Future America
- Dow last -0.3% at 33873
- S&P last -0.54% at 4130
- Nasdaq last -0.85% at 13000
In Europe
- FTSE -0.19% at 7893
- Dax -0.04% at 15858
The stock’s value increases
U.S. stocks are falling as the economy expands on expectations that the Federal Reserve will keep interest rate hikes for longer.
Atlanta Federal Reserve President Raphael Bostic and James Bullard made hawkish comments yesterday, with James Bullard saying interest rates should rise to 5.5%-5.75%. Recent economic data has been mixed, with the US expected to enter a recession later this year or before 2024.
The Fed’s Beige Book, which provides anecdotal evidence of the health of the US economy, will be released later. Investors will look to it for clues about the impact of the banking crisis on economic activity.
Meanwhile, earnings continue with the likes of Morgan Stanley, Tesla, and United Airlines releasing numbers today.
Meanwhile, earnings have largely supported equities, although the bar to entry has been lower during the earnings period. Regional banks, which may be mine, are not the picture of health, but they have not fallen off the cliff. Of course, Western Alliance impressed and traded 18% higher.
Corporate news
Netflix fell 1.3% before the market after the flow of the number of subscribers after the start of the advertising support phase. Netflix had 1.75 million subscribers, below the 2.06 million expected.
Fox faces a bear market after the media giant settled its defamation suit by Dominion Voting Systems for $787.5 million.
Tesla is down about 2% pre-market compared to its annual revenue, as the EV maker cuts prices for some of its Model Y and Model 3 vehicles in the US . This is the sixth price cut this year alone.
Where next for S&P 500?
The S&P 500 rose steadily from the March low of 3800, making a series of higher highs, hitting a monthly high yesterday of 4172. The stock is trending lower, e testing the multi-week rising trendline. A low below this opens the door to support at 4080 at the March high, and the April low. The breakdown below shows the 50 sma at 4035 rather than 4000. If the trendline support is able to go higher then traders can look for a move above 4170 to point to 4195. 2023 high, before 4330, the high of August.
FX markets – USD & GBP up
The USD is rising after hawkish comments from Fed Presidents James Bullard and Raphael Bostic, supporting further hikes. A negative opening on Wall Street could help boost the USD on safe-haven flows.
The EUR/USD is falling below 1.0950 against the strong USD, and investors are waiting for the next issue. The Eurozone CPI, the last reading confirmed the previous reading of 6.9% YoY, down from 8.5%. Meanwhile, headline inflation rose to 5.7% from 5.6%. As of the last reading, the market effect was muted. ECB Chief Economist Philip Lane said he expected interest rates to rise in the near term.
GBP/USD is rising due to a strong US dollar after UK inflation stayed in double digits. The CPI rested below expectations at 10.1%, from 10.4%, indicating that the BoE has more work to do to bring inflation back to its 2% target. The market is now trading at 97% of an increase of 25 bps in May, up from 82% yesterday. The BoE raised its benchmark rate to 5% in September.
EUR/USD -0.22% at 1.0969
GBP/USD +0.1% at 1.2439
Oil falls as fears of US rate hike weigh on demand
Oil was 2% lower on concerns that US interest rate hikes could slow in the US, the world’s biggest oil buyer. These fears are overshadowing upbeat data from China and falling oil stocks.
Fed speakers continue to sing from the rate hike choir, supporting expectations that the Fed will raise interest rates again in May. The oil market is worried that it could slow economic growth and oil consumption.
These concerns overshadow the upbeat Q1 GDP data from China, which was stronger than expected at 4.5%, but did not increase the high oil prices.
API data showed that US inventories fell by 2.68 million barrels last week. EIA numbers will be available this evening.
Looking ahead
15:30 United States oil reserves