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Today in the Market (4/01/2022)

Good Evening. Investors watched a key recession indicator in the bond market briefly flash red today.  In addition, Wall Street mulled strong labor market data out of Washington that reaffirmed expectations for more hawkish monetary tightening plans by the Fed. 

After struggling for direction throughout intraday trading, the S&P 500 rose 0.34% at the close.  The Dow rose by 0.40%. The Nasdaq Composite gained 0.30% this week, marking the third week of increases for the tech-heavy index.

UNION

Employees at Amazon’s (AMZN) Staten Island warehouse narrowly won a historic union election on Friday.

The union was on the verge of winning with a margin of about 500 votes as of early Friday afternoon. According to the National Labor Relations Board, the union and Amazon challenged 66 ballots, implying that the margin of victory would be greater than the number of contested ballots, ending the election without further controversy.

“A win is potentially world-changing,” Erik Loomis, a labor historian, and professor at the University of Rhode Island told Yahoo Finance prior to the vote. “It would set a precedent that there is a big demand out there to organize this new economy.”

The move is also expected to amplify a nationwide wave of unionizing among major corporations such as Starbucks (SBUX) and Disney (DIS).

OIL

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For the next six months, the Biden administration will discharge 1 million barrels of oil each day.  The intent is to flood the market with supply and bring down soaring gas prices.

This is the largest release from the Strategic Petroleum Reserve (SPR) ever declared by the United States, demonstrating how politically sensitive the subject of gas prices are for the Biden administration.

How did we end up here?

  • Oil prices were already rising before the crisis in Ukraine, but when Russia decided to invade many Western governments boycotted a portion of its energy supplies, forcing prices to skyrocket.
  • The national average price of a gallon of gas has risen to $4.23 from $2.87 last year.

What is the SPR?

The SPR was established in 1975 in response to yet another severe economic shock: the Arab oil embargo. To ensure that such shortages never happened again, the US government built up a massive crude oil store along the Gulf Coast.

In the previous six months, the US has used the SPR three times to bolster thirsty energy markets. So, will releasing the reserves be successful? Oil prices fell by 7% yesterday. Consider it like sipping a 5-Hour Energy after pulling an all-nighter: According to Goldman Sachs, it should help to stabilize oil prices this year.  However, don’t expect the release to be a long-term solution to broader supply issues.

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