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FX.co ★ 05.10.2022: Wall Street halts its rapid rally (S&P500, USD, CAD, Bitcoin).

05.10.2022: Wall Street halts its rapid rally (S&P500, USD, CAD, Bitcoin).

The US stock market is likely to cool down in the middle of the week after a two-day rally of risky assets. Today investors are alert to the OPEC summit, a slew of surveys by the ISM, and the ADP employment report. Our analysts are ready to share their reviews and forecasts.

As we expected, Tuesday was full of optimism on Wall Street. The benchmark stock indices closed with confident gains.

The Dow Jones surged 825 points or 2.80%. The Nasdaq skyrocketed 3.34% intraday. The S&P 500 rose 3.06% to close at 3,790.

Today the stock market is feeling only the pleasant aftertaste after a rapid rally. The major stock indices traded lower in the New York pre-market. All three indices retreated from previous highs. The S&P 500 is expected to trade in the intraday corridor between 3,680 and 3,820.

Earlier in the week, the S&P 500 regained roughly 5.7% for just two sessions. After massive selling and fears, investors seemed to have spotted light at the end of the tunnel.

The benefactor of optimism was the Reserve Bank of Australia because it surprised markets with a moderate rate hike and softer rhetoric. Traders found a faint hope that the US Fed might also soften its stance in the fourth quarter.

Besides, the JOLTs report on job openings added to the overall optimism about earlier-than-expected termination of monetary tightening. The number of vacancies in the US contracted by 1.1 million in August. It suggests less active hiring.

The number of vacancies in the US declined to the lowest level since June 2021 from 11.2 million in July. The actual reading is below the consensus of 10.775 million.

4.2 million Americans left their jobs in August, roughly the same figure as in the previous month. Despite high demand for employees, the lower number of vacancies in the US means that the Fed’s rate hikes are to blame for a slowdown in the economy.

Elon Musk came under the spotlight on Tuesday. Twitter stock jumped 22.2% after Blomberg reported that Elon Musk would go ahead with his Twitter purchase deal at 54.20 dollars per share. The deal is worth 44 billion dollars. As a result, Twitter was the main driving force for the S&P 500.

Today futures on the benchmark indices dropped in the pre-market. Yields of 10-year Treasuries rose sharply, thus bolstering sell-offs of equities.

Today the Reserve Bank of New Zealand announced another aggressive rate hike which undermined hopes for a pause in the global cycle of monetary tightening.

The stock market felt a kind of a hangover in the wake of a party. The key stock indices went down. The same is true about stocks of companies with mega capitalization such as Apple, Tesla, Microsoft, Amazon, and Meta. In contrast, shares of Chinese companies are gaining ground. Alibaba stock appreciated 4.5% in the pre-market.

The ADP employment report dampened investors’ optimism. The ADP payroll processor reported that the US private sector created 208,000 jobs in September after 185,000 new jobs in August because schools reopened and pandemic fears receded. The actual figure is above the consensus of 200,000 new jobs.

Apparently, the report discouraged Wall Street investors who are alert to a series of macroeconomic data such as the services PMI and the ISM non-manufacturing PMIs. Besides, Fed’s policymaker Raphael Bostic will speak tonight.

The US dollar is taking a breather following the steepest slump in two years. Its index has surpassed 111 points. The intraday corridor is seen between 110.7 and 111.8.

Remarks of some Fed’s policymakers yesterday cast a shadow over the stock market and cemented the bullish outlook for the US dollar.

Federal Reserve Bank of San Francisco President Mary Daly said that the central bank has to go ahead with more rate hikes. She also acknowledged that the regulator pays attention to the greenback’s impact on global economic growth. Indeed, a slowdown in the global economy might dent the domestic economy.

For the time being, fresh data on trade balance proves resilience of the US economy.

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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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