U.S. stocks are ticking higher in early action for a third-straight session, though volume remains subdued ahead of tomorrow’s Thanksgiving Day break and Friday’s shortened session. Deere & Co is highlighting the earnings front, rallying in its stronger-than-expected results. Treasury yields are diverging and the U.S. dollar is dipping following a mixed read on durable goods orders, which unexpectedly fell but the previous month’s figures were revised higher. Crude oil is gaining ground ahead of next week’s OPEC meeting and gold is higher. Asia finished to the upside and Europe is mostly higher.
As of 8:55 a.m. ET, the December S&P 500 Index future is near fair value, the DJIA future is 16 points above fair value, and the NASDAQ 100 Index future is 4 points north of fair value. WTI crude oil is rising $0.95 to $57.78 per barrel and Brent crude oil is up $0.56 to $63.13 per barrel. The Bloomberg gold spot price is trading $4.85 higher at $1,285.46 per ounce. Elsewhere, the Dollar Index—a comparison of the U.S. dollar to six major world currencies—is dipping 0.1% to 93.83.
October preliminary durable goods orders were down 1.2% month-over-month (m/m), compared to the Bloomberg estimate of a 0.3% gain, and September’s 2.0% rise was revised to a 2.2% increase. Ex-transportation, orders were 0.4% higher m/m, versus forecasts of a 0.5% gain and compared to September’s favorably-revised 1.1% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, fell 0.5%, versus projections of a 0.5% increase, and following the upwardly-revised 2.1% rise posted in the month prior.
Weekly initial jobless claims dropped by 13,000 to 239,000 last week, versus forecasts of a decrease to 240,000, with the prior week’s figure being upwardly revised to 252,000. The four-week moving average rose by 1,250 to 239,750, while continuing claims increased 36,000 to 1,904,000, north of estimates of 1,880,000.
The MBA Mortgage Application Index ticked 0.1% higher last week, following the prior week’s 3.1% gain. The slight increase came as a 4.8% drop in the Refinance Index was met by a 5.3% jump in the Purchase Index. The average 30-year mortgage rate rose 2 basis points (bps) to 4.20%.
Later this morning, the economic calendar will bring the final University of Michigan Consumer Sentiment Index for November, estimated to be revised higher to 98.0 from the preliminary level of 97.8, but below October’s 100.7 figure.
However, the afternoon release of the minutes from the Fed’s most recent monetary policy meeting that ended November 1st with an unchanged stance will likely garner the heaviest attention as a December rate hike is highly expected. Last night Fed Chairwoman Janet Yellen spoke and cautioned about hiking rates too quickly, while delivering a subdued outlook for inflation.
Treasuries are mixed with the yield on the 2-year note dipping 1 bp to 1.76%, while the yield on the 10-year note is ticking 1 bp higher to 2.36% and the 30-year bond rate is increasing 2 bps to 2.78%.
Treasury yields are diverging and the U.S. dollar is dipping as the markets grapple with U.S. tax reform uncertainty ahead of next week’s expected Senate vote on its plan that differs significantly from the House’s plan that passed last week. This is being countered by Q3 earnings season that is winding down and mostly above expectations against a positive global economic backdrop.
Schwab Center for Financial Research – Market Analysis Group
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