Market Brief – Wednesday 5/4/22

Stocks started the day slightly higher and Treasury were flat in overnight trading. Stocks headed lower and Treasury yields higher in early trading.

Mortgage applications rose +2.5% as purchase applications increased and refinance applications increased slightly.

The ADP Nonfarm Employment Change rose +247k, missing expectations of a +395k gain.

Exports rose +$12.9 billion to $241.7 billion and imports rose +$32.9 billion to +$351.5 billion in April.

The Markit Services PMI expanded at a slower rate in April.

The ISM Services PMI expanded at a slightly slower rate, dropping from 58.3 to 57.1 in April. Prices paid expanded at a faster rate, while new orders and employment expanded at a slower rate.

The Department of Energy reported crude oil inventories as Crude: +1.302mm (-829k expected), Cushing: +1.379mm, Gasoline: -2.230mm (-589k expected), and Distillates: -2.344mm (-1.341mm expected).

The Federal Open Market Committee announced it would raise the Federal Funds rate by 50 basis points to a range of 0.75% to 1.00%. The FOMC also announced the beginning of its balance sheet unwind that will start in June.

Stocks surged following the Fed’s plan to raise rates and unwind its balance sheet to close higher on the day. Treasury yields closed lower on the day.