Morning in New York: Geopolitics Favors Buyers

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The positive outlook among participants in the upcoming trading session may be supported by progress in the U.S.-Iran talks. Following the first round of talks, the parties agreed on a roadmap calling for a final agreement to be reached within 60 days. Technical consultations will continue this week. A special committee will be established to coordinate the negotiation process and monitor compliance with the agreements reached. Mechanisms to ensure safe navigation through the Strait of Hormuz and measures to reduce tensions in the region remain on the agenda.

Markets are reacting positively to news of progress in the dialogue between Iran and the U.S. WTI crude oil prices fell toward $75 per barrel as the geopolitical premium narrowed. This helps reduce inflationary risks and supports demand for risk assets.

Today’s focus will be on the remarks by Federal Reserve Board member Christopher Waller. Any additional signals regarding the future path of interest rates will be of particular significance to the investment community. Following the meeting held on June 16–17, half of the FOMC members deemed at least one rate hike this year to be appropriate.

Futures on U.S. stock indices are trading near zero. We assess the risk balance for the upcoming session as neutral, with high volatility.

— Getty Images (GETY) shares soared by more than 160% following the announcement of a multi-year agreement with OpenAI. Under the partnership, the company’s licensed content will be used in ChatGPT’s search and recommendation services, expanding the monetization opportunities for Getty Images’ vast library of visual content. The news has fueled investor interest in the company amid growing demand for high-quality licensed data for AI applications.

— MoonLake Immunotherapeutics (MLTX) shares are up 20% following the release of strong trial results for sonelokimab, a drug for severe chronic inflammatory skin disease. Approximately 67% of trial participants achieved significant improvement after one year of treatment. The company confirmed plans to submit a marketing application for this product to the FDA in late September, opening the door for the product’s commercial launch.

— Shares of Western Digital (WDC) and SanDisk (SNDK) are rising by nearly 6% and 4%, respectively, while Micron Technology (MU) shares are up about 3% on expectations of further growth in demand for data storage solutions from AI infrastructure. MU’s stock is also rising ahead of its quarterly earnings report, scheduled for June 24, which may confirm continued strong momentum in the memory chip segment.

— SpaceX (SPCX) shares fell 4% after MSCI assigned the company the lowest rating (CCC) on its ESG scale. The index provider pointed to significant risks in the areas of corporate governance and sustainability, noting a high level of corporate disputes. Elon Musk disagreed with these assessments; nevertheless, a weak ESG profile could limit interest from some institutional investors in the company’s shares following the IPO. In addition, it has been reported that the issuer plans to issue at least $20 billion in bonds to refinance a bridge loan taken out earlier this year.

— The U.S. Internal Revenue Service has filed a $20 billion lawsuit against Coca-Cola (KO), which could influence the approach to taxing multinational corporations.

Trading on June 18 on U.S. stock exchanges closed firmly in positive territory. The S&P 500 rose 1.08%, the NASDAQ 100 gained 2.48%, the Dow Jones rose 0.14%, and the Russell 2000 climbed 2.12%. Despite hawkish signals from the Fed, investors returned to buying after the signing of a memorandum between the U.S. and Iran and signs of a possible increase in oil supply from Gulf states. The absence of new signs of escalation in the Middle East supported demand for risky assets.

The technology sector (XLK: +3.04%) led the gains, driven by strong performance from semiconductor manufacturers, including memory chip makers. The energy sector (XLE: -1.65%) lagged behind amid the continuing decline in oil prices.

All of the “Magnificent Seven” stocks closed the session in positive territory, with NVIDIA (NVDA: +2.95% at the close of trading on June 18) and Amazon (AMZN: +2.9%) were the most sought-after by buyers.

Macroeconomic data came in moderately positive. Initial jobless claims totaled 226,000, virtually in line with market expectations. The Philadelphia Fed’s Manufacturing Activity Index rose to 10.3 points in June from -0.4 a month earlier, with the employment component returning to positive territory. The published data confirmed the resilience of the U.S. economy, which increases the likelihood that the Fed will follow through on its hawkish signals.

— U.S. President Donald Trump announced that Apple (AAPL: +0.7% at the close of trading on June 18) has agreed to collaborate with Intel (INTC: +10.6%) on the development and production of chips for the domestic market. The news has heightened investors’ expectations that Intel will strengthen its position in the semiconductor foundry segment and expand its participation in projects aimed at localizing supply chains.

— According to Bloomberg, Amazon (AMZN: +2.9%) is discussing the possibility of selling its own specialized chips to third-party customers. Investors reacted positively to the company’s prospects in the rapidly growing AI infrastructure market.

— Accenture (ACN: -18%) reported earnings for the last quarter that exceeded market expectations, but its revenue and new order volume fell short of the consensus, as did its outlook for the current three-month period. An additional negative factor was the announcement of several acquisitions with a combined value of more than $4 billion.

— Kroger’s (KR: -8.4%) revenue and operating profit for the quarter exceeded consensus estimates, but investors were disappointed by the retailer’s gross margin and comparable sales trends. Its financial performance was pressured by rising transportation costs, falling egg prices, and investments in price competitiveness.

— David Denton will step down as CFO of Pfizer (PFE: -2.7%) in August, and his duties will be temporarily assumed by Cecil Geegan, senior vice president of finance.

This article was AI-translated and verified by a human editor