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Wealth Daily 18 May 2022

WEALTH DAILY 2022-05-18
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 US equities staged a broad-based rally on Tue as markets digested the latest comments by Fed Chair Jerome Powell that the Fed remained committed to reducing inflation. Powell said the Fed will not hesitate to raise rates above neutral if need be and warned that tightening could bring discomfort. He repeated guidance for 50 bps (basis points) hikes in Jun and Jul.

The Dow Jones Industrial Average gained 431.17pts or 1.34% higher to close at 32,654.59. The broader S&P 500 index rose 2.02%. The tech-heavy Nasdaq Composite advanced 2.76%. The small-cap Russell 2000 gained 3.19%.

 Short-term Treasuries underperformed, extending a flattening in the yield curve. The yield on the 10-year Treasury note notched up 10.38 bps to 2.9860%, while the yield on the 2-year Treasuries rose 13.05 bps to 2.7003%.

 Megacap tech stocks rose on Tue, including Apple (AAPL US, +2.54%), Microsoft (MSFT US, +2.03%) Amazon (AMZN US, +4.11%), Alphabet (GOOGL US, +1.77%), Nvidia (NVDA US, +5.29%) & Meta Platforms (FB US, +1.29%).

US Retail: Home Depot (HD US, +1.68%) lifted its outlook for the year as demand for home-improvement supplies continues. However, big-box retailer Walmart (WMT US, -11.38%) was disappointed after cutting its earnings outlook for 2022, while 1QFY23 profit underwhelmed expectations. 

The iShares iBoxx High Yield Corporate Bond ETF (HYG US) fell 0.09%. 

The front-month Brent and WTI futures closed down $2.31 at US$111.93/bbl and $1.80 at US$112.40/bbl respectively. 

The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, fell 0.79% to 103.360. 

The most actively traded US gold futures (Jun) contracts settled up $4.90, or 0.27%, at US$1,818.90/oz. July silver, which is the most actively traded silver futures, rose 19.9 cents, or 0.92%, to end at US$21.750/oz. 

European equity markets finished higher on Tue. The UK FTSE gained 0.72%, France's CAC 40 rose 1.30%, while the German DAX advanced 1.59%.