Technology Sector Assistance Boosts Market Gains…..

U.S. stocks began the week modestly higher with gains led by the technology sector, while healthcare shares advanced amid a flood of reports from the annual Meeting of the American Society of Hematology. Market participants appeared to exercise a cautious approach as legislators continue to grapple with reconciling the Senate and House tax reform bills. Treasury yields ticked higher ahead of this week’s Fed monetary policy decision. Crude oil prices gained ground, gold ticked lower and the U.S. dollar was nearly unchanged.

The Dow Jones Industrial Average (DJIA) increased 57 points (0.2%) to 24,386, the S&P 500 Index was 8 points (0.3%) higher at 2,660, and the NASDAQ Composite advanced 35 points (0.5%) to 6,875. In moderate volume, 782 million shares were traded on the NYSE and 1.8 billion shares changed hands on the NASDAQ. WTI crude oil increased $0.63 to $57.99 per barrel and wholesale gasoline gained $0.01 to $1.73 per gallon. Elsewhere, the Bloomberg gold spot price moved $5.80 lower to $1,242.69 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 93.94.

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, came in at a level of 6.0 million jobs available to be filled in October, down from the upwardly revised 6.2 million level in September. This compared to the Bloomberg forecast calling for a 6.1 million level. The hiring rate rose to 3.8% from September’s 3.6% pace, and the separation rate dipped to 3.5% from the prior month’s 3.6% rate.

Treasuries finished lower, with the yield on the 2-year note rising 2 basis points (bps) to 1.82%, while the yields on the 10-year note and the 30-year bond gained 1 basis point to 2.39% and 2.77%, respectively.

Treasury yields ticked higher and the U.S. dollar gave back some of last week’s gain, with U.S. tax reform remaining a key focus for the markets, as the House and Senate try to reconcile their bills with a goal of trying to get one bill on President Donald Trump’s desk for a signature by the end of the year.

However, this week fiscal policy focus will share the spotlight with monetary policy as the Federal Open Market Committee (FOMC) is highly expected to conclude its Wednesday meeting with a 25 bps increase to its target fed funds rate to 1.50%. The accompanying updated FOMC projections and Chairwoman Janet Yellen’s final press conference shortly after the decision will likely garner the most attention as the markets try to gauge the pace of rate hikes in 2018. The Fed’s meeting will be followed by monetary policy decisions from the European Central Bank (ECB) and Bank of England (BoE) on Thursday. Other economic releases this week include: the Consumer Price Index (CPI), retail sales, Markit’s business activity reports, and industrial production and capacity utilization.

Schwab Center for Financial Research – Market Analysis Group

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