US Close: Stocks show resilience, Musk and Twitter have a deal, Oil’s demand problem, Gold’s danger zone, Bitcoin above $40k

US stocks were under pressure earlier as investors couldn’t quite summon up the courage to ‘buy the dip’ as global growth concerns were driven as China seems poised they won’t back away from their zero COVID strategy.  With no more Fed speak until next week’s policy decision, the bond market selloff was ready for a pause.  Wall Street won’t feel confident aggressively buying stocks until the Fed shows signs they may tap the breaks on tightening later this year.  The S&P 500 index will likely consolidate leading up to the FOMC decision next week, while the beaten-up Nasdaq is offering some heavy discounts too good for some investors to pass up.

Twitter

Elon Musk and Twitter have a deal.  The pressure was on for Twitter to make a decision on Musk’s deal before Thursday’s earnings announcement as many were expecting disappointing results.  Twitter’s board has accepted Elon Musk’s offer to buy the social media giant for $54.20 per share in cash. This is great news for Twitter shareholders as it doesn’t seem like the company was going to get things right anytime soon.  Tesla shareholders can’t be happy that Musk will have to divert even more attention away from winning the EV race.   Twitter shares are below the offer price as some investors are concerned that the deal might not close.

Oil

China concerns sent crude prices sharply lower to start the trading week.  A rebound with risk appetite and overdone concerns about demand destruction helped oil pare losses.  The hit from Chinese lockdowns is over a million barrels a day and the testing of 12 districts over the next five days will determine the next major move for crude prices.  Supply fears are not the primary focus for energy traders and now you have a surging dollar that is adding extra pressure across all commodities.  The oil market could easily become very tight if China shows they are close to reversing their stance on lockdowns, but right now that doesn’t seem to be happening anytime soon.

Gold

Gold prices are stuck in the danger zone until the Fed rips off the tightening band-aid next week.  Even with a pause in the bond market selloff the dollar is not losing any steam and that is bad news for gold.  Gold is struggling here and could be vulnerable to further momentum selling to the $1850 level.

Gold is not attracting flows even on mounting global slowdown fears, as China is potentially poised to have the weakest growth since the early 90s, and as consumer demand destruction becomes more likely later this year. Gold will have its day in the sun once the majority of Fed tightening has been priced in, but that might not happen until the June 15^th meeting.

Bitcoin

Bitcoin is back above the $40,000 level as investors get close to fully pricing in Fed tightening for the year.  Inflation needs to show signs it is peaking soon for crypto traders to feel they have the greenlight to start to scale back in.

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