Tech Stocks Lead as S&P 500 Rises Ahead of Crucial Jobs Report | Daily Market Analysis

Key events:

• Eurozone - CPI (YoY) (Jun)
• USA - Fed Chair Powell Speaks
• USA - JOLTs Job Openings (May)

The S&P 500 closed higher on Monday, led by tech stocks, as the market began the second half of the year positively, ahead of an important monthly jobs report due later this week.

The Dow Jones Industrial Average rose by 50 points, or 0.1%, the S&P 500 gained 0.2%, and the NASDAQ Composite increased by 0.8%. The major indices kicked off the new week, shortened by Thursday's Independence Day holiday, on a strong note, building on the gains from the previous quarter.

In the second quarter, the S&P 500 and NASDAQ Composite experienced gains of 3.9% and 8.3%, respectively, while the Dow Jones Industrial Average saw a decline of 1.7%.

On the manufacturing side, data indicated that US manufacturing activity unexpectedly decreased further into contraction territory in June, with a reading of 48.5, falling short of the estimated 49.2. A reading below 50 signifies contraction.

Boeing shares climbed nearly 3% following the announcement that the aircraft manufacturer agreed to acquire Spirit Aerosystems, whose shares rose by 3.4%, for $4.7 billion. This acquisition concludes a prolonged pursuit that was complicated by Spirit's contracts with Boeing's chief competitor, Airbus.

Tesla Inc jumped 6% ahead of its second-quarter delivery numbers expected on Tuesday. The Q2 deliveries are anticipated to reflect the softer electric vehicle demand seen in the first half of the year. Still, the EV maker experienced a "mini rebound" in Q2, which should help Tesla approach the Street's estimate of 435,000 units, according to a recent note by Wedbush.

The Japanese Yen declined on Tuesday, influenced by the strengthening US Dollar. The USD/JPY pair is trading near a new low of 161.73, the weakest level since 1986. However, verbal intervention by Japanese authorities might help limit the JPY's downside.

Japanese Finance Minister Shunichi Suzuki commented on Tuesday that he is "closely watching FX moves with vigilance." While he did not comment on specific forex levels, he emphasized that the government's stance on foreign exchange remains unchanged, as reported by Reuters.

The Australian Dollar continued its decline for the second day in a row on Tuesday. This downward movement is linked to the Reserve Bank of Australia's Index of Commodity Prices, which saw a 4.1% year-on-year decrease in June, following a revised 6.0% drop the previous month. This June reduction marks the mildest deflation in sixteen months.

Minutes from the RBA's June monetary policy meeting, released on Tuesday, revealed that the board found a stronger case for maintaining rates rather than increasing them. The board stressed the importance of staying alert to inflation risks, noting data that indicated an upside risk for May's CPI.

The GBP/USD pair traded sideways during the Asian session on Tuesday, remaining within a familiar range seen over the past two weeks. Currently, spot prices hover around the 1.2655-1.2645 confluence region, which includes the 50-day and 100-day Simple Moving Averages (SMAs), amid concerns about the upcoming UK general elections on Thursday.

Simultaneously, the Bank of England's dovish pause in June, which heightened expectations for a rate cut at the August monetary policy meeting, continues to pressure the British Pound. Conversely, the US Dollar is capitalizing on its solid overnight rebound from a multi-day low, further challenging the GBP/USD pair. On Monday, the yield on the benchmark 10-year government bond reached its highest level in a month, spurred by fears that aggressive tariffs imposed by the Trump administration could boost inflation and lead to higher interest rates.

This week will feature several labor market updates, including the job openings report on Tuesday, which will provide further insights into monetary policy ahead of Friday's nonfarm payrolls data for June.

The monthly jobs report is anticipated to offer deeper insights into the labor market, a crucial element for the Fed's decisions on rate cuts. Before the release of the nonfarm payrolls data, the Federal Reserve will publish the minutes from its June meeting, with many seeking new clues on the central bank's monetary policy outlook after it indicated only one rate cut this year, down from the previous estimate of three cuts.

Federal Reserve Chairman Jerome Powell is set to speak at the European Central Bank’s annual forum in Portugal on Tuesday, although he isn't expected to deliver new insights into monetary policy.