US Stock Market Overview – S&P 500 Closes Fresh All-time High; Energy Shares Outperform

US stocks rallied on Thursday a day after the Fed let the markets know that rates were likely to be reduced in July. The 10-year US treasury yield declined below 2%, allowing the US dollar to decline and buoying gold prices. Miners stocks surged as the yellow metal hit fresh 5-year highs. Oil prices surged more than 5% following news that Iran shot down a US military drone. Energy shares surged on the news and were the best performing sector in the S&P 500 index. The S&P 500 closed at an all-time high. All sectors were higher led by Energy, cyclicals were the worst performing sector.

US Yields Tumble

US government debt demand has driven the benchmark 10-year yield back below 2%. Yields that have hit multiyear lows reflect the difficulties central bankers face in normalizing monetary policy after a decade of unusually easy money. The falling 10-year yield, a barometer that helps set borrowing costs across the economy, suggests the economy has slowed substantially.

The gloomy outlook for growth prospects has also weighed on yields across Europe. In the U.K., 10-year yields Thursday fell close to their lowest levels since late 2016, hitting 0.805% after a downbeat assessment on the economy from the Bank of England. The monetary authority voted to hold interest rates steady.

Separately, after the FOMC decision, implied yields across the Fed Funds futures strip have fallen.  The January 2020 contract is now at 1.60%, which is fully pricing in three cuts this year.  This weighed on the dollar paving the way for higher gold prices.

Iran Admits it Shot Down a US Drone

Iran shot down a US military drone, which stoked fears. President Trump initially said Iran had made a huge mistake, but it might have been a mistake. Oil prices jumped following the action. Prices rallied more than 5.8%, driving up energy shares. The Islamic Revolutionary Guard Corps said its air force brought down the American surveillance drone in a southern coastal region along the Strait of Hormuz.

Slacks surged in Initial Listing

Slack Technologies surged in its trading debut on the NYSE, the latest technology firm to jump into a hot initial-public-offering market. The stock opened just after noon Thursday at $38.50 and has trended higher through the afternoon. The workplace-messaging service went public through an unusual method called a direct listing, becoming only the second major company ever to make such a move. Spotify Technology SA went public through a direct listing last year. In a direct listing, the company simply floats its existing shares onto a public exchange and lets the market determine the price without investment banks serving as underwriters.v