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Market Digest: Wall Street Slightly Lower, Dollar Gains with Treasury Yields

Market Update - Daniel Ang The Accidental Trader Traders Academy International 3

On Tuesday, May 2, 2023, Wall Street experienced a minor downturn, with the equity market not reacting as negatively as anticipated, given the recent JP Morgan Chase & Co deal and the third major US bank failure in two months. The Dollar Index increased with Treasury yields, as market participants digested Monday’s data and awaited key upcoming economic data and quarterly earnings reports. This market update provides a detailed overview of the current market situation in different sectors.


Equity Market:
The Dow Jones Industrial Average fell 46.46 points, or 0.14%, to 34,051.7; the S&P 500 lost 1.61 points, or 0.04%, to 4,167.87; and the Nasdaq Composite dropped 13.99 points, or 0.11%, to 12,212.60. The US equity market reacted with a slight downturn, given the recent news of the JP Morgan Chase & Co deal to buy most of the assets of First Republic Bank after regulators seized the troubled lender, marking the third major US bank failure in two months.

USD Index:
Monday’s data gave the Dollar Index a boost, with EUR/USD down 0.44% to 1.0971. USD/JPY rose 0.87% to 137.50, while GBP/USD was last trading at 1.2491, down 0.64% on the day. US Treasury 10-year yields added to gains throughout the session, adding to a boost from the release of economic data Monday. Benchmark 10-year notes were up 12.4 basis points to 3.576%, from 3.452% late on Friday. The 30-year bond was last up 14 basis points to yield 3.8172%, from 3.677%. The 2-year note was last up 7.5 basis points to yield 4.1386%, from 4.064%. The USD Index gained significantly in the market.

US Construction:
US construction spending increased more than expected in March, boosted by investment in non-residential structures, but single-family homebuilding remained depressed. The construction sector remained mixed in the face of this data.

China Economic Data:
Weak economic data from China was also in focus, with the manufacturing purchasing managers’ index (PMI) declining to 49.2 from 51.9 in March, indicating a contraction. This has impacted crude oil prices, which were lower as weak economic data from China and expectations of another Fed interest rate hike on Wednesday outweighed support from OPEC+ supply cuts due this month.

Crude Oil Prices:
Crude oil prices fell due to weak economic data from China and expectations of another Fed interest rate hike on Wednesday, outweighing support from OPEC+ supply cuts due this month. WTI crude oil settled down 1.46% at $75.66 per barrel, and Brent ended at $79.31, down 1.3% on the day.

Gold Prices:
Gold prices edged lower as the Dollar rose after better-than-expected US manufacturing data. Spot gold dropped 0.4% to $1,981.19/oz. COMEX gold futures fell 0.50% to $1,980.20/oz.

Digital Assets:
Most major digital assets slumped on Monday, with Bitcoin (BTC) falling below the $28,000 level for the second time in a week. BTC was changing hands at $27,945, down 4.9% in the past 24 hours, after touching an intra-day’s low of $27,862. Ethereum (ETH) slipped

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