North American News
US stocks end an up and down session with losses on the day
- Dow industrial average snaps a 6 day win streak
The major US indices had an up and down trading day. The major indices are closing lower on the day.
The Dow closed lower after 6 straight days of gains. The Nasdaq and S&P snapped 3 day’s of gains.
The final number are showing:
- Dow fell -222.84 points or -0.67% at 32990.11
- S&P index fell 26.07 points or -0.63% at 4132.16
- NASDAQ index fell -49.73 points or -0.41% 12081.40
- Russell 2000 fell 23.85 points or -1.26% at 1864.04
Although there was ups and downs, the downside was the more dominant. At session highs:
- Dow industrial average was up 0.08%.
- S&P index was up +0.26%
- NASDAQ was up +0.49%
Some of the big winners today included:
- Nio, +5.19%
- Amazon +4.4%
- Tencent, +3.6%
- Alibaba, +2.8%
- Qualcomm, +2.48%
- FedEx, +2.23%
- Shopify, +1.53%
In the Dow 30, gainers include:
- Nike, +2.75%
- Walt Disney +0.97%
- J.P. Morgan +0.78%
- Travelers +0.74%
- Amgen +0.58%
Some big losers today included:
- Snap, -9.37%
- GameStop, -9.26%
- Chewy, -8.52%
- Beyond Meat, -7.61%
- Bed, Bath and beyond -6.28%
- Roblox, -6.0%
Dow 30 losers include:
- Salesforce, -2.3%
- Chevron, -2.01%
- United health, -1.98%
- Home Depot -1.82%
- Dow -1.81%
After the close a Salesforce announced earnings:
- revenues $7.41 billion vs. $7.38 billion estimate
- earnings-per-share $0.98 vs. $0.94 estimate
The after-hours share price is trading up $8.86 or 5.53%
US consumer confidence 106.4 vs 103.98 expected
- Consumer confidence from The Conference Board
- Prior was 107.3 (revised to 108.6)
- Present situation 149.6 vs 152.9 prior
- Expectations 77.5 vs 77.2 prior
- Jobs hard-to-get 12.5 vs 10.1 prior
Commodities
Gold Price Analysis: XAU/USD bears are moving in from a weekly 38.2% Fibo resistance
- Gold is on the verge of a test of critical daily support, resisted at a weekly 38.2% Fibonacci.
- Forthcoming events on the Us economic calendar will be key.
At $1,839.80, the gold price is down by some 0.85% on the day as the US dollar attempts to correct from the lowest levels since the last trading week of April. Gold prices are headed for a second consecutive month of declines as rising US Treasury yields discourage investors from the non-yeilding asset, despite concerns over surging inflation.
The 10-year yield is currently trading near 2.82%, up from last week’s low near 2.70% but still well below the May 9 peak near 3.20%. Elsewhere, the 2-year yield is trading near 2.54%, up from last week’s low near 2.44% but still well below the May 4 peak near 2.85%. US gold futures (GCv1) settled down 0.5% at $1,848.4 and the spot gold price is following in tow.
Investors’ nerves were shaken up by the US Federal Reserve Governor Christopher Waller who on Monday advocated for the central bank to raise interest rates at every meeting until inflation is curbed. Specifically, Waller said “I support tightening policy by another 50 bp for several meetings. In particular, I am not taking 50 bp hikes off the table until I see inflation coming down closer to our 2% target.”
This has left markets with the expectation of further rate increases in the forthcoming months. Analysts at Brown Brothers Harriman explained that WIRP suggests 50 bp is fully priced in for June and July. ”However, a third 50 bp that was fully priced in for September is now about 50% priced in vs. 35% last week. After September, two more 25 bp hikes are fully priced in and a third is partially priced in that would take the Fed Funds ceiling to between 3.0-3.25%.”
What’s really changed is that rates are seen peaking in mid-2023 before falling in H2 23 and beyond, the analysts added. ”This would only happen if the US were to fall into recession next year and while it is possible, it is not our base case. This week’s data will be very important for near-term market expectations.”
The US Nonfarm Payrolls is critical at the last trading of this week, but before then, ahead of the jobs report, important survey data will be reported. Chicago PMI will be reported today and is expected at 55.1 vs. 56.4 in April. The regional Fed manufacturing surveys wrap up with Dallas today, which is expected at 1.5 vs. 1.1 in April. May ISM manufacturing PMI will be reported tomorrow and is expected at 54.5 vs. 55.4 in April.
In the immediate future, US President Joe Biden said he and Jerome Powell will discuss inflation in a White House meeting Tuesday, and pledged to give the Federal Reserve chair space to do his job.
- Biden and Powell to discuss inflation, US dollar on a knife’s edge
The outcome of the meeting will be important for the gold price. While gold is viewed as a hedge against inflation, rising US interest rates increase the opportunity cost of holding non-yielding bullion and boost the dollar in which gold is priced.
”The world is chasing the same narrative: quantitative tightening is going to sap liquidity at a fast clip, while the Fed hikes into a slowing growth profile in a grand battle against inflation,” analysts at TD Securities argued, ”and yet,” they said, ”consensus positioning in gold remains to the long-side, keeping precious metals prices resilient.”
WTI crude oil futures settle at the $114.67
- Down $0.40 or -0.35%
The price of WTI crude oil futures are settling at $114.67. That’s down $0.40 or -0.35%.
The high price reached $119.98. The low price extended to $114.15. The move to the upside earlier today was propelled by the EU announcement that they would embargo Russian oil by the end of the year (with some caveats). However the gains were later paired on reports that some OPEC members were working toward the idea of suspending Russia’s participation in oil production deal. Exempting Russia from OPEC+ would allow other producers to pump significantly more crude.
Looking at the hourly chart, the rotation back to the downside has seen the price move back toward the its rising 100 hour moving average at $114.44. A move below that moving average level would next target the 38.2% retracement at $113.57, followed by the rising 200 hour moving average at $112.03.
The move to the upside today traded at the highest level since March 9, 2022.
Natural gas prices also moved lower today. The price is currently trading at $8.16 down $0.51 or -5.96%. The high price last week reached $9.43. The price is still up 121% from the end of year level of $3.70
OPEC May output rose 170k bpd from April – survey
- Reuters’ secondary sources survey
- May output 28.76 mbpd
- 10 OPEC members bound by OPEC+ deal boosted output by 280kbpd vs 274kbpd quota increase
- Compliance at 178% from 164%
EU News
European equity close: Down on the day and mixed in the month of May
- Closing changes and the monthly moves in European bourses
- Stoxx 600 -0.9%
- German DAX -1.4%
- UK FTSE 100 -0.1%
- French CAC -1.6%
- Italy MIB -1.2%
- Spain IBEX -0.9%
On the month:
- Stoxx 600 -1.6%
- German DAX +2.1%
- UK FTSE 100 +0.8%
- French CAC -1.0%
- Italy MIB +1.1%
- Spain IBEX +3.0%
Other News
US stocks struggle but Citi says we’ve seen the worst already
- Strong finish last week doesn’t continue
The China reopening news that helped global stocks on Monday (with the US on holiday) hasn’t extended to the United States as inflation worries mount.
In a note today, Citi said that peak bearishness for equities has passed:
“Over the near term, our high level takeaway is that the equity markets have reached a peak bearishness related to Fed expectations and recession risk,” Citi Strategist Scott Chronert wrote in a client note. “From here, we suspect that volatility will move more down the single stock path. With the Q2 reporting period approaching, we expect to see more evidence of this.”
They argue that speculators have been washed out.
“CFTC futures and options positioning data shows that asset manager net length is near 10-year lows when we normalize notionals by aggregate market cap or gross exposure,” the note said. “Leveraged fund positioning contrasts this as the group appears to have taken profits on shorts in recent weeks. Retail speculation has declined. The sharp under performance of social sentiment stocks, non-earning names and other more speculative trades basically was hinting at this already.
Cryptocurrency News
Avalanche price could devastate investors as previous LUNA negotiations re-kindle uncertainty
- AVAX price displays subtle bearish cues on the Volume Profile indicator.
- Avalanche price has reported a $60 million loss associated with the LUNA sell-off.
- Invalidation of the bearish thesis is a breach at $32.
Avalanche price could be setting up for another move to the downside. Traders should be cautious with bullish targets amidst potential “news-related sell-offs.”
Avalanche price is questionable
Avalanche price displays a possibility to consider another downside move. The AVAX price currently trades at $26, still within range of the initial sell-off that occurred on May 9. The bulls have displayed some retaliative effort over the weekend, but subtle cues point at one more fall. The potential sell-off comes at interesting times in the market. The AVAX founder reported a $60 million loss entangled in the massive capitulation event last month for the LUNA community.
Avalanche price also displays bearish signals using the Volume Profile and Relative Strength Index. The newly established bowl-like pattern could project a sell-off back into the $21 levels. The Relative Strength Index has a significant bearish divergence recently printed on the 4-hour chart. The current uptrend move could be fully retraced in the coming days when combined.
Invalidation of the bearish idea is a breach above $32. If the bulls breach this level, then consider this thesis incorrect. The bulls could then aim for $56, resulting in a 100% increase from the current AVAX price.