U.S. equities finished mixed and near the unchanged mark as investors weighed eased geopolitical concerns against upbeat economic data that may have put the possibility of a Fed rate hike back into play. Retail sales came in much stronger than expected and manufacturing activity in the New York region surged. Meanwhile, Treasury yields rose on the reports, gold was lower, while crude oil prices and the U.S. dollar were little changed.

The Dow Jones Industrial Average (DJIA) gained 6 points to 21,999, the S&P 500 Index lost 1 point to 2,465, and the NASDAQ Composite ticked 7 points (0.1%) lower to 6,333. In light-to-moderate volume, 700 million shares were traded on the NYSE and 1.6 billion shares changed hands on the NASDAQ. WTI crude oil inched $0.04 lower to $47.55 per barrel and wholesale gasoline was unchanged at $1.58 per gallon. Elsewhere, the Bloomberg gold spot price lost $10.05 to $1,272.10 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 93.82.

Advance retail sales for July rose 0.6% month-over-month (m/m), compared to the Bloomberg forecast of a 0.3% gain and compared to June’s upwardly revised 0.3% increase. Last month’s sales ex-autos grew by 0.5% m/m, versus expectations of a 0.3% gain, and following the favorably revised 0.1% increase seen in the previous month. Sales ex-autos and gas were up 0.5% m/m, compared to estimates of a 0.4% rise, and versus June’s upwardly revised 0.3% rise. The retail sales control group, a figure used to help calculate GDP, increased 0.6%, compared to the projected 0.4% rise, and the prior month’s figure was revised higher to a 0.1% rise. Ten of the thirteen categories were higher, with autos, building materials and nonstore retailers—including on line activity—leading the way, while gas, clothing and electronics and appliances sales were lower.

The report suggests strong consumer confidence and wages flashing early signs of trending higher could be starting to bolster consumer spending, the lifeblood of U.S. economic growth. The Import Price Index ticked 0.1% higher m/m for July, matching projections, and compared to June’s unrevised 0.2% decrease. Compared to last year, prices were up by 1.5%, in line with forecasts to match June’s unrevised increase.

The Empire Manufacturing Index showed output from the New York region jumped further to a level depicting expansion (a reading above zero) for August. The index surged to 25.2 from July’s unrevised 9.8 level, with forecasts calling for a reading of 10.0.

The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment this month rose to 68 from July’s unrevised level of 64, where it was forecasted to remain. This index sits at the highest since May and well above the 50 mark, the point of separation for good versus poor conditions. The NAHB said its members are encouraged by rising demand in the new-home market, due to ongoing job and economic growth, attractive mortgage rates and growing consumer confidence. However, the report noted that builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.

Treasury yields rose and the U.S. dollar was nearly unchanged on the data as expectations of one more Fed rate hike this year rebound modestly from last week’s decline in the wake of subdued inflation data. This may bring more scrutiny on tomorrow’s release of the Central Bank’s July policy meeting minutes.

Schwab Center for Financial Research – Market Analysis Group

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