North American News
Dow industrial average cannot stay in positive territory. S&P and Nasdaq close higher.
- Down 7 of 8 trading days but still off the month lows
The major US indices are closing mixed again with the Dow industrial average moving lower for the 7th time in 8 trading days in the month of May. The S&P and NASDAQ index closed higher with the NASDAQ index leading the way with a gain of over 1%.
Although the Dow is down once again, it still is well above its May low at 32935.44, thanks to a gain of 546 points from Friday’s unemployment day surge.
The final numbers are showing:
- Dow Industrial Average -30.83 points or -0.09% at 33531.01
- S&P index +18.39 points or 0.45% at 4137.59
- NASDAQ index up 126.88 points or 1.04% at 12306.43
- Russell 2000 rose 9.83 points or 0.56% at 1759.51
The biggest gainer in the Dow was:
- Salesforce rose 1.8%
- Microsoft gained 1.73%
- Apple rose 1.04%
- IBM rose 0.71%
Disney earnings are out and it’s mostly lower.
- EPS $0.93 per share as expected.
- Revenues came in and $21.82 billion versus expectations of $21.79 billion expected
- Subscribers 157.8 million versus 163.17 million estimate.
- Average revenue per user $4.44 versus $4.52 estimate
Shares of Disney are trading down -2.12% at $98.95. Shares closed at $101.14.
US treasury auctions off $35 billion of 10 year notes at 3.448%
- WI level 3.439% at the time of the auction
- High-yield 3.448%
- WI level at the time of the auction 3.439%
- Tail 0.9 bps vs six-month average of +1.4 basis points
- Bid to cover 2.45X versus six-month average of 2.41X
- Dealers 13.04% versus six-month average of 16.9%
- Directs (domestic demand) 19.46% versus six-month average of 18.3%
- Indirects (international demand) 67.5% versus six-month average of 64.8%
Bank of America credit and debit card spending dropped YoY for the 1st time since Feb 2021
- Year-over-year falls -1.2% in April 2023
Gaining some traction today is that Bank of America, the leading bank for consumer credit cards, saw credit and debit card spending fall -1.2% year-over-year in April 2023. That was the 1st fall since February 2021.
Looking at discretionary spending percentage change from 6 months and one month ago, higher income households (earning over $125,000) cut spending for the month. For incomes from $50,000 to $125,000, spending was unchanged.
Unemployment is rising fastest amongst higher-income households, while their pay growth is weakest. That is being reflected in the numbers. Lower paying jobs are being filled in leisure and hospitality. Spending within that demographic remains positive.
Google at their development conference says they are integrating AI into their search
- Google and Microsoft fighting it out
Google at their development conference is saying that they are integrating generative AI into their search.The fight is on with Microsoft. The early AI winner has been Microsoft with their OpenAI, but Google still dominates search vs Microsoft’s Bing.
Shares of Google are trading up $2.56 or 2.39% at $109.90. The high price yesterday reached $110.15. The high price today was at $110.13. Looking at the daily chart, the prices back above the 38.2% retracement of the move down from the February 2022 high at $109.39.
US federal budget surplus $176 billion versus $235 billion expected
- Federal budget data for the month of April
- US surplus $176 billion vs $235 billion expected
- revenues fell sharply from record to set a year earlier at down -132 billion or 43% from April 2022 surplus of $308 billion
- revenues for April totaled $639 billion – the 2nd highest level since April 2022 record of $864 billion, but down 26%.
- The bulk of the decline was due to lower non withheld individual tax receipts, reflecting lower stock market capital gains in 2022
- Outlays for April also fell -17% to $462 billion, but after calendar adjustments, they would have risen 9% to 535 billion
- For the 1st 7 months of fiscal year 2023 the deficit is at $925 billion. That is a 157% increase from the $360 billion deficit a year earlier
Commodities
Gold retreat’s despite weakening us dollar as inflation concerns linger
- Gold slips 0.33% as US inflation data fuels uncertainty over Fed tightening cycle.
- US Treasury bond yields drop while Biden and lawmakers continue debt ceiling discussions.
- China’s expanding gold reserves cushion XAU/USD’s fall; the market awaits Thursday’s PPI release.
Gold price slumps following the release of April’s inflation in the United States (US), which initially sent the XAU/USD to its daily high of $2048.15, though it retraced even though the US Dollar (USD) weakened on the news. Hence, the XAU/USD is trading at $2027.54, down 0.33%.
Investors eye PPI data, fed speculations, and debt ceiling talks amid market volatility
US Treasury bond yields dropped, with 2s and 10s, down eight and seven and a half bps, each at 3.935% and 3.446%, respectively. The greenback, which has an inverse correlation with Gold prices, slips 0.14%, down to 101.514.
The US Labor Department revealed the Consumer Price Index (CPI) for April continued to decelerate, as the CPI rose 0.4% MoM, aligned with estimates, while the year-over-year (YoY) came at 4.9%, below forecasts of 5%. Excluding volatile items like food and energy, the core CPI advanced 0.4% MoM, while annually based stood at around the 5.5% threshold.
Meanwhile, speculations that the US Federal Reserve (Fed) will pause its tightening cycle have increased, as shown by the CME FedWatch Tool, with odds at 95%.
On Tuesday, President Biden met with House Speaker Kevin McCarthy and other congressional leaders to discuss a possible increase or temporary stopping of the US debt ceiling. Even though there was no agreement, discussions would be held on Friday. On Monday, the US Treasury Secretary, Janet Yellen, has warned that if the debt ceiling is not raised, the government could run out of money by June 1.
As May comes to a close and if no extension is agreed upon, there will likely be an increase in overall market unease.
In other data, news that China is expanding its Gold reserves and may be abandoning the US Dollar cushioned XAU/USD’s fall. Sources cited by Kitco commented that China’s reserves increased by 8.09 tons in April.
WTI crude oil future settle at $72.56
- Down -$1.15 or -1.56%
WTI crude oil futures are settling at $72.56. That is down -$1.15 or -1.56%. The high price reached $73.89. The low price was at $71.80. Looking at the hourly chart, the low price today reached toward its 100 hour moving average currently at $71.70. Moving below that level would increase the bearish bias in the short term. Risk focused buyers leaned against the level today.
Crude oil inventories for the current week build 2.951M versus -0.917M draw
- Weekly oil inventory data
- Crude oil 2.951 million versus -0.917M expected. The private data showed a build of 3.618 million
- Distillates showed a draw of -4.17 million versus an expected draw of -0.808M
- Gasoline showed a draw of -3.168M versus expectations of -1.233M. Private data showed a build of 400K yesterday.
- Cushing build of .0.397M versus last week 0.541M
- Refining utilization 0.3000% versus expected 0.7%. Last week -0.6%
EU News
European major indices close the session lower
- France’s CAC down -0.49%
Major European stock indices are ending that session lower. The declines are led by France’s CAC which declined by -0.49%.
A look at the closing levels shows:
- German DAX -59.25 points or -0.37% at 15896.24
- France’s CAC -35.97 points or -0.49% at 7361.21
- UK’s FTSE 100 -282.78 points or -0.29% at 7741.32
- Spain’s Ibex -15.50 points or -0.17% at 9167.71
- Italy’s FTSE MIB down -120.11 points or -0.44% at 27263.42
ECB’s Centeno: Monetary policy in terms of fixing key rates is at maximum of this cycle
ECBs Centeno is out with comments. He says:
- Monetary policy in terms of fixing key rates is at maximum of this cycle
- Interest rates adjustment is still underway
- Interest rates historically are not high but they are rising fast
- ECB rates to remain high for some time after rate peak
- Rates should start to come down sometime in 2024
- We must be approaching in the terminal rate. If this is done in June or July, there is a very important condition that is inflation
EU antitrust regulators set to approve Microsoft/Activision merger on May 15
- According to sources
According to sources, the regulators are set to approve Microsoft/Activision merger on May 15.
Recall UK regulators rejected the merger. Microsoft appealed the decision.
Other News
White House: Debt limit talks were productive
White House:
- Debt limit talks were productive
- Everyone understood risk of default
- Staff will meet daily on debt until leaders meet again on Friday
Earthquake shakes buildings in greater Tokyo
- Some earthquake activity today
There are reports that a earthquake is shaking buildings in greater Tokyo. The initial magnitude is 5.4.
There are no tsunami warnings issued after Japan earthquake.
Earlier today there was a larger earthquake of 7.6 centered about 59 miles west-northwest from Hihifo, Tonga and 225 miles from Samoa, the United State Geological Survey reported.
Cryptocurrency News
MATIC price oversold for the first time in 11 months, making ready for short-term recovery
- MATIC price falling by 12% in the last seven days sent the altcoin into the oversold zone on the daily chart.
- The altcoin also slipped into the opportunity zone for the second time in two months, suggesting it is most likely set to witness HODLing from investors.
- The crypto market sentiment is still neutral despite the decline, which stands to be a crucial trigger for recovery
MATIC price continued its downtrend this week after losing the $1 mark, bringing the cryptocurrency to a four-month low. However, an important signal noted over the last 24 hours suggests that the altcoin may not be too far away from beginning a recovery.
MATIC price to drive up on the charts
MATIC price failed to follow Bitcoin and Ethereum’s lead as the Layer-2 blockchain token added another 12.7% decline this week to the already ongoing drawdown. Trading at $0.88, the altcoin is currently at a four-month low.
As the altcoin’s trading value declined over the last few weeks, MATIC price has reached a point where its potential for a bounce exceeds the probability of a further decline. The cryptocurrency’s Relative Strength Index (RSI) fell into the oversold zone below the 30.0 mark on the daily chart. The last time the indicator was at this point was back in June 2022, marking 11 months since the altcoin’s bearishness reached this zone.
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