2022.06.22 22:11

LIVE MARKETS-U.S. stocks modestly red as markets mull Powell remarks

S&P 500, DJI decline, Nasdaq just below flat

  • S&P 500, DJI decline, Nasdaq just below flat

  • Energy weakest S&P sector; healthcare leads gainers

  • Euro STOXX 600 index down ~1.5%

  • Dollar, bitcoin slip, gold up, crude down ~6%

  • U.S. 10-Year Treasury yield slides to ~3.13%

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Major U.S. stock indexes are modestly red early on Wednesday with investor focus squarely on Federal Reserve Chair Jerome Powell’s congressional testimony for cues on interest rate hikes and the state of the economy. (.N)

The Federal Reserve is “strongly committed” to bringing down inflation that is running at a 40-year high and policymakers are acting “expeditiously to do so,” U.S. central bank chief Jerome Powell said on Wednesday in prepared remarks for his Senate Banking Committee appearance.

After gapping down at the open, the S&P 500 (.SPX) hit its low in the first minute of the session. It has since pared its losses. The Nasdaq (.IXIC) did manage to briefly poke into positive territory, but is now just slightly red.

A majority of major S&P 500 (.SPX) are lower, with energy

(.SPNY) by far the weakest group. Crude futures (CLc1) are sinking around 6%.

The U.S. 10-Year Treasury yield (US10YT=RR) is sliding back to the 3.15% area. This after the yield essentially tagged 3.50% last week.

Regarding Powell’s remarks, Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, said, “The (prepared) comments were fairly broad. Like all Fed commentary, there are positives and negatives, but the overall message is the Fed is not backing away from rate hikes. Powell said there’s some positive indicators and negative indicators, but they are firm that the Fed is going to continue to raise the fed funds rate.”

Here is where markets stood shortly after 1000 EDT:

(Terence Gabriel, Stephen Culp)


Commodity stocks are joining the 2022 stock rout in earnest in June as crude oil is once again reversing sharply to the downside.

The RefinitivCRB Commodity Equity index (.CRBQX) , tracks globally traded stocks that are principally engaged in the production and distribution of commodities including energy, metals, and agricultural products.

While still up for the year, so far in June the index is underperforming the S&P 500 (.SPX) . CRBQX is down more than 11% this month vs an SPX decline of about 9%. With this, materials

(.SPLRCM) and energy (.SPNY) are among the worst performing major S&P 500 sectors this month.

Meanwhile, NYMEX crude futures (CLc1) are threatening to end a six-month win streak, which is the longest run of higher monthly closes since an eight-month streak from September 2010 to April 2011. This, after the futures once again flirted with important chart resistance :

The futures closed the week ending June 10 at 1.98 times their 200-week moving average (WMA). Of note, oil put in a major top in 1990, and again in 2008, when the 200-week disparity hit the 2.07/2.08 area on a weekly closing basis.

More recently, in early March, just shortly after Russia invaded Ukraine, crude spiked to a high of $130.50 - while its 200-week disparity hit more than 2.2 intra-week - before sliding back to end at 1.98. By mid-April, crude hit a low of $92.93.

During the week ending June 17, crude reached a high of $123.68, which put the disparity reading at about 2.02, intraweek. It then reversed, and the disparity once again ended at 1.98.

Crude is now trading around $103, down more than 14% from its high on a weekly closing basis. Disparity has fallen to 1.68. This, as President Biden is expected to suspend taxes on fuel.

A test of the early April disparity trough at 1.66 would put crude around $100. However, given that the rising 200-WMA is around $61.50, crude’s downside potential could be far more severe if the disparity were to even threaten parity over the near-term.

A weekly disparity close above 2.07/2.08 can instead suggest a major upside breakout.

(Terence Gabriel)




(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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