US Close – Stocks rally on strong retail sales and earnings, Oil jumps, Gold hovers around $1700, Bitcoin joins risk rally

US stocks rallied as investors grow optimistic that signs are emerging that inflation is slowing, consumer spending remains healthy, and on a better second day of earnings. There still remains a good chance that we will see stocks make fresh lows, but now appears to be the time for some traders to test the waters.

The Atlanta Fed GDPnow was cut again, now seeing second quarter GDP at -1.2%, which would signal the economy is in a technical recession. Currently economists are still upbeat about the economy and see Q2 GDP with a 1.0% print.

The Fed was especially pleased to see the University of Michigan inflation expectations come down. Risky assets have been beaten up enough and could be ready for a bounce here, but a sustained rally won’t be happening until the Fed has delivered a couple more massive rate hikes.

Oil

Crude prices surged after an impressive retail sales report reminded just how strong the US economy remains and as President Biden’s trip to the Mideast will not lead to an increase with oil supplies. The oil market was down earlier in the week on demand destruction fears, so today’s retail sales report and University of Michigan consumer sentiment data helped undo some of that.

China’s weakening economic data and possibly improving COVID situation will keep their crude demand outlook as a big question mark.

Complicating the outlook for oil is the revival of Libya’s production. There is always a lot of moving parts for figuring out what will drive oil’s next big move, but right now it seems this market is too tight to break below the $90 level.

​Gold

Gold prices are softer as Wall Street gets a bit of its appetite back for risk. After today’s retail sales data, imminent recession calls will have to be dialed back. The peak in yields is welcome sign for bullion, but the precious metal is still vulnerable to further technical selling.

Bitcoin

Bitcoin is back above the $20,000 level as Wall Street becomes a little bit more upbeat on risky assets after an impressive retail sales report and on expectations the Fed won’t have to deliver a full point rate hike at the policy meeting at the end of the month.

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