July 5 New York

The DJIA fell by 1.10 points to 21478.17 while the S&P 500 Index rose by 3.53 points to 2432.54.  The Nasdaq Composite Index gained by 40.796 points to 6150.856 while the Nasdaq 100 Index added by 51.860 points to 5648.816.  10-year Treasury note’s yields fell by 2.7 basis points to 2.323 percent.  The market was closed Tuesday.  The yen strengtheneded against the U.S. dollar by ¥0.02 yen, closing at 113.26.  WTI crude futures dropped by $1.94 to settle at $ 45.13 a barrel.  The loss ended the longest winning streak this year, as Russia was said to oppose any proposal to deepen OPEC-led production cuts.  The S&P 500 Index rose a third day to close 0.9 percent from its June 19 all-time high, even as Fed minutes showed some officials concerned “increased risk tolerance” among investors could be lifting asset prices and building risks to financial stability.  Chipmakers beaten down in the past three weeks led a rebound in technology shares.  The Fed minutes did little to alter market expectations for a third rate hike this year, mostly likely December as officials view tepid inflation rates as transitory.  Markets had largely ignored the rising tensions on the Korean peninsular, with an emergency United Nations Security Council meeting on Wednesday looking to formulate a response to North Korea’s latest provocations.  Crude oil fell sharply, ending the longest winning streak this year.  FUtures dropped 4.12 percent in New York, the most in four weeks, after eight straight sessions of gains.  Russia doesn’t want to change the current deal because any further supply curbs would send the wrong message to the market.  Shares of oil and gas producers were down across the board.  Baker Hughes plunged as much as 37 percent on its first day of trading as a unit of General Electric Co.  While crude prices surged last week, futures are down 16 percent for the year amid concerns that rising global supply will offset the output cuts from the OPEC and its partners.  WTI for August delivery settled $1.94 lower at $45.13 a barrel on the New York Mercantile Exchange.  WTI crude futures gained by $2.6 a barrel since June 21 ($42.53).  A divided Federal Reserve policy committee couldn’t reach an agreement in June on the timing of when to begin shrinking its massive balance sheet, according to minutes of the meeting.  U.S. central bankers in June raised the benchmark lending rate for a second time this year to a range of 1 percent to 1.25 percent, while describing monetary policy as “accommodative” in their statement.  They reiterated their support for continued gradual rate increases, according to the minutes.  The central bank wants to start winding down the $4.5 trillion bond portfolio without roiling longer-term interest rates, while gradually raising the policy rate.  The minutes indicated that the Fed wants to begin the balance-sheet process this year.

Kazuhide Matsuishi

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