Markets Begin Week on High Note…..
U.S. equities posted solid gains, with the S&P 500 coming off a seven-week losing streak and briefly dipping into bear market territory last Friday. Persistent inflation and the ensuing aggressive monetary policy to combat it continued to be headwinds, as well as fears of slowing economic growth and the ongoing war in Ukraine. Equity news was light, with cloud computing company VMWare reportedly in advanced talks to be acquired by chipmaker Broadcom, while Pfizer offered results from its COVID vaccine trial on children under the age of five. The economic calendar was dormant today but is set to heat up tomorrow, with the Fed meeting minutes, initial jobless claims, and consumer sentiment headlining the week’s docket. Treasuries fell, lifting yields, and the U.S. dollar dropped, while crude oil prices were little changed, and gold traded higher. Europe finished to the upside following comments from European Central Bank President Christine Lagarde who indicated that negative rates are likely to be over by the end of Q3. Asia was mixed, although President Biden said he is considering lifting some Chinese tariffs to help combat inflation.
The Dow Jones Industrial Average rose 618 points (2.0%) to 31,880, the S&P 500 Index added 72 points (1.9%) to 3,974, and the Nasdaq Composite advanced 181 points (1.6%) to 11,535. In moderate volume, 4.4 billion shares of NYSE-listed stocks were traded, and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil edged $0.01 higher to $110.29 per barrel. Elsewhere, the gold spot price was up $10.00 to $1,852.10 per ounce, and the Dollar Index lost 1.0% at 102.10.
In M&A news, the Wall Street Journal reported that chipmaker Broadcom Inc (AVGO $526) is in advanced talks to acquire the cloud computing company VMWare, Inc (VMW $120). The two sides are said to be discussing a cash-and-stock deal and an announcement could come as early as this week, according to the report. Neither company commented on the report. AVGO was lower, while VMW rallied nearly 25%.
Treasuries lost some ground today amid a dormant economic docket, and yields have been choppy as of late following a recent spike, as markets anticipate tighter Fed monetary policy amid the backdrop of persistent inflation and signs of slowing economic growth.
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