Outside Markets
Equities: Stocks were little changed but still in the rarefied air on Tuesday with another round of record-high closes. Nasdaq gained nearly 40 points and outdid Monday’s record-high close, setting a new mark of 16,823. The Dow was up 66 points and not too far below another 40,000-point finish while the S&P 500 remained buoyant and reached its own record close of 5,321.
Analysts said traders were anxiously waiting for Wednesday’s earnings report from Nvidia, the AI darling of Wall Street. Predictions are for another good showing by the chipmaker that will likely have a major impact on the tech sector and could lift the entire equities market. Tuesday’s action featured better-than-expected earnings from Lowe’s and Macy’s, which analysts saw as a positive indication of consumer spending.
Dollar: The dollar was mostly steady Tuesday with nothing in the day’s news to inspire much change. Traders continue to look for something more definitive on the chances for a reduction in interest rates than the non-committal statements from Federal Reserve officials. The Dollar Index was little changed from Monday at 104.5, while the dollar was still above 156.0 versus the yen.
The dollar was little changed against the euro and the British pound. Germany’s version of the Producer Price Index fell for the 10th consecutive month by 3.3% annually, in line with expectations and maintaining the likelihood the European Central Bank will lower its interest rate next month.
Treasuries: The bond market played it cool on Tuesday while waiting for the release of the minutes of the last Federal Reserve meeting. Yields drifted slightly lower with the 10-year sticking around 4.41% and the 2-year at 4.83%. The minutes will drop on Wednesday and may provide some fresh insights on how the Fed might handle interest rates later this year.
The market appeared to find a bit of encouragement when Fed Governor Christopher Waller said the economy appeared to be headed in the right direction, but he added he was among those who would like to see more data indicating cooling inflation before seeing rates go down.
Energies: Crude futures remained soft Tuesday as interest rates threatened to blunt summer consumer demand for gasoline. In addition, the risk level in the Middle East is considered lower. July crude’s move toward $80 reversed with a loss of less than a dollar that took prices below $79. June and July gasoline declined to $2.51 and $2.52 respectively.
Analysts were expecting Wednesday’s Energy Information Administration inventory report to show declines in U.S. crude supplies as well as lower gasoline and distillate stocks, and an uptick in refinery utilization.
The Biden administration moved to head off any potential gasoline squeezes over the July 4 holiday by making fuel from the Northeast Gasoline Supply Reserve available to retailers and terminal operators. Bidding on the 1 million barrels stored in Maine and New Jersey closes May 28 with the awarded gasoline to be delivered at the end of June.
Metals: Gold futures remained within walking distance of the new 12-month high on Tuesday. June gold set a new high of $2,454 on Monday as the market positioned itself to withstand inflation and other economic headwinds, analysts said. June moved higher early in the day but took a sharp downturn once prices neared $2,440 and finished the day $10 lighter.
Copper didn’t appear inclined to make a strategic withdrawal and remained around the 12-month high of just under $5.20. China’s pledge to buy up unsold housing was seen as holding up copper demand in the real-estate sector.
Livestock: Cattle futures held up Tuesday with the help of higher cash and cutout prices while hogs fell to a 3-month low. June cattle finished $1.50 higher and a few cents short of $183 while late-summer August was the most active contract and crossed the finish line nearly $2 higher and above $180. Analysts said the managed-money funds were driving the August market.
August feeder cattle also gained more than a dollar and reached above $260 for a time before falling back modestly. August hogs opened below $100 and continued to trade around a 3-month low of $98.625.
Flooding in Brazil has put a dent in the nation’s pork and poultry output. Reuters said flooding in Rio Grande do Sul has cost hog farmers an estimated 12,600 head while poultry losses were around 279,000. Flooding has also disrupted operations at four packing plants and around 30 hog farms. Officials said Rio Grande do Sul accounts for 24% of Brazil’s pork exports and 16% of chicken exports.
Live Cattle: Concerns about Memorial Day demand appeared to be easing Tuesday as the choice cutout rose to nearly $314 compared to the 5-day average of $309.49. The rib and loin primals remained well over $400. Cash prices were around $188 to begin the week.
Feeder Cattle: Auction activity in Texas began the week with mostly steady prices and not a lot of sales, but demand was considered good and there was a good selection to choose from. Corn futures leveled off Tuesday following declines over the past few days. Pasture conditions last week improved nationwide with Texas at 23% good-to-excellent and Nebraska at 56%.
Lean Hogs: The slaughter rose to 957,000 for the week compared to 941,000 the previous week, although Tuesday’s tally of 480,000 was higher than the Monday total. Lower cash prices were seen to start the week while the cutout of $100.78 was a quarter or so under the 5-day average 100.78.