The S&P 500 briefly breached 5,500 and closed lower

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The S&P 500 fell from a record high
The S&P 500 briefly breached the 5,500 mark for the first time before ending the session lower. Nasdaq Composite falls as Nvidia runs out of steam. The Dow Jones Industrial Average bucked the trend and posted its best day since May. The yield on the 10-year Treasury rose. U.S. oil prices traded above $82 a barrel and are on track for a second straight increase.

HIV shot
Shares of Gilead Sciences rose 7% after the company said its experimental twice-yearly HIV prevention drug proved 100% effective in a late-stage study. None of the nearly 2,000 women who received the lenacapavir injection in the study became infected with HIV, an interim analysis showed. An independent data monitoring committee recommended that Gilead offer the treatment to all study participants.

Open the challenger’s AI
Anthropic, OpenAI’s leading AI competitor, introduced the Claude 3.5 Sonnet, its most advanced AI model to date. Backed by tech giants Google, Salesforce and Amazon, Anthropic closed five financing deals last year totaling about $7.3 billion. Claude 3.5 Sonnet “shows significant improvement in capturing nuance, humor and complex instructions, and is exceptional at writing high-quality content with a natural, relatable tone,” the company said in a blog post.

Trump Media stock flops
Former President Donald Trump’s stake in Trump Media fell by more than $2 billion, down from $5.6 billion at the start of the month. The company that owns Truth Social saw shares drop more than 14% on Thursday. Trump Media’s decline follows the conviction of Trump, the presumptive Republican presidential nominee, on 34 counts of falsifying business records by a New York jury.

Japanese stocks are mixed, only weakening
Japan’s Nikkei 225 fell slightly, while the Topix rose after May inflation data came in cooler than expected, threatening the Bank of Japan’s plans to raise interest rates. The yen weakened, falling below 159 against the dollar for the first time since April 29. Masato Kanda, the country’s top diplomat, warned of a possible crackdown on speculative and excessively volatile currency movements, Reuters wrote. The United States has placed Japan on its foreign exchange watch list. Elsewhere in Asia-Pacific, Hong Kong’s Hang Seng, mainland China’s CSI 300 and South Korea’s Kospi traded lower.

[PRO] AI real estate
Citi analysts point to a “compelling emerging” real estate trend driven by AI and nearshoring. Global real estate companies are flocking to it because of the high potential returns. Here are stocks and REITs to buy.

Before the European debt crisis, political motives often overshadowed economic prudence. The European Union set a 3% budget deficit target in 1997, but in a rush to expand, Greece was accepted into the Eurozone in 2001. The rest is history. After relaxing the deficit target during the pandemic, the EU executive is now again warning countries against excessive spending.

France is among seven countries to exceed the deficit limit, potentially hampering the spending plans of Marine Le Pen’s party. Le Pen, the poll leader, has pledged to cut VAT on essentials and lower the retirement age. France’s budget deficit is expected to fall to 5.3% this year from 5.5% in 2023.

The debate reflects concerns in the US, where the deficit is expected to rise to $1.92 trillion, or 7% of GDP, this year, according to the Congressional Budget Office, an independent fiscal watchdog for lawmakers. This represents a 27% increase over the February forecast.

The additional $408 billion in spending is largely due to legislation allocating $95 billion to Ukraine, Israel and the Indo-Pacific region, along with spending by the Biden administration on student loan relief and Medicaid. By the end of 2034, public debt is expected to total $50.7 trillion, or 122% of GDP, compared with the February forecast of $48.3 trillion, or 116% of GDP.

There is currently no sign that Republicans or Democrats will cut spending plans or tax giveaways.

Roger Altman, founder of Evercore, told ‘Squawk Box’: “The idea of ​​a 7% deficit in an economy this strong is dangerous… It’s corny to say, but it’s perhaps unsustainable. If it’s not proactively fixed, market forces will eventually force it to be fixed, and that’s going to be ugly.”

“The markets seem to be ignoring it for a very long time until … At some point the markets are going to wake up and they’re not going to like it. It’s going to affect the funding of the Treasury dramatically.”

As for the markets, they are showing signs of fatigue. Nvidia fell from an all-time high, dragging down the S&P 500 and Nasdaq. Interestingly, JP Morgan believes the bull run was caused by less short selling in the major averages.

“One piece of support for the U.S. stock market over the past year has come from a decline in short interest in the two largest equity ETFs,” SPDR S&P 500 ETF Trust and Invesco QQQ Trust, which track the performance of the Nasdaq-100 index, wrote chief strategist Nikolaos Panigirtzoglou. “This short interest has been declining fairly steadily since the second quarter of 2023, reaching record lows,” they said.

As markets feel extended, short sellers could return.

— CNBC Brian Evans, Kevin Breuninger, Hayden Field, Jesse Pound, Angelica Peebles, Scott Schnipper, Brian Evans, Charmaine Jacob and Lim Hui Jie contributed to this report.