U.S crude inventories dropped by nearly 5 million barrels and fuel demand rose to an all-time high

Wall Street jumped on Wednesday, closing sharply higher as mega-cap growth stocks powered up thanks to a pause in rising interest rates, and upbeat earnings reports also encouraged investors to buy. 

The benchmark 10-year U.S Treasury yield slipped from multi-year highs hit in the previous session, helping steady sentiment across global markets and boosting demand for growth stocks. Meta Platforms surged more than 5%, ending four sessions of deep declines that saw it lose almost a third of its value. 

The biggest boosts to the S&P 500 came from Nvidia, up 2.2%, and Microsoft, up 6.4%. All 11 S&P 500 sector indexes rose, led by a 2.45% jump in real estate. The bond market basically is saying there's a cap or a limit to how much the Fed is likely to raise rates, and that is very positive for stocks in general, and especially for growth stocks that tend to be valued higher. Hit by worries about rising interest, the tech-heavy NASDAQ has fallen more than 7% so far this year after gaining nearly 21% in 2021. The S&P 500 is down about 4% year to date.

Economic Calendar

Dow Jones Industrial Average

The Dow Jones Industrial Average added 0.86%. The best performers of the session on the Dow Jones Industrial Average were Walt Disney Company, which rose 3.33% or 4.75 points to trade at 147.23 at the close. Meanwhile, Intel Corporation added 2.25% or 1.10 points to end at 49.91 and Microsoft Corporation was up 2.18% or 6.65 points to 311.21 in late trade. The worst performers of the session were Amgen Inc., which fell 1.58% or 3.82 points to trade at 237.19 at the close. Coca-Cola Co declined 1.55% or 0.96 points to end at 61.04 and Merck & Company Inc. was down 0.49% or 0.38 points to 76.53.

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NASDAQ 100

The NASDAQ index added 2.08%. The top performers on the NASDAQ Composite were US Ecology Inc. which rose 67.73% to 47.25, Tritium Dcfc Ltd which was up 64.57% to settle at 15.70 and Gracell Biotechnologies Inc. which gained 34.10% to close at 4.09. The worst performers were Zosano Pharma Corp which was down 48.56% to 0.2431 in late trade, QuinStreet Inc. which lost 26.85% to settle at 11.39 and Society Pass Inc. which was down 23.72% to 3.57 at the close.

Oil

Oil prices rallied yesterday after U.S crude inventories dropped by nearly 5 million barrels and fuel demand rose to an all-time high, underscoring the market's ongoing tightness. U.S crude (WTI) ended up 30 cents to $89.66 a barrel. U.S crude stocks fell by 4.8 million barrels last week to 410.4 million barrels, their lowest since October 2018, while overall product supplied, a proxy for demand, hit a record 21.9 million barrels per day over the past four weeks, government data showed. 

The heavy activity and ramp-up in U.S refinery processing augur for a tight market for coming months. The data was decidedly bullish hands down - everything was bullish, with inventories at their lowest level in years. The market has also been supported by concerns about ongoing threats to supply in the United Arab Emirates, which has been hit by attacks from Yemen's Houthi group, and over Russia due to the presence of thousands of its troops near Ukraine's border. The bullish U.S energy data offset the prospect of increased supply from Iran.

Trade Commodities Today! GOLD, SILVER, and OIL

Precious and Base Metals

Gold eked out gains yesterday, helped by a weaker dollar and a retreat in U.S. Treasury yields, although prices moved in a tight range as investors refrained from making large bets ahead of U.S inflation data. Spot gold rose 0.5% to $1,834.25 per ounce. U.S gold futures settled up 0.5% at $1,836.60. 

The dollar is down a little bit and it seems somewhat supportive to gold, but overall the gold market is just kind of flat in anticipation of today's CPI number. Benchmark 10-year U.S Treasury yields were off their November 2019 highs, while the dollar eased, making greenback-priced bullion cheaper for other currency holders. 

Elliott waves signal for Gold

All eyes are on U.S. consumer price data for January due on Thursday that could provide more clarity on the Federal Reserve's rate hike trajectory. A robust inflation reading is expected to burnish gold's mettle as an inflation hedge, but U.S interest rate increases would raise the opportunity cost of holding non-yielding bullion. 

U.S central bank officials have signaled they will start raising interest rates next month to fight high inflation. Atlanta Fed President Raphael Bostic said yesterday U.S may be nearing a turn lower in inflation, but added he is still leaning towards a slightly faster pace of rate increases this year. 

Rising prices are eroding the value of fiat currencies around the world, making gold an appealing investment for many. But gold must now clear the key $1,830-$1,850 resistance range if it were to make a more serious comeback. Among other precious metals, silver rose 0.5% to $23.28 per ounce, platinum was up 0.4% at $1,036.02 and palladium climbed 1.7% to $2,286.01.

Investors have been revising their forecasts for ECB rate hikes

Traditional Agricultures

Soybean and corn futures set eight-month highs on concerns about the risk for more unfavorable crop weather in drought-stressed growing areas of South America. The U.S Department of Agriculture, in a monthly crop report, pegged Brazil’s soy crop at 134 million tonnes, down from 139 million in January, and Argentina’s soy crop at 45 million, down from 46.5 million. Analysts surveyed by Reuters, on average, expected 133.65 million for Brazil and 44.51 million for Argentina. USDA will likely need to make further cuts. Some private analysts have predicted Brazilian production dropping to around 125 million tonnes.

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