Stocks Stage Comeback After Early Losses…..

After another rocky trading session, U.S. equities were able to finish in the green and near the highs of the day, but a number of headwinds continued to keep conviction at bay. The persistent rise in prices remained a concern, as investors look ahead to the first look at the May inflation picture later this week in hopes for signs that it may have peaked. Caution of a slowdown in economic activity and a possible recession looming in the midst of the Fed’s tightening campaign remained, as well as the consequences of the ongoing war in Ukraine. In equity news, Target was lower after cutting its margin guidance for Q2 due to planned inventory reductions, and Dave & Buster’s rose after beating on the top and bottom lines. On the economic front, the trade balance shrunk more than expected, while consumer credit cooled slightly with credit card debt pulling back from a two-decade high. Treasuries were mixed, and the U.S. dollar nudged to the downside, while crude oil prices were higher, and gold gained ground. Europe finished mixed after U.K. Prime Minister Boris Johnson survived a vote of confidence Monday evening, and stocks in Asia also diverged following a larger-than-expected rate hike from the Reserve Bank of Australia.

The Dow Jones Industrial Average rose 264 points (0.8%) to 33,180, the S&P 500 Index added 39 points (1.0%) to 4,161, and the Nasdaq Composite gained 114 points (0.9%) to 12,175. In moderate volume, 4.2 billion shares of NYSE-listed stocks were traded, and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.91 higher to $119.41 per barrel. Elsewhere, the gold spot price increased $12.40 to $1,856.10 per ounce, and the Dollar Index lost 0.1% to 102.30.

Trade balance shrinks more than expected, consumer credit cools a bit…..

The trade balance showed that the April deficit shrunk more than expected, falling to $87.1 billion, from March’s downwardly-revised deficit of $107.7 billion, and compared to forecasts of a decrease to $89.5 billion. Exports rose 3.5% month-over-month (m/m), and imports decreased 3.4%.

Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $38.0 billion during April, slightly above the $35.0 billion forecast of economists polled by Bloomberg, while March’s figure was adjusted downward to an increase of $47.4 billion from the originally reported $52.4 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $20.3 billion, a 7.1% increase y/y, while revolving debt, which includes credit cards, added $17.8 billion, a 19.6% y/y rise.

Treasuries rose with yields having been choppy as of late, as markets anticipate tighter Fed monetary policy amid the backdrop of persistent inflation and signs of slowing economic growth.

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