The U.S. trade deficit widened to a record high of $74.4 billion in March, with imports of goods and services reaching a record $274.5 billion and exports reaching a one-year high, both up more than 6 percent, related to U.S. consumers stranded at home during the outbreak and strong demand.
The mutated strain is spreading and the number of infections is soaring again in many countries around the world, with Singapore tightening its vaccination restrictions. In India, the number of confirmed cases exceeded 300,000 on a single day for the 13th consecutive day on May 4, and the cumulative number of confirmed cases exceeded 20 million, second only to the U.S., with the third highest number of deaths worldwide at 220,000. Europe and the U.S. accelerate the easing of anti-epidemic restrictions, Biden announced a new target of 70% of U.S. adults receiving at least one dose of the new crown vaccine by July 4.
Pfizer’s first-quarter revenue and net income both exceeded expectations, raising full-year new crown vaccine revenue guidance by more than 73%, and U.S. stocks rose 1% before the bell and opened slightly higher. The U.S. Food and Drug Administration FDA will approve Pfizer’s New Crown vaccine for people aged 12 to 15 next week, people familiar with the matter said. But vaccine co-developer Germany’s BioNTech plunged 19%, the biggest drop in a month, retreating from the all-time high hit yesterday.
Tech leads declines in U.S. and European stocks, Dow turns up to two-week high after 350-point drop, Nasdaq’s biggest drop since March
On Tuesday, May 4, U.S. stocks opened lower, with technology stocks continuing to lead the broader market, although losses narrowed significantly in late trading, with the Dow boosted mainly by components Dow Chemical and Caterpillar, and the S&P narrowing losses driven by commodities, financial and industrial stocks.
Two hours after the opening, as the U.S. Treasury Secretary Yellen mentioned that “at some point may need to raise interest rates slightly to curb economic overheating”, U.S. stocks fell again to expand, the Dow fell 1% or nearly 350 points, falling below the 34,000-point integer, the Nasdaq fell 2.9% or nearly 410 points, the S&P fell 1.5% to the deepest since mid-March. VIX volatility once rose more than 25% and forced 22, at least the highest in a month since March 24.
But the Dow turned up at the end of the day, Yellen said after the U.S. stock market that she did not hint at a rate hike. By the close, the S&P 500 index fell 0.67% to 4164.66 points, the lowest since April 22, yesterday had the second-highest closing record in history. The Dow rose 0.06% to 34,133.03 points, up two days in a row and the highest since April 21, setting a new record for the third highest close ever. The Nasdaq fell 1.88% to 13,633.50 points, down three days in a row and the lowest since April 1, and the worst single-day performance since March. Russell 2000 small-cap stocks fell 1.3% to underperform the broader market.
Facebook closed down 1.3% after falling 2.9% intraday. Amazon down 3% after closing down 2.2%, Apple down over 4% closing down 3.5% to a one-month low, Microsoft down over 2% after closing down 1.6%, co-founder Bill Gates announced his divorce after the bell yesterday, Nifty down over 2% after closing down 1.1%, Google parent Alphabet down over 3% after closing down 1.6%.
New energy vehicles in general fell, Tesla closed down 1.7% after falling more than 3% during the day, falling for two days and hitting the lowest since April 7. The Chinese “three fools” in car-making, Azera fell more than 4%, Xiaopeng fell more than 4% after closing down only 0.2%, ideal car fell more than 3% after closing down only 0.1%.
Chip stocks also fell in unison but narrowed in late trading. Philadelphia Semiconductor Index fell more than 3% after closing down 1.6%, once fell below 3,000 points to the lowest since March 25. Nvidia fell 5.6% after closing down 3.3%, AMD fell more than 1% after turning up, Intel fell 2.5% after closing down 0.6%.
The economy reopened to benefit airline, cruise, and retailer stocks all gave back Monday’s gains. Bank stocks were mixed, with Goldman Sachs down more than 1% at one point and JPMorgan Chase up more than 1%. After-hours earnings report of online car giant Lyft once fell more than 6% to a three-month low, closing down 1.6%.
But U.S. Steel bucked the market by rising nearly 8% to a two-and-a-half-year high from November 2018. Credit Suisse upgraded its rating two notches to “outperform” from “underperform,” saying rising steel prices indicate the industry is in a “super cycle.
Popular Chinese stocks followed the broader market down, Alibaba, Tencent ADR, Jingdong fell more than 1%, Baidu fell more than 2%, B station fell more than 2% after turning up. MileagePlus rose more than 11% to $68.19, after receiving an updated privatization proposal before the bell, with a purchase price of $79.05.
Technology stocks also led European stocks lower. The pan-European Stoxx 600 index closed down 1.4% to a two-week low from April 20, with technology and banking stocks falling, as investors’ concerns about high valuations and the reopening of the economy led to a continued rotation of funds from technology stocks to cyclicals. Germany’s DAX fell 2.5% to its biggest one-day drop in five months, followed by Italy’s FTSE MIB, down 1.8%.
Analysts say that today’s sharp drop in European and U.S. stock markets is unexplained, and may be related to stock indexes have been near record highs, in the positive earnings season is difficult to have an upward breakthrough, economic recovery and earnings have been priced in, the market is concerned about inflation and a surge in new crown cases, as well as the geopolitical situation.
Kristina Hooper, chief global market strategist at Invesco, noted that “equities are remaining cautious” and that the recent surge is likely to be difficult to sustain given the growth in U.S. government debt and expected tax hikes. Sophie Chardon, cross-asset strategist at Lombard Odier said the next step that will most affect the market is policy, especially how the Federal Reserve changes its monetary policy outlook.
Dollar regains 91 two-week high, ethereum breaks $3,500 in two-day streak, bitcoin loses 54,000
The dollar index rose as high as 0.5% on Tuesday, back above 91 to a nearly two-week high since April 22, almost completely erasing Monday’s losses and also rebounding from the one-month low hit last week, as the market awaits more data reflecting the U.S. economic recovery and interest rate hike expectations pushing the dollar higher.
The euro fell 0.3% against the dollar and forced the 1.20 mark, the pound fell 0.5% against the dollar and fell below 1.39, the market is expected to have boosted the British economy due to vaccinations, the country’s central bank may announce on Thursday to slow the pace of bond purchases. The Australian dollar fell more than 1% against the U.S. dollar, the country’s central bank sharply raised its economic forecast, but maintained its commitment not to tighten ultra-loose monetary policy until at least 2024.
Ether, the second-largest cryptocurrency by market capitalization, rose above $3,500 at one point and hit a new high of $3,530. Dogcoin, which is being touted by Musk, surged more than 50% to $0.60 per coin and surpassed Ripple for fourth place in market cap, according to Coinmarketcap.
Bitcoin, the top market cap, fell from above $58,000 all the way to less than $54,000 in Tuesday’s Asian session, returning above $55,000 at the beginning of the U.S. session, before breaking below $54,000 again after Yellen’s comments about a small rate hike, extending its decline to 7.6% in 24 hours. Most other cryptocurrencies also fell, but dogcoin maintained its more than 30% gain. Bitcoin was back above $54,000 at the end of the U.S. session.
Gold falls two-month high, corn futures highest in eight-and-a-half years takes grain futures higher, palladium all new three-day high
The COMEX gold futures June contract closed down $15.80, or 0.88%, at $1,776 per ounce.
Spot gold fell 1.2% or down more than $21 during the day, the daily low forced $1770, from the two-month high set on Monday since February 25 back down, the U.S. stocks turned up at the beginning of the session and forced the $1800 mark. After Yellen said interest rates may need to be raised to stop the economy from overheating, spot gold dived about $18 in the short term to regain 0.8% or less than $1780.
Spot silver also fell below $27, forcing a daily low of $26, down as much as 2.9%, after having hit its highest since March 1 on Monday. The higher dollar and interest rate hike talk are weighing on the prices of gold, silver and other precious metals. Palladium, on the other hand, closed at a record high for the third consecutive day on supply concerns, with NYMEX June palladium futures closing up to $2,986 per ounce, up four days in a row.
During the U.S. session, CME corn futures surged above $7 per bushel for the first time in eight and a half years, the highest since April 2013, with dry weather affecting corn production in South America and Europe triggering supply concerns. Grain futures such as soybeans and wheat also rose broadly, with the Bloomberg Commodity Spot Index rising to its highest in 2011 in late U.S. trading.
London base metals mostly closed higher. The “Copper Doctor” LME copper futures closed up $141 at $9,966 per tonne, closing above $9,800 for the fifth consecutive day, having risen above $10,000 during trading last Thursday and approaching the all-time high set in February 2011. Zinc hit another two-year high, but nickel fell slightly from an eight-week high.
Oil prices rose another 2% to a six-week high on demand optimism from the easing of the epidemic in Europe and the U.S.
On Tuesday, WTI June crude oil futures closed up $1.20, or 1.86%, at $65.69 per barrel. Brent July crude oil futures closed up $1.32, or 1.95 percent, at $68.88 per barrel.
Market optimism about a rebound in U.S. and European demand saw U.S. oil WTI rise as high as $1.35 or more than 2% during the day to regain $65, with a daily high of $65.84. The highest rise of $1.48 or 2.2% for the bunker oil, back on $68 and once exceeded $69, a six-week high.
After the U.S. stock market, WTI crude oil broke through the $66 barrier for the first time since March 15, extending gains to 2.5%. Brewer’s oil broke through $69, up 2.58 percent for the day.
Analysis said that New York, New Jersey, Connecticut and Florida all eased travel restrictions against the disease, just as the North American summer driving peak will help fuel oil demand, and another positive is the EU plan to open up to foreign tourists who have been vaccinated. Oil prices could hit $70 in the coming months, unless OPEC+ policies change, as international agencies have raised their oil demand growth forecasts one after another for the rest of the year.
U.S. bond yields fall for third straight day as safe-haven demand lifts prices of U.S. and European Treasuries
The 10-year U.S. bond yield fell for the third day in a row, with the deepest intraday drop of 5 basis points to a daily low of 1.557%, a one-week low since April 26, and closed above 1.60% yesterday, with Yellen’s “may need to raise interest rates in the future” comments narrowing its decline.
The 10-year German bond yield fell 4 basis points to -0.25% intraday, after hitting a 14-month high on Monday, while the 10-year British bond yield fell 5 basis points to 0.79%.
Kathy Jones, chief fixed income strategist at Charles Schwab, said the decline in U.S. bond yields came in part from a sell-off in technology stocks that triggered safe-haven demand in the market, lifting the price of Treasuries, especially long bonds.
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