meanwhile, the number of people filing for unemployment benefits for the first time remained unchanged from the previous week, slightly above expectations.

With the latest U.S. PPI and unemployment claims data supporting a rise in the bond market, traders have fully digested the expectation of two interest rate cuts by the Federal Reserve this year.

U.S. Treasury yields fell 6 to 7 basis points across the board, hitting their lowest levels in a week. This rally lowered expectations for the yield on 30-year bonds to be auctioned later to around 4.84%. Earlier this week, yields had reached approximately 4.98%.

"Over the past four months, inflation data has been very, very good," said Tony Farren, Managing Director of the Rates Sales and Trading Department at Mischler Financial Group. "How much longer can the Federal Reserve ignore this mild inflation data?"

The Federal Reserve will hold its fourth monetary policy meeting of the year next week, with expectations that it will keep the short-term benchmark interest rate unchanged. The Federal Reserve will also update its economic forecasts for the first time since March.