Major Averages Rest After a Volatile Week, Crude Oil In Focus

Barry Adams
05 Jun, 2023
New York City

Stocks showed little movement in early trading after a week of volatile trading. 

President Joe Biden signed the Fiscal Responsibility Act approved by the House and Senate, averting the June 5 debt default deadline set by the U.S. Treasury. 

The bipartisan bill garnered broader support from Republican leaders in the U.S. Senate, which will suspend the debt ceiling for the next two years and keep discretionary spending in check. 

The S&P 500 index and the Nasdaq extended weekly gains and the price of crude oil advanced after Saudi Arabia announced voluntary production cuts in support of the price amid weakening demand growth. 

After the weekend meeting of OPEC and allied nations, ministers agreed to hold recently agreed production cuts for the current year. 

In Monday's trading, market sentiment was mildly positive after Friday's employment situation report and focus shifted to Fed's policy meeting next week. 

The Federal Reserve is likely to lift rates at its next two-day meeting ending on June 14, and more investors are factoring a rate hike of 25 basis points. 

 

Crude Oil Rebounded 

Crude oil rebounded as much as 4% before receding from the day's high in Asian markets after Saudi Arabia pledged to cut additional output from July. 

After a tense meeting of OPEC+ nations over the weekend, Saudi Arabia announced voluntary oil production cuts by 1 million barrels a day to 9 million barrels a day. 

OPEC+ nations produce 40% of the world's crude oil and any change in policy could impact oil prices worldwide. 

Under the agreement, the United Arab Emirates was permitted to increase its output next year and Russia will hold its monthly production target.  

Brent crude jumped 0.7% to $76.84 a barrel and WTI crude  increased 1% to $72.87 a barrel. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 1.12 points to 4,280.72 and the Nasdaq Composite increased 0.1% to 13,256.81. 

The yield on 2-year Treasury notes increased to 4.55%, 10-year Treasury notes edged up to 3.75% and 30-year Treasury bonds held at 3.94%. 

Crude oil increased $1.74 to $73.64 a barrel and natural gas prices increased 9 cents to $2.26 a thermal unit. 

 

U.S. Stock Movers

Apple Inc increased 1.5% to $183.30 as investors looked forward to new product announcements at its annual developers conference starting today. 

Tesla Inc gained 2.3% to $218.96 and technical traders boosted the stock after the 15-day average crossed its 50-day average, supporting the case for higher stock price ahead. 

Starbucks Inc advanced 0.9% to $100.37 after a private survey showed China's service sector expanded for the fifth month in a row in May. 

For the coffee retailer, China is the second largest market with more than 6,000 locations. 

UBS Group AG declined 0.1% to $19.96 after the company said the acquisition of Credit Suisse is likely to be completed by June 12. 

Chewy Inc extended  its Friday's gains by 2.2% to $36.31 after the pet food  retailer reported better than expected results last week..