Stock Markets Rally as Commodity Prices Jump

Markets Movers

The stock markets in the United States and around the world rebounded on Friday as commodity prices are moving toward a weekly gain. The Dow Jones Industrial Average (DJIA) climbed 0.38% to 17,500.94 points, the NASDAQ gained 1.21% to 4,769.56 points; the S&P 500 increased 0.60% to 2,052.32 points, and the Russell 2000 went up 1.44% to 1,110.51 points.

The price of crude oil was $47.75 per barrel in New York. It is headed to a weekly gain of around 3.3%. The decline of the output in the United States helped boost the price of crude oil.

The price soybeans in Chicago are set to increase for the sixth time—the longest run of gains since 2013. Last week, the U.S. Department of Agriculture forecasted that the global inventories will decline 8.1% by the end of September next year.

Recent market volatility

Bloomberg noted that the value of global stocks dropped by more than $900 billion over the past three days due to investors’ concern regarding the impending interest rate hikes in the United States in June.

Joe Bell, a senior equity strategist at Schaeffer’s Investment Research, commented, “There’s been a little bit of volatility recently and markets are rebounding. The Fed minutes surprised people. It seems they’re a little more ready to raise rates in June than people anticipated. When you take a step back the market continues to be grinding sideways.”

The minutes of the meeting of the Federal Open Market Committee (FOMC) indicated a strong sign regarding a potential interest rate hike in June, but investors perceived a number of hindrances such as the referendum on Britain’s membership in the European Union (EU) and slowing economic growth in China.

On Thursday, William Dudley, the president of the Federal Reserve Bank in New York stated that the U.S. economy is strong enough to warrant an increase in interest rates. Last month, the home resales in the country grew more than expected.

John Hardy, a strategist at Saxo Bank FC said, “The question for traders now is whether this Fed rate hike issue is a ‘risk-on’ or a ‘risk-off’ situation. Our interpretation is that they want to do a June move, especially now Brexit chances seem to have dropped right off.”

On the other hand, Rahul Shah, the chief executive of Ideal Asset Management believed that the economic data is not enough to warrant a rate hike. He added that stock market gain is a relief rally.

Market movers

The stock price of Applied Materials (NASDAQ:AMAT) surged more than 13% to $22.66 per share.  The company estimated that its sales for the third quarter will increase around 14% to 18% from the same period a year ago. Its forecast implies sales of as much as $2.89 billion, higher than the $2.51 billion estimated by analysts.

The shares of Liberty Media Group (NASDAQ:LMCA) climbed more than 2% to $19.08 per share. The company recently announced its proposed terms for the distribution of subscription rights to holders of its Series A, Series B and Series C Liberty Braves common stock to acquire shares of its Series C Liberty Braves common stock.

Tesla Motors (NASDAQ:TSLA) gained more than 2% to $220.28 per share. The electric car manufacturer disclosed that its net reservation for its Model 3 was 373,000 units as of May 15. Panasonic said it is ready to increase its investment in Tesla.