Financial markets on Wall Street conclude their strongest weekly performance of 2022.
Following six straight days of victories, American investors end the week on a high note. Recent figures from U.S. retail and the stock market spark optimism for a rate hike in September, boosting gold's value.
On Friday, U.S. markets followed their previous day's success, with the Week on Wall Street being its strongest yet. The Dow Jones Index increased by 0.2%, reaching 40,660 points, while the S&P 500 and Nasdaq Composite both gained 0.2%.
Fears of a U.S. economic downturn have eased, and the likelihood of September's rate cuts has grown stronger, despite initial assumptions of a minor 25 basis point reduction. Strong retail data from the previous day prompted a surge and continued to prop up the market at the week's end. According to Bill Adams, chief economist at Comerica Bank, "Consumers are propelling the economy forward. The robust growth in retail sales suggests the Fed is more inclined towards a 25 basis point rate cut in September over a half-percent one."
The day's economic data corroborated the existing narrative, offering arguments for a rate reduction as well as quelling apprehensions about an impending recession. While U.S. housing starts and permits saw a larger-than-anticipated decline, consumer sentiment provided a positive signal, as it improved more than predicted in August.
Commodity market turbulence
The US dollar weakened as speculations of rate cuts intensified, causing the dollar index to drop by 0.5%. The gold price reached a new record high, trading at $2,509.48 per ounce at the spot market. The possibility of a September rate cut by the U.S. Federal Reserve, a weak greenback, and increased purchases by Chinese private investors bolstered the precious metal. Geopolitical threats in the Middle East were also pinpointed as a reason for the price increase.
Meanwhile, oil prices tumbled significantly following the previous day's surge. Market players cited lingering concerns about demand, particularly from China, and advancements in negotiations for a ceasefire in the Gaza conflict. U.S. President Joe Biden reported progress in the talks.
Applied Materials under pressure
Individual stocks experienced pressure, with Applied Materials losing 1.9%. This may be due to profit-taking after the company reported higher revenue and earnings in the third quarter due to strong demand for AI. However, market participants expected a more encouraging outlook.
The U.S. government plans to aid Texas Instruments with up to $4.6 billion in grants and loans to establish three new semiconductor factories in Texas and Utah. However, analysts suggested that the company may scale back its investments, hinting at a decreasing demand.
U.S. pharmaceutical giant Pfizer (-1.4%) and its German partner Biontech (-2.4%) fell short of a major clinical trial milestone for their new COVID-19 and flu vaccine candidate. The combination vaccine candidate only met one of the two primary endpoints in a Phase 3 study.
However, H&R Block shares soared by 12.1%. The tax preparation company reported quarterly results and projected future performance that exceeded market expectations.
After a successful week on Wall Street, the Dow Jones Index, S&P 500, and Nasdaq Composite all saw gains on Friday, with the Dow Jones Index reaching a new high of 40,660 points. This strong performance on Wall Street was accompanied by optimism in the commodity market, particularly in gold, which saw a new record high due to speculations of a September rate cut by the U.S. Federal Reserve.
The turmoil in the commodity market also saw a decline in oil prices following the previous day's surge, with lingering concerns about demand, particularly from China, and advancements in negotiations for a ceasefire in the Gaza conflict playing a role in the decline.
