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Oil Gains, Labor Data Propel U.S. Markets to Record Highs

US markets rallied today with the Dow Jones reaching an all-time high, fueled by positive economic news, rising oil prices, and robust corporate earnings.  The labor market reported initial jobless claims at 266,000, 1k less than the previous week’s level and continuing to hover around historical lows.  In the energy sector, oil prices surged more than 4 percent following a statement from Saudi Arabia’s Energy Minister, Khalid al-Falih, who reinforced his openness to meeting with fellow OPEC members to discuss potential oil-price stabilizing strategies.  Prior to the release of retail sales data tomorrow, Macy’s and Kohl’s boosted the sector by exceeding earnings expectations, resulting in both stocks rising more than 10% each.

Overseas, the Reserve Bank of New Zealand cut its official cash rate by 25bp today, producing a new low of 2 percent.  However, many investors felt that the RBNZ was a bit conservative and perhaps a 50bp cut would have been appropriate given current economic conditions there.  As a result, the New Zealand dollar reached its highest intraday value since May 2015 at $0.7351.  In Europe, after a number of strong corporate earnings results there, equity markets finished higher on the day, reaching levels last seen pre-Brexit (FTSE up 0.7% to 6,914 GBP).
 
All three major U.S. stock indexes are up between .35% and .75% for the day, while U.S. Treasury yields and swap rates have risen 3-8bp across the curve.  Oil’s current rally puts WTI crude at roughly 43.60/bbl. and Brent crude near 46/bbl.

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