US stocks rally, poised to snap nearly two months of weekly losses

The NYSE Fang+ Index was 3.2% higher. The VIX fell 6.5% to 25.72.

Ryan Detrick of LPL Financial said when the S&The P 500 gained more than 6% in one week, as it just did, the index rose an average of 12.5% ​​six months later and 21.7% a year later. “In other words, those big weeks tend to mark the beginning of strength, not the end.”

“An overall healthy consumer report today, as income and spending have increased, pricing pressures have moderated (but not by much) and upward revisions from previous months show no signs of abating. an economy on the brink of recession,” according to First Trusted Advisors.

Oxford Economics’ Lydia Boussour said the latest personal income and spending reports provide “some assurance that the main pillar of the economy is still strong in the face of historic inflation and rising labor costs. loan. But a bumpy road awaits the US economy.”

Boussour said inflation showed signs of moderating, with the PCE core deflator rising 0.2% m/m, the weakest advance in seventeen months, while core PCE inflation rose. rose 0.3% for a third consecutive month. As a result, annual headline inflation fell by 0.3 points to 6.3% – the first drop since November 2020 – while core inflation fell a further 0.3 points to 4.9%.

“Given the continued upside risks to inflation and aggressive policy by Fed officials, we now expect a total of 250 basis points of rate tightening this year,” she also said. “We believe the Fed is on track to raise the fed funds rate by 50 basis points at each of the June and July meetings before reducing the pace of tightening to 25 basis points at the remaining meetings of the Fed. ‘year.”

Market Highlights

ASX futures up 82 points or 1.14% at 7270 around 6:05 a.m. AEST

  • AUD +0.9% to 71.59 US cents
  • Bitcoin -2.2% to US$28,861.88 as of 6:20 a.m. AEST
  • On Wall St: Dow +1.8% S&P500 +2.5% Nasdaq +3.3%
  • In New York: BHP +3.8% Rio +1.5% Atlassian +5.5%
  • Tesla +7.3% Apple +4.1% Amazon +3.7% Alphabet +4.2%
  • Stoxx 50 +1.8% FTSE +0.3% CAC +1.6% DAX +1.6%
  • Spot gold +0.2% at $1,853.36 an ounce at 2:47 p.m. in New York
  • Brent +1.4% to $119.08 a barrel
  • Iron ore +2.4% to $134.45 per ton
  • 10-year yield: United States 2.74% Australia 3.25% Germany 0.96%
  • US prices from 1:59 p.m. in New York

United States

US stock markets will be closed Monday for Memorial Day.

The U.S. Securities and Exchange Commission (SEC) is reviewing Tesla CEO Elon Musk’s disclosure of his Twitter stake in early April, according to a letter the agency sent him that month.

Robinhood Markets lawyers say they have reached a tentative agreement to resolve disputes for some investors who were barred from trading shares in high-flying stocks during an outage in March 2020. No details are given. was disclosed.

Latest US data

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.9% last month, beating expectations for a 0.7% rise.

March data has been revised up to show spending rose 1.4% instead of 1.1% as previously reported. The strength in spending is explained by the fact that consumer confidence is at its lowest level since 2011.

Personal income rose 0.4%, with wages accounting for the bulk of the increase. The savings rate fell to 4.4%, the lowest since September 2008, from 5.0% in March. This suggests that households have tapped into the more than $2 trillion in excess savings accumulated during the COVID-19 pandemic.

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Although inflation continued to rise in April, it did not reach the same magnitude as in recent months. The personal consumption expenditure (PCE) price index rose 0.2%, the smallest gain in November 2020, after rising 0.9% in March.

In the 12 months to April, the PCE price index rose 6.3% after jumping 6.6% in March.

The annual increase in the PCE price index is slowing, as last year’s strong gains are no longer factored into the calculation.

Excluding volatile food and energy components, the PCE price index gained 0.3%, rising by the same margin for three straight months. The so-called core PCE price index rose 4.9% year-on-year in April, the smallest gain since last December, after rising 5.2% in March.

It was the second month in a row that the rate of increase in the annual core PCE price index decelerated.

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The University of Michigan’s final May sentiment index fell to 58.4 from a preliminary reading of 59.1, data showed Friday. In April, the gauge stood at 65.2.

Households have become particularly pessimistic in their short and long term outlook for the economy. A gauge of current conditions fell to a 13-year low of 63.3, while a measure of future expectations fell to 55.2.

Consumers expect prices to rise 5.3% over the next year, holding near a four-decade high. They expect prices to rise at an annual rate of 3% over the next five to ten years.

Europe

European stocks marked their best week since mid-March, ending Friday on a positive note.

The pan-European STOXX 600 index rose for a third consecutive session, closing up 1.5%, taking weekly gains to 3%. The German DAX ended at a one-month high, up 1.6%.

Tech stocks led gains among sectors, up 3.3%, while industrials and luxury stocks were among the biggest risers on the STOXX 600.

London’s blue-chip FTSE 100 underperformed on Friday as energy stocks tracked lower oil prices and utilities worried about a potential windfall tax.

Goods

Russian steelmakers were the most profitable in the world industry before the war in Ukraine, but they are now forced to sell to some buyers at deep discounts.

Heavyweights such as Severstal PJSC are facing demands from importers in Asia to sell at discounts of up to 40% off the market price of steel slabs, according to three people familiar with the matter, who have asked not to be identified because the information is not public. Customers in Turkey also want price cuts, the people said.

Some Russian steel products have now become unprofitable because the sector is also being hit by a strong ruble and soaring coal, freight rates and marine insurance costs, the sources said.

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