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David Becker
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US stocks moved higher on Wednesday as the Nasdaq rebounded sharply and the S&P 500 closed just shy of an all-time high. The large-cap index has now rebounded 50% since hitting a low in March. Most sectors in the S&P 500 index were higher led by gains in Utilities and Consumer Staples. Financials, bucked the trend. The US 10-year yield continued to edge higher while the dollar resumed its downtrend. Oil prices rallied following a larger than anticipated draw in crude oil inventories and a drop in US production by 300-thousand barrels per week. The US consumer price index jumped by 0.6% matching the June rise. TSA traffic jumped to 700-thousand this week, up from approximately 200-thousand in April, but still down nearly 75% year over year. The VIX volatility index declined below 22, matching the lowest close in the volatility index since February.

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Crude Inventories Draw More than Expected

US crude oil inventories decreased by 4.5 million barrels from the previous week. This compared to the expectation that they would decline by 1-million barrels. At 514.1 million barrels, crude oil inventories are about 15% above the five year average for this time of year. Gasoline inventories decreased by 0.7 million barrels last week and are about 8% above the five year average for this time of year. Total commercial petroleum inventories decreased last week by 6.2 million barrels.

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The Consumer Price Index Rose More than Expected

The US consumer price index rose by 0.6% rise in June, matching the increase seen in May. The uptick was about twice what economists expected. The increase was drive by a rise in gasoline prices. Gasoline prices rose 5.3% from June to July but are down 20.3% on a year over year basis. Food prices dipped 0.4%, the first drop since April 2019. Grocery prices dropped 1.1% while the cost of dining out rose 0.5%. Excluding volatile food and energy prices, CPI surged 0.6% last month from June, which was the biggest monthly increase since January 1991. Still, core inflation is only up 1.6% from a year earlier.

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