Wall Street giants’ second-quarter profits surge as core inflation cools, lowering expectations for Fed rate hikes
On July 14, local time in New York, the second quarter earnings season of the U.S. stock market kicked off. The performance of the five Wall Street financial giants recorded explosive growth. In addition, the latest inflation data released exceeded expectations and cooled down, stimulating The Composite Index and S&P 500 closed up 0.9% and 0.4% respectively. However, influenced by technology giants Dragged down by a 25% plunge in performance warning, The industrial average ended the day essentially unchanged. Second-quarter profits of the five largest Wall Street banks soared 39%, and investment banking business recovered across the board Benefiting from the enthusiastic atmosphere of the US initial public offering (IPO) market and the investment boom in artificial intelligence (AI), including The combined profits of the five largest financial institutions in the United States exceeded US$49 billion in the second quarter, a significant year-on-year increase of 39%. Data show that driven by multiple positive factors such as the overall increase in market risk appetite and the historic initial public offering of Space Exploration Technology Company (SpaceX), Wall Street investment banking trading and consulting business revenue has increased significantly. Among them, Goldman Sachs Group's stock price rose by more than 9% as its quarterly profits hit a record high; while Citigroup's stock price bucked the trend and closed down 5% due to expected increases in future operating expenses. U.S. CPI increased by 3.5% year-on-year in June, and the market generally lowered its bets on the Federal Reserve raising interest rates within the year. Data released by the U.S. Bureau of Labor Statistics on the same day showed that the U.S. Consumer Price Index (CPI) rose by 3.5% year-on-year in June, and fell sharply by 0.4% month-on-month on the basis of the previous month. The overall performance was significantly lower than the market consensus of 3.8%. The analysis pointed out that the sharp drop in gasoline prices that month was the main factor driving the unexpected cooling of inflation. After the data was released, government bond yields fluctuated lower, and market funds' expectations for the Federal Reserve's recent interest rate hikes sharply adjusted. Data from CME Group showed that traders' forecasts for the probability of the Federal Reserve raising interest rates at this month's policy meeting have plummeted to about 16% from 42% the previous day. In addition, international oil prices gave up some of their recent gains as U.S. President Trump previously stated that he would suspend the implementation of the plan to impose a 20% fee on all goods passing through the Strait of Hormuz. Fed Chairman Warsh reiterates determination to fight inflation, warns "the task is not yet accomplished" In response to the unexpected fall in inflation report, new Federal Reserve Chairman Kevin Warsh expressed restrained views when questioned by members of Congress. Warsh welcomed the steady decline in inflation, but warned clearly that inflation data should not be "screened out of context" and that it by no means meant that the Fed "has won" the battle against high prices. He reiterated his commitment to maintaining price stability and made clear to members of Congress that his Price stability in the document refers to “a level of inflation that ordinary households and businesses do not need to consider when making decisions.”