U.S. equities finished higher amid upbeat U.S. and global manufacturing reports, while technology stocks rebounded slightly from a recent rollover ahead of tonight’s earnings report from Dow member Apple. Treasury yields fell and the U.S. dollar and gold were higher, while crude oil prices saw pressure. News on the equity front consisted of more earnings reports, as Dow member Pfizer posted mixed results, Under Armour lowered its guidance, and Sprint posted a surprise profit, while monthly auto sales missed forecasts.

The Dow Jones Industrial Average (DJIA) advanced 73 points (0.3%) to 21,964, the S&P 500 Index was 6 points (0.2%) higher at 2,476, and the Nasdaq Composite increased 15 points (0.2%) to 6,363. In moderate volume, 827 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil lost $1.01 to $49.16 per barrel and wholesale gasoline was $0.02 lower at $1.66 per gallon. Elsewhere, the Bloomberg gold spot price gained $0.42 to $1,269.86 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 93.06. The major automakers reported July sales today, with General Motors (GM $35) sales falling 15.4% y/y, compared to FactSet’s projected 8.8% decrease. Fiat Chrysler Automobiles NV’s (FCAU $12) Chrysler sales dropped 10.5%, compared to the expected 6.3% decrease. Ford Motor Co (F $11) reported a 7.5% decline in sales, versus the expected drop of 5.7%. Toyota Motor Corp (TM $114) announced a 3.6% rise in sales, compared to the 5.0% decline that was expected. Shares of the big three were lower, while TM was modestly higher.

The Institute for Supply Management (ISM) Manufacturing Index for July declined but remained solidly in expansion territory (above 50) after decreasing to 56.3 from 57.8 in June—which was the fastest pace since August 2014—compared to the Bloomberg forecast calling for a dip to 56.4. New orders and production both declined but held onto levels above 60, while employment and new export orders declined 2 points to 55.2 and 57.5, respectively. Inventories rose 1 point to 50.0 and prices paid jumped 7 points to 62.0. ISM said comments from the survey generally reflect expanding business conditions.

The final Market U.S. Manufacturing PMI Index was revised to 53.3 for July from the preliminary reading of 53.2, where it was expected to remain, and above the 52.0 level posted in June. A reading above 50 denotes expansion. The release is independent and differs from ISM’s manufacturing report, as it has less historic value and Market weights its index components differently.

Personal income was flat month-over-month (m/m) in June, below forecasts of a 0.4% gain, and compared to May’s downwardly revised 0.3% increase. Personal spending ticked 0.1% higher last month, matching expectations, and versus May’s upwardly revised 0.2% gain. The June savings rate as a percentage of disposable income was 3.8%.Construction spending fell 1.3% m/m in June, versus projections of a 0.4% advance, and following May’s favorably revised 0.3% gain. Residential spending dipped 0.3%, while non-residential spending dropped 2.0%.

Treasuries were higher, as the yield on the 2-year note dipped 1 basis point (bp) to 1.34%, the yield on the 10-year note declined 4 bps to 2.25% and the 30-year bond rate fell 5 bps to 2.86%.

Schwab Center for Financial Research – Market Analysis Group

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