Wealth Daily 28 July 2022

WEALTH DAILY 2022-07-27
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US equities rallied on Wed. Wall Street opened firmer, but the bulls really began charging hard after Federal Reserve Chairman Jerome Powell spoke to the financial press. After announcing a decision to raise the Fed’s main policy rate 75 basis points (bps) to a range of between 2.25% and 2.50%, Powell signaled that a downshift in the speed of future rate hikes could come soon. 

The Dow Jones Industrial Average gained 436.05 pts or 1.37% to close at 32,197.59, on Wed. The S&P 500 index rose 2.62%. The tech-heavy Nasdaq Composite advanced 4.06%. The small-cap Russell 2000 gained 2.39%. 

Fixed income derivatives indicate that US short-term interest rates will peak sooner and lower than previously expected. Swaps tied to the date of Fed policy meetings now imply a 3.3% peak for the fed funds rate around year-end. One week ago, swaps showed rates peaking at 3.6% in Feb. 

The mega-cap tech stocks participated Wed’s stock market rally, including Apple (AAPL US, +3.40%), Microsoft (MSFT US, +6.66%), Amazon (AMZN US, +5.32%), Alphabet (GOOGL US, +7.65%), NVidia (NVDA US, +7.62%), and Meta Platforms (META US, +6.50%). 

After the close, Meta Platforms shares have dropped 4.7%. The owner of Facebook and Instagram reported its first-ever quarterly sales decline, citing advertisers’ shrinking budgets. 

The yield on the 10-year Treasury note slipped 2.37 bps to 2.7849%, while the yield on the 2-year Treasuries fell 5.48 bps to 2.9979%. 

Crude oil prices rose on a report of lower inventories in the US and cuts in Russian gas flows to Europe. The front-month Brent and WTI futures closed up $2.22 at US$106.62/bbl and $2.28 at US$97.26/bbl respectively.

Gas supplies via Nord Stream fell to 20% of capacity on Wed  The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, fell 0.69% to 106.542. 

The most actively traded US gold futures (Aug) contracts settled up $1.40, or 0.1%, at US$1,719.10/oz. September silver, which is the most actively traded silver futures, rose 6.5 cents, or 0.4%, to end at US$18.60/oz. 

European equity markets finished higher on Wed. The UK FTSE gained 0.57%, France's CAC 40 rose 0.75%, while the German DAX advanced 0.53%.