Weekly Market Recap – August 12, 2022
The Senate passed the Inflation Reduction Act. This legislation includes a 15% minimum tax on large companies. It also extends subsidies for private healthcare plans, and creates tax credits for electric vehicles and incentives to make homes more energy efficient. In Crimea, explosions at a base in Russian-occupied territory leveled dozens of buildings and at least eight Russian jets. A senior Ukrainian official said that the blasts were carried out by partisans. In North America and Western Europe, weeks of drought, wildfires, and floods are continuing to cause a reduction in supplies of food, water, and energy.
Monthly economic statistics reported during the week, compared with prior releases were as follows: consumer price index 0.0% vs. +1.3% core CPI +0.3% vs. +0.7%, CPI (year-over-year) +8.5% vs. +9.1%, producer price index -0.5% vs. +1.0%, import price index -1.0% vs. +0.2%, wholesale inventories (revised) +1.8% vs. +1.7%, and the federal budget deficit (year-over-year) -$211 billion vs. -$302 billion. Quarterly figures showed that productivity fell by 4.6% in Q2 vs. a 5.0% drop in Q1 and that Q2 unit labor costs rose 10.8% compared with +9.5% in Q1. The unemployment numbers for the weekly reports showed initial jobless claims rising to 262,000 vs. the prior 248,000 (revised from last week’s 260,000). Continuing unemployment claims rose to 1.43 million from 1.42 million.
As indicated by the price index statistics cited above, Wall Street received good news on the inflation front, which encouraged investors to hold off on selling, which caused the stock market to surge. The three indices we monitor hit levels that hadn’t traded since early May. DJIA rose to 33,761.05, a 2.9% increase from the previous Friday. The S&P 500 went out at 4,280.15 (+3.3%), and the NASDAQ Composite ended at 13,047.19 (+3.1%). Volatility was crushed as the CBOE VIX fell to 19.53 (-7.7%). In currencies, USD index futures closed at 105.510 (-0.9%). The commodity sector soared 3.6%, as per the S&P GSCI, which finished at 672.69 on Friday.
In the nearly two and a half years since our recap began following the present format, for the first time, all 21 commodity futures contracts we feature here went in the same direction: they all advanced.
Strength persisted across the board for the futures on our metals list. Closing prices and percentage increases were: gold at $1,815.50 (+1.4%), silver at $20.698 (+4.3%), platinum at $959.40 (+3.8%), palladium at $2,219.40 (+4.3%), copper at $3.6685 (+3.3%) and aluminum at $2,434.50 (+0.8%).
AAA reported on Friday that the average national at-the-pump gasoline price had dropped down to $3.98 per gallon. That being said, in the energy futures market, where wholesale prices are the focus, the sector didn’t see a negative move in any of the six contracts we survey. For the week, the final settlements looked like this: NYMEX WTI at $92.09 per barrel (+3.5%), Brent at $98.15 (+3.4%), heating oil at $3.5178 per gallon (+9.4%), RBOB gasoline at $3.0460 (+6.7%), NYMEX natural gas at $8.768 per MMBtu (+8.7%), and ICE Dutch gas at €206.108 per MWh (+5.0%).
Completing the broad commodity rally, the weekly direction was upwards for agricultural contracts, as well. For the nine products we monitor, final results were: soybeans at $14.54¼ (+3.2%), corn at $6.42¼ (+5.3%), wheat at $8.06 (+3.9%), coffee at $2.2660 (+8.2%), sugar at 18.60¢ (+3.7%), cocoa at $2,352 (+2.0%), cotton at $108.59¢ (+13.0%), live cattle at 144.500 (+0.4%), and lean hogs at 100.025 (+1.7%).
Futures Referenced in Market Recap
|ICE||Dutch TTF Gas||September|
|NYMEX||ULSD (Heating Oil)||September|
|LME||Aluminum||3 Mo. Forward|
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