​1 Aug 2022

U.S. stocks ended the week higher overall. The S&P rose 4.3% for the week, the Nasdaq rose 4.7% and the Dow rose 3%. The Federal Reserve raised interest rates by 75 basis points as scheduled, and the financial reports of giants generally provided favorable support for the rebound of the broader market. The yield on the 10-year U.S. Treasury bond continued to fall by 10 basis points, to close at 2.65%, a -25 basis point spread with the yield on the two-year Treasury bond. The VIX, the fear gauge, fell 7.4% for the week. Oil futures rebounded, with WTI crude closing the week up 3.4%. $GOLD gold rebounded this week, closing up 2.23% at $1,766.24 an ounce. The dollar index continued to fall, closing down 0.68% at 105.83.

Market sentiment was weak on Monday and Tuesday, mainly due to Walmart's lower earnings forecast, with the established supermarket leader down nearly 8% in a day. In addition, the previous snap thunderstorms continued to ferment, and Internet companies in the market game may have to cut capital expenditures. But the situation reversed completely on Wednesday, mainly because Microsoft's performance was solid, and Google's performance was not bad. Microsoft's order data is particularly eye-catching. The contract balance this quarter is 189 billion, a record high, and it has increased by 34% year-on-year, and there is still an accelerating trend. Analysts said this has boosted market confidence significantly.

Apple and Amazon released financial reports after the market on Thursday. Apple CEO Cook expects Q3 to accelerate growth. Amazon's financial report shows that the effect of cost reduction and efficiency increase is significant. Although the GDP data released on the same day was -0.9%, it recorded a negative value for two consecutive quarters. But the market is still full of confidence, pushing the broader market to continue to rebound.

The U.S. core PCE price index in June recorded an annual rate of 4.8% on Friday, beating expectations of 4.70% and the previous value of 4.70%. Real personal consumption expenditures recorded a monthly rate of 0.1% in June, compared to expectations of 0%. The final reading of the University of Michigan's consumer confidence index came in at 51.5 in July, slightly beating expectations for 51.1 and the previous reading of 51.1.

Institutional analysis said U.S. labor costs rose strongly in the second quarter as a tightening job market continued to boost wage growth, which may keep inflation at a high level for some time. Policy makers and economists generally believe that the U.S. labor cost index quarterly rate and labor employment wage quarterly rate in the second quarter are adjusted for changes in composition and employment quality, so they are one of the better indicators of labor market weakness to predict core inflation. The data is being closely watched for signs of whether wage growth has peaked as economists and investors try to gauge the pace of interest rate hikes by the Federal Reserve.

Sources from: Investing.com; Reuters.com

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Louis Yap

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