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Wealth Daily 05 May 2022

WEALTH DAILY 2022-05-05
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The bulls were charging on Wall Street on Wed. The Dow Jones Industrial Average gained 932.27 pts, or 2.81%, to close at 34,061.06. The broader S&P 500 index rose 2.99%. The tech-heavy Nasdaq Composite advanced 3.19%. The small-cap Russell 2000 gained 2.69%. 

The major indexes had been moving sideways during most of the trading session, as investors cautiously awaited the results of the Federal Reserve’s policy committee meeting. When the Fed announced that it had raised rates by 50 basis points (bps), as was widely expected, the major indexes dipped at first. 

But Fed Chair Jerome Powell spoke, and US equities rocketed higher. Investors had been worried that Powell would amp up the anti-inflation rhetoric. Instead, Powell said the Fed was not considering raising rates by 75 bps. Fixed income markets did not have to price in any more tightening than they already had. Fears that an overaggressive Fed would push the US economy were put aside, for at least a day. Traders began buying stocks in relief, setting off a dramatic short-covering rally. 

Mega cap tech stocks rose, including Apple (AAPL US, +4.10%), Microsoft (MSFT US, +2.91%) Amazon (AMZN US, +1.35%), Alphabet (GOOGL US, +4.20%), Nvidia (NVDA US, +3.73%), and Meta Platforms (FB US, +5.37%). 

The yield on the 10-year Treasury note slipped 3.68 bps to 2.9344%. 

The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, fell 0.85% to 102.587. 

The front-month Brent and WTI futures closed up $5.17 at US$110.14/bbl and $5.40 at US$107.81/bbl respectively. US crude stockpiles rose 1.3m barrels last week while East Coast distillate inventories fell to a record low of 22.4m barrels, sending overall distillate stockpiles to a fresh 14-year low. 

Futures markets in precious metals had closed by the time Powell spoke. The most actively traded US gold futures (Jun) contracts settled down $1.80, or 0.1%, at US$1,868.80/oz. However, in early trade this morning (Thurs), US gold futures are nearing the US$1,900.00/oz. 

European equity markets finished lower on Wed. The UK FTSE lost 0.9%, France's CAC 40 fell 1.24%, while the German DAX retreated 0.49%. 

Belgium’s Umicore (UMI BB, +10.35%) rallied the most since Mar 2020 on the news that it may be a potential target for acquisition by South Korean chemicals giant LG Chem (051910 KS, -0.03%), boosting the chemicals sector.