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On May 8th, a team led by Michael Hartnett of Bank of America stated that U.S. stocks are on the verge of recording double-digit gains for the fourth consecutive year, a rare occurrence that has only happened a handful of times in history. The S&P 500 currently corresponds to an annualized gain of approximately 20%. Such sustained rallies have previously only occurred during World War II, the years of peace following the war, and the bubble phase of 1995-1999. The latest surge, fueled by a frenzy of capital spending on artificial intelligence, has further propelled the stock market, but the gains have been very narrow. Now, other sectors are also beginning to show stronger upward momentum. Hartnett and his team believe that, supported by the resilience of the U.S. economy, small-cap stocks, emerging markets, and commodities are "all approaching a long-term bull market turning point." The Bank of America team expects materials stocks to be among the next strong performers. Although this sector currently accounts for only 2% of the S&P 500, near a 30-year low, this is expected to change. Geopolitical competition over resources, increased military spending, the surge in capital expenditures on artificial intelligence, and efforts to address the housing shortage will make the materials sector a "new bull market protagonist."Federal Reserve Governor Tim Cook declined to comment on the economic or monetary policy outlook while speaking at a digital asset conference in Senegal.May 8th - British Prime Minister Keir Starmer suffered a major early defeat in Fridays election, highlighting strong voter dissatisfaction with his government and casting a shadow over his political future. In regions where results have been announced, Starmers Labour Party saw a significant drop in support, including traditional strongholds in the former industrial areas of central and northern England, as well as parts of London. The main beneficiary of the election was Nigel Farages anti-immigrant populist Reform Party, which won over 200 seats in England and is poised to become the main opposition force to the pro-independence Scottish National Party and the Party of Wales in Scotland and Wales. The elections in Englands 136 local councils, along with those in Scotland and Wales, represent the most crucial test of public opinion before the next general election in 2029. Labour MPs have stated that if the party performs poorly in Scotland, loses power in Wales, and fails to retain its majority of approximately 2,500 uncontested seats in England, Starmer will face renewed pressure to resign or set a timetable for his departure. Preliminary results indicate that Britains traditional two-party system is continuing to crumble, transitioning towards a multi-party democracy, which analysts call one of the biggest changes British politics has undergone in the past century.Federal Reserve Governor Lisa Cook will speak in ten minutes.Market news: Baidus (09888.HK) chip division, Kunlun Core, plans to list in Hong Kong with a target valuation of US$14.7 billion.

Wall Street Mixed Ahead of Friday’s US Jobs Data; Energy Stocks Drop 3.6% on Oil Price Decline

Skylar Shaw

Aug 05, 2022 15:39

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Indices Are Mixed, and Energy Stocks Are Hurt Due to the Declining Oil Price

On Thursday, the major US stock indexes were uneven, with the Nasdaq 100 index rising 0.44 percent to new highs over 13,300 since early May, the S&P 500 maintaining flat at 4,150, and the Dow falling 0.26 percent to close to 32,725 points. A near 6.0 percent increase in Advanced Micro Devices and a more than 2.0 percent increase in Amazon's share price were the main drivers of Nasdaq 100 outperformance. While this was happening, Walmart's near 4% decline and Chevron's almost 3% decline weighed on the Dow.


Chevron was hardly the only US oil company to suffer; in fact. Exxon Mobil had a decrease of almost 4.0 percent, while the S&P 500 Energy GICS sector as a whole lost 3.6 percent. This was due to additional drops in the world's oil markets and a dimming demand forecast. WTI dropped to below $90 per barrel, its lowest point since February 2014, just before Russia invaded Ukraine.


The price of Coinbase Global's stock increased by 10% at the close of business on Thursday as a result of the announcement that global asset management firm Blackrock would provide its customers with access to cryptocurrency trading services via Coinbase's institutional platform, Coinbase Prime. Shares of COIN had increased by as much as 44% throughout the day at one point.

Investor Attention Turns to the NFP Data on Friday

Wall Street was neutral on Thursday, but none of the main indexes experienced significant swings outside of previous levels due to investors' caution ahead of the Friday publication of important US job market data. The assumption that US inflation has peaked and the notion that the labor market is now weakening as the US economy slows are just two emerging economic storylines that recent data has shown are forming.


The second of these two storylines was in fact strengthened on Thursday by new data showing an increase in US weekly unemployment claims, perhaps putting pressure on the US currency and US rates. Traders will consider Friday's data in light of how it contributes to these stories. It may be more confident in a less aggressive Fed tightening forecast if the pace of job increases slows from June's 372,000 and the pace of average hourly wage growth moderates from June's 5.1 percent YoY.


Given that the battle against inflation is far from being won, Fed officials have been careful this week to caution the markets not to get ahead of themselves by betting on rate decreases in 2023. The Fed's Loretta Mester signaled that the bank is open to another 75 basis point rate rise in September, depending on the data, and said that the Fed would need to see many months of inflation drifting down before the central bank would take its foot off the throttle in terms of tightening.

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