July 11 New York

The DJIA rose by 0.55 points to 21409.07 while the S&P 500 Index fell by 1.90 points to 2425.53.  The Nasdaq Composite Index added by 16.912 points to 6193.305 while the Nasdaq 100 Index gained by 15.647 points to 5709.799.  The yield on 10-year Treasuries declined by 1.3 basis points to 2.361 percent.  The yen strengthened by 0.10 to 113.94 per U.S. dollar.  While Goldman Sachs called for oil to drop back below $40 a barrel without “shock and awe” from OPEC, WTI crude futures rose by 64 cents to settle at $45.04 a barrel.  Investors expected to U.S. government data showing oil stockpiles had extended declines in the U.S.  Fresh reports on the Trump campaign’s possible involvement with Russia during last year’s election shattered calm on financial markets Tuesday, sending U.S. stocks lower in a brief spurt of late morning selling.  The move proved short-lived, as the S&P 500 Index rebounded from a quick 0.5 percent slide to end the day little changed.  Technology shares advanced while Treasury yields held near 2.36 percent, declining by 1.3 basis point.  Assets were jolted after the president’s son Donald Trump Jr. released emails he exchanged ahead of a meeting with a Russian lawyer last year that indicated the Russian government was backing his father’s presidental campaign and trying to damage Hillary Clinton.  The new revelations will alter the U.S. economic outlook, according to Dan Ivascyn, chief investment officer at PIMCO.  President Trump’s key initiatives such as a health-care overhaul, tax cuts and fiscal stimulus are less likely to win approval before the 2018 mid-term elections as controversies build, Ivascyn said.  The developments mean the economy will grow slower than the Trump administration’s projectionsof 3 percent, Ivascyan said.  As a result, the Federal Reserve will continue its slow path of raising and unwinding its $4.5 trillion balance sheet, rather than rushing to head off an overheated economy, according to Ivascyn.  It was a news today that despite Goldman Sachs’ pessimistic reports on decline in crude prices in the global markets, WTI crude futures soared.  Oil fell from above $100 a barrel in 2014 to as low as $26 in 2016 as the OPEC opened the taps in an effort to stem the surge in shale production.  That set off the worst industry downturn in a generation.  While OPEC changed course last year and curbed output to boost prices, shale was the main beneficiary and resurgent U.S. output has kept crude below $50.

Kazuhide Matsuishi

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