S&P 500 Reclaims 4,500, Oil Hits $90 As Rising Inflation Fails To Dampen Risk Sentiment: What's Driving Markets Thursday?

Thursday witnessed a widespread rally across the spectrum of risk markets, with both equities and commodities surging in response to a slew of economic developments that are progressively dispelling recession concerns.

In August, the Producer Price Index surpassed expectations, following a Consumer Price Index report that was also higher than anticipated.

Remarkably, the renewed upswing in price pressures within the economy is not ruffling the feathers of markets, thanks to the continued robustness of consumer spending. Retail sales among U.S. consumers outstripped forecasts in August, marking a positive streak of five consecutive months of growth.

China made a significant announcement by enacting a 25-basis-point reduction in the reserve requirement ratio for all banks, a move poised to inject much-needed liquidity into the country’s economically challenging situation. The European Central Bank raised rates by 25 basis points but indicated an imminent end to tightening measures, further underpinning the momentum of risk assets.

All S&P 500 sectors were in positive territory, with cyclical sectors such as the Energy Select Sector SPDR Fund XLE, the Materials Select Sector SPDR Fund XLB and the Real Estate Select Sector SPDR Fund XLRE leading the way as investors embrace a reflation trade narrative.

Oil prices rallied to a striking $90 per barrel, marking fresh highs for the year and sustaining the upward trajectory of energy and oil giant stocks.

Cues From Thursday’s Trading:

U.S. stock indices traded higher, with the economically sensitive Russell 2000 small-cap index notching a robust 1.2% gain for the day, surpassing the performance of other benchmarks. The Nasdaq 100 and the S&P 500 both inched up by 0.8%, while the Dow Jones saw a solid 0.9% increase.

US Index Performance On Wednesday

Thursday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.8% higher to $450.22.
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.95% to $349.83.
• The Invesco QQQ Trust QQQ gained 0.8% to $377.10, according to Benzinga Pro data.

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Stocks In Focus:

• Norwegian Cruise Line Holdings Ltd. NCHL rose 4.6%, the most among S&P 500 stocks, after Redburn upgraded the cruise line from Neutral to Buy and raised the price target from $17.50 to $25.
• MetLife Inc. MET rose 3% after Jefferies upgraded the stock from Hold to Buy, raising its price target from $58 to $72.
• Shift4 Payments, Inc. FOUR rose nearly 10% after announcing it will process all payments for RedWeek.com, the world’s largest online marketplace for timeshare rentals and resales.
• Alnylam Pharmaceuticals, Inc. ALNY fell 3% after an FDA panel raised concerns about the meaningfulness of patisiran’s benefit in treating patients with a type of heart muscle disease, cardiomyopathy, caused by a wild-type or hereditary transthyretin-mediated amyloidosis. The panel, however, voted 9-3 that the drug’s benefits outweigh the risks.
• Nikola Corp. NKLA rose over 20% after the CEO said the several cases of fire reported with its battery electric trucks won’t affect the delivery of hydrogen-powered trucks.
• Copart, Inc. CPRT, and Lennar are among the companies reporting their earnings after the market close.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 1.5%, with a barrel of WTI-grade crude trading at $89.55. The United States Oil Fund ETF USO was 1.5% higher to $80.85.  

Treasury yields were slightly higher: the 10-year yield inched to 4.29% and the two-year yield hit 5%. The iShares 20+ Year Treasury Bond ETF TLT was 0.8% lower for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.7% lower to 1.0653.

European equity indices closed in the green. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 1%. 

Gold edged 0.1% higher to $1,910/oz, while silver fell 0.7% to $22.67. Bitcoin BTC/USD was 1.5% higher to $26,147.

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