New highs on Wall Street, Fed’s Waller says rate cuts months away

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Wall Street reaches new highs
The S&P 500 and the Nasdaq Composite rose to fresh record highs as investors await earnings from AI chipmaker Nvidia after the close on Wednesday. The Dow Jones Industrial Average closed 0.17% higher at 39,872.99. Nvidia’s shares rose 0.6% with option traders pricing in swings of as much as 9% up or down in reaction to its earnings. Treasury yields fell and oil prices drifted lower.

Rate cuts several months away
Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September. 

Gasoline reserve release
The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.

Pixar job cuts
Pixar Animation Studios will lay off about 175 employees, or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.

Singapore Airlines: one dead, 30 injured
One person died and 30 people were injured aboard a Singapore Airlines flight that was hit by severe turbulence and forced to land in Thailand. Singapore Airlines Flight 321 encountered “sudden, severe turbulence” about 10 hours into a flight from London to Singapore, the airline said. The Boeing 777-300ER plane was carrying 211 passengers and 18 crew members.

[PRO] Stubborn bear
With the S&P 500 index up more than 11% so far this year, Wall Street strategists have been revising their previously pessimistic outlooks for the benchmark. Against this backdrop, CNBC’s Jesse Pound explores why JPMorgan’s Marko Kolanovic is maintaining his negative outlook for stocks.

Few CEOs are strong-willed and have the vision or audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged gas-guzzling Detroit’s dominance with electric vehicles, and Jamie Dimon, CEO of JPMorgan Chase, has done the same for the often-criticized grey banking industry.

Dimon might seem like an unusual addition to this list of innovators. Yet, he took a bank ranked eighth on Wall Street in 2006 and propelled it to the top spot within five years, surpassing giants like Goldman Sachs, Deutsche Bank, and Citi.

However, Dimon’s inclusion here isn’t solely due to his bank’s impressive growth. Like his peers, he isn’t afraid to stand up to his big institutional investors. This was evident at a recent investor day, where the headline revolved around his potential retirement in the next five years.

When pressed on when the bank would repurchase its own shares, Dimon’s response was unequivocal: “I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices.”

He went on to say, “Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren’t going to do it.”CNBC’s Hugh Son covered this exchange in detail, providing further insight into the share buyback debate.

Unlike CEOs of companies like Apple, Alphabet, and Meta, who have succumbed to pressure and used their vast cash reserves for share buybacks, Dimon resists this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.

Dimon could have easily agreed, considering his estimated $2.2 billion net worth, largely tied to his bank holdings. Critics might argue it’s easy for him to forego additional wealth, given his substantial $36 million compensation package in 2023.

However, it’s undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has built JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization approaching $600 billion, and at 68 he’s still going strong.

— CNBC’s Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.