Bulls Trample Bears
May 27, 2022
The bulls trampled the bears that stuck around today, and the major averages rallied into the close to finish the week on a high note. Economic data showed some easing of inflation as April Core PCE rose +0.3% and 4.9% YoY, both below estimates. Personal Income increased +0.4% vs. +0.5% expected, while Personal Spending jumped +0.9% vs. +0.8% estimated. Stocks rallied at the bell with every sector higher and got a second wind the last hour of trading to close at the highs of the day. Growth sectors Consumer Discretionary (XLY) and Technology (XLK) led the charge up more than +3.4%, while REITs (XLRE), Communication services (XLC), Materials (XLB) and Industrials (XLI) all jumped more than +2%. The DJIA picked up 575.77 points (+1.76%) and settled at 33212.96 with every component in the plus column, while the S&P 500 added 100.40 points (+2.47%) finishing at 4158.24. The tech heavy NASDAQ jumped 390.48 points (+3.33%) to 12131.13.
Breadth was bullish with advancing issues beating declining issues 6:1 on the NYSE and 4:1 on the NASDAQ. Advancing volume was 86% on the NYSE and 80% of the NASDAQ. The VIX fell 1.78 (-6.47%) and closed at 25.72. Crude oil prices added 1.05 (+0.92%) on supply concerns and the July contract closed at $115.14 a barrel. Gold prices rose 3.10 (+0.17%) and finished at $1850.70 an ounce. Bitcoin (BTC) closed the session at $28,900.
The major averages snapped their seven-week losing streak on strong underlying breadth and now look ready to make a run at a summer rally. Although upside seems limited until we see whether the Federal Reserve can raise rates without leading the economy into a recession, this week's FOMC Minutes showed the Committee would practice some restraint and not raise rates too far, too fast. Look for more volatility when traders come back next week as short covering could lead to more gains.
Enjoy your holiday weekend and if you're driving, keep your eyes off the pump when you fill up!
Earnings releases to watch for on Tuesday include: ChargePoint Holdings (CHPT), HP Inc (HPQ), salesforce.com (CRM) Sportsmans Warehouse Holdings (SPWH).
Tuesday's Market Moving Economic Calendar: Case-Shiller Home Price Index, Chicago PMI and Consumer Confidence.
By David L. Blake, CMT