Despite political controversy, US stocks have pulled off another surprise recovery. Trump may have riled up the entire industry, but a promising earnings report is dispelling investors’ fears. According to this new release, the American financial market is still on track. This welcome news helped stocks recover as the dollar stayed flat. While the future of American stocks is promising, commodities experienced a rough week. Both gold & crude took losses while other metals experienced the same fate. Even though the market is turbulent, the American economy appears to be ready to weather the storm.
U.S. Stocks Rebound as Commodities Tumble
France’s controversial presidential election has the rest of Europe holding its breath. The second round of the election takes place May 7th, & both candidates are neck & neck. Marine Le Pen is promising to broker a euro exit immediately upon being elected. This could throw the market in turmoil, but for now investors are forced to wait. Even though this could be the end of the European union, investors are focused on Trump.
In a world full of political turmoil, America has managed to steal the spotlight. In a recent interview with Bloomberg news, Trump suggested a series of controversial financial overhauls. This bold plan would raise gas taxes to fund infrastructure & a new set of rules. These guidelines will separate commercial & investment banking operations. While it sounds simple, the repercussions of implementing this is profound. This new plan has the potential to shake up the banking industry, so investors are scrambling to stop it. The effects of this proposal sent shockwaves throughout the market. As soon as Trump’s interview aired, equities briefly dipped. This is far from a heavy loss, but it signals that investors are ready to react. Treasuries also fell after Steven Mnuchin stated that ultra-long bonds can “absolutely” make sense.
Ironically, rallying bank & technology shares managed to pull U.S. stocks out of a slump. The S&P 500 Index rose 0.3%, which helped ease the 0.2% decrease seen immediately after Trump’s remarks. The benchmark gauge reported a 1.5% gain, which was the biggest gain since February. The Nasdaq 100 Index joined the rebound with a 0.9% jump.
This surprise recovery is easing fears that the American market’s momentum was fluttering. Lackluster consumer spending in March fueled speculation, but April is putting things back on track. A new earnings report showed that 73% of S&P 500 firms topped profit estimates. Out of this group, tech shares drastically outperformed other margins. This welcome news shows that earnings in America remain on track.
Slow factory output put a damper on the dollar, but it’s still on the rise. According to the Bloomberg Dollar Spot Index, the greenback gained 0.3% against the British pound. It was little changed versus the euro, which was surprising due to the current political turmoil.
Out of all the markets, commodities got hit the hardest. Gold dropped 0.9% to $1,256.70 an ounce. Metal prices also slipped with a 0.3% decline. Not to be outdone, crude also experienced a rough month. Oil lost 2.5% in April, which gives is a 9% total loss this year. This week West Texas Intermediate crude slipped by 1.2%, leaving it at $48.76 a barrel.
These wild fluctuations are a direct reflection of the current political state. As the world holds its breath, unconventional politicians are winning more elections. This is giving birth to some wild policies, but that’s not surprising. Even though investors are scrambling for answers, the market is well prepared to handle the repercussions. This promises to be a unique year, & it’s only going to get more unpredictable as it goes on.