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U.S. stock markets closed higher on Monday, the first trading day of May, after a choppy session. Market participants remained highly concerned regarding the Fed’s policy changes in May FOMC. Yields on U.S. sovereign bonds hit a crucial benchmark after more than three years. Wall Street rebounded in the last hour of trading. All three major stock indexes ended in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.3% to close at 33,061.50. Notably, 17 components of the 30-stock index ended in positive territory while 13 in red. In intraday trading, the blue-chip index was down 527 points at its session low. The tech-heavy Nasdaq Composite finished at 12,536.02, appreciating 1.6% or 201.38 points due to the strong performance of large-cap technology stocks.
Meanwhile, the S&P 500 gained 0.6% to end at 4,155.38. Six out of 11 broad sectors of the benchmark index closed in positive zone while five in red. The Energy Select Sector SPDR (XLE), the Communications Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) rallied 1.6%, 2.8%, 1.5% and 1.5%, respectively. The Real Estate Select Sector SPDR tumbled 2.6%.
The fear-gauge CBOE Volatility Index (VIX) was down 3.2% to 32.34. A total of 13.22 billion shares were traded Monday, higher than the last 20-session average of 11.87 billion. The S&P 500 recorded one new 52-week highs and 52 new 52-week lows. On the other hand, the Nasdaq Composite posted 26 new 52-week highs and 503 new 52-week lows.
Fed’s FOMC Meeting in Focus
The Fed will conduct a very important FOMC Meeting on May 3-4. Market participants across the world are eagerly waiting for the outcome of this meeting. Economists and financial experts are by and large expecting the central bank to raise the benchmark interest rate by 50 basis points after raising the Fed fund rate by 25 basis points in March.
However, investors will closely monitor the post-FOMC statement of the Fed Chairman Jerome Powell and his answer in press conference to gauge whether the aggressive rate hike policy will be a single dose affair or it will just open the gate of more aggressive rate hikes in 2022. At the same time, market participants would like to hear Fed’s decision regarding shrinking the size of its $9 trillion balance sheet.
Several measures of U.S. inflation are currently at their 40-year highs. Fed has decided to take harsher measures in order to combat soaring inflation. However, a large section of economists and market experts have warned that too much tougher stand may result in economic contraction that will lead to a recession in the U.S. economy in the near future. Notably, the U.S. economy has contracted by 1.4% year over year in first-quarter 2022.
Yields on Government Bonds Hit record High
On May 2, the yield on the benchmark 10-Year U.S. Treasury Note rose about 11 basis points to 2.994%. At session’s high, the yield hit 3.01%. The yield crossed the key psychological barrier of 3% for the first time since December 2018. The yield on the 30-Year U.S. Treasury Note rose about 9 basis points to 3.044%.
The Institute of Supply Management reported that the U.S. Manufacturing index in April fell to 55.4% from 57.1% in March. The consensus estimate was 57.6%.
Construction spending in March dropped to 0.1% from 0.5% in February. The consensus estimate was 0.8%.
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Stock Market News for May 3, 2022
U.S. stock markets closed higher on Monday, the first trading day of May, after a choppy session. Market participants remained highly concerned regarding the Fed’s policy changes in May FOMC. Yields on U.S. sovereign bonds hit a crucial benchmark after more than three years. Wall Street rebounded in the last hour of trading. All three major stock indexes ended in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.3% to close at 33,061.50. Notably, 17 components of the 30-stock index ended in positive territory while 13 in red. In intraday trading, the blue-chip index was down 527 points at its session low. The tech-heavy Nasdaq Composite finished at 12,536.02, appreciating 1.6% or 201.38 points due to the strong performance of large-cap technology stocks.
Meanwhile, the S&P 500 gained 0.6% to end at 4,155.38. Six out of 11 broad sectors of the benchmark index closed in positive zone while five in red. The Energy Select Sector SPDR (XLE), the Communications Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) rallied 1.6%, 2.8%, 1.5% and 1.5%, respectively. The Real Estate Select Sector SPDR tumbled 2.6%.
The fear-gauge CBOE Volatility Index (VIX) was down 3.2% to 32.34. A total of 13.22 billion shares were traded Monday, higher than the last 20-session average of 11.87 billion. The S&P 500 recorded one new 52-week highs and 52 new 52-week lows. On the other hand, the Nasdaq Composite posted 26 new 52-week highs and 503 new 52-week lows.
Fed’s FOMC Meeting in Focus
The Fed will conduct a very important FOMC Meeting on May 3-4. Market participants across the world are eagerly waiting for the outcome of this meeting. Economists and financial experts are by and large expecting the central bank to raise the benchmark interest rate by 50 basis points after raising the Fed fund rate by 25 basis points in March.
However, investors will closely monitor the post-FOMC statement of the Fed Chairman Jerome Powell and his answer in press conference to gauge whether the aggressive rate hike policy will be a single dose affair or it will just open the gate of more aggressive rate hikes in 2022. At the same time, market participants would like to hear Fed’s decision regarding shrinking the size of its $9 trillion balance sheet.
Several measures of U.S. inflation are currently at their 40-year highs. Fed has decided to take harsher measures in order to combat soaring inflation. However, a large section of economists and market experts have warned that too much tougher stand may result in economic contraction that will lead to a recession in the U.S. economy in the near future. Notably, the U.S. economy has contracted by 1.4% year over year in first-quarter 2022.
Yields on Government Bonds Hit record High
On May 2, the yield on the benchmark 10-Year U.S. Treasury Note rose about 11 basis points to 2.994%. At session’s high, the yield hit 3.01%. The yield crossed the key psychological barrier of 3% for the first time since December 2018. The yield on the 30-Year U.S. Treasury Note rose about 9 basis points to 3.044%.
Consequently, shares of major banks like Bank of America Corp. (BAC - Free Report) , The Goldman Sachs Group Inc. (GS - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) have rallied 1.3%, 1.6% and 0.9%, respectively. All three stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The Institute of Supply Management reported that the U.S. Manufacturing index in April fell to 55.4% from 57.1% in March. The consensus estimate was 57.6%.
Construction spending in March dropped to 0.1% from 0.5% in February. The consensus estimate was 0.8%.