Investors eye inflationary pressures easing

  • US equities started June with a rally as investors watch for the potential easing of inflationary pressures.
  • Oil prices fell briefly as OPEC considers excluding Russia from its production count, which would pave the way for increased supply.
  • Wheat prices also fell after reports that Russia could lift its blockade of Black Sea ports in exchange for the lifting of sanctions.

U.S. stocks traded higher on Wednesday, extending their week-long rally into June as investors watch for the potential easing of inflationary pressures.

The Fed’s tightening measures led to a slowdown in some sectors like the housing market, while independent actions from OPEC and Russia led to a rapid drop in oil and grain prices on Tuesday. OPEC is considering excluding Russia from its supply, which would pave the way for an increase in oil production and supply.

Additionally, Russia is reportedly considering lifting its blockade of Black Sea ports in exchange for the lifting of sanctions. This consideration led to a sharp drop in wheat prices on Tuesday.

Finally, Shanghai is reopening after its two-month lockdown due to the spread of COVID-19. China’s reopening could help improve supply chain bottlenecks and drive prices down instead of up.

Here’s where the U.S. indices were shortly after Wednesday’s open at 9:30 a.m. ET:

US Treasury Secretary Janet Yellen has admitted she was “wrong” about the extent of inflation risk in the aftermath of the COVID-19 pandemic. Now, Yellen’s top priority, along with that of President Joe Biden and Fed Chairman Jerome Powell, is getting inflationary pressures under control.

Salesforce shares soared 10% on Wednesday after the company reported better-than-expected first-quarter results. The results could lead to a broader tech rally, Wedbush argued, as it could allay fears of a general slowdown in enterprise cloud spending.

Oil prices initially fell on the OPEC report, but then rebounded. West Texas Intermediate crude oil rose 1.81% to $116.75 a barrel. Brent, the international oil benchmark, rose 1.88% to $117.77.

Bitcoin jumped 0.74% to $31,833. Ether prices rose 1.89% to $1,965.

Gold rose 0.05% to $1,849.90 an ounce. The 10-year Treasury yield rose 2 basis points to 2.86%.

Edward N. Arrington