Strong tech supports the push of data in stocks
The S&P 500 increased on Thursday as large tech rose and Treasury rates sputtered in response to data suggesting declining inflation and loosening labor market conditions. This may persuade the Fed to adopt a more dovish monetary policy stance.
The Dow Jones increased by 1%, or 350 points, while the Nasdaq increased by 2%. The S&P 500 increased by 1.3%. Alphabet up 2%, and Apple, up 3%, led the way higher in big tech.
Treasury rates dropped in response to information indicating that wholesale inflation slowed more than anticipated. In contrast to experts’ expectations for a 0.1% increase, the PPI for final consumer demand unexpectedly dropped 0.5% last month. The PPI increased 2.7% in the year up to November, far less than the predicted 3% increase.
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There were hints that the strong labor market fueled optimism that the Fed may take a less severe monetary policy approach in addition to lowering price pressures. The Fed anticipates that the current banking instability will lead to a “mild recession” later this year, according to the minutes from its meeting in March.
US dollar sinks to one-year lows
The recession fears, inflation, and PPI statistics on Thursday caused the dollar to drop to a two-month low versus a group of peers. The US dollar hit a year-to-date low against the euro, as a less hawkish Fed mood dominates trading.
The next significant economic data milestone for the US will be Friday’s retail sales. This marker will be closely watched for signs that inflation is impacting consumer spending.
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At 100.84, the dollar index hit its lowest level since February 2nd. The price of the euro rose to $1.10680, its highest level since April 1st, 2022. A somewhat more hawkish ECB, which is anticipated to keep hiking rates to combat inflation, is helping to strengthen the euro as well.
The yen and the dollar resulted in a 0.32% loss for the dollar to 132.77. The Australian dollar, which is susceptible to risk appetite, increased by almost 1.4% on the day to hit $0.67965, its highest level since February 24th.
Gold is inching towards all-time highs as oil retreats
Fears of a coming US recession and OPEC’s cautions about potential impacts on summer oil consumption caused oil prices to nudge down on Thursday. This happened as a pull/back after reaching multi-month price peaks in the previous session.
The price of Brent crude dropped by 85 cents, or 1%, to $86.48 a barrel. $82.53 per barrel marked the closing price of West Texas Intermediate which lost 73 cents, or 0.9%.
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With fears, the gold extends its power. On the New York Comex, the price of gold for June delivery finished at $2,055.30 per ounce, up $30.40 or 1.5% on the day. Less than $16 separated the session high of $2,063.15 from the all-time high of over $2,080 reached by Comex gold in August 2020.
Gold futures 1W chart, source: tradingview.com
The yellow metal’s younger brother – silver also made advances. The white metal closed a hair under $26. With a 2% green close, silver marked $25.973.
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