After looking as if the bulls were in solid control, and the Dow breaking the 26,000 mark for the first time ever, the early rally in U.S. equities fizzled with the major indexes turning on a dime to finish mixed. Optimism surfaced early amid results from Dow member UnitedHealth and Citigroup, along with guidance from General Motors, but with the fast rise in stocks over the past two weeks, the looming possibility of a government shutdown, and uncertainty surrounding NAFTA, investors appeared to have taken time to reflect. Treasury yields reversed course to finish slightly lower, gold and crude oil prices also lost ground, and the U.S dollar was flat.
The Dow Jones Industrial Average (DJIA) declined 10 points to 25,793, the S&P 500 Index fell 10 points (0.4%) to 2,776, and the NASDAQ Composite decreased 38 points (0.5%) to 7,224. In heavy volume, 1.1 billion shares were traded on the NYSE and 2.3 billion shares changed hands on the NASDAQ. WTI crude oil fell $0.57 to $63.73 per barrel and wholesale gasoline lost $0.01 to $1.84 per gallon. Elsewhere, the Bloomberg gold spot price shed $0.99 to $1,339.00 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 90.41.
The Empire Manufacturing Index showed output from the New York region slowed but remained solidly at a level depicting expansion (a reading above zero) for January. The index declined to 17.7 from December’s upwardly revised 19.6 level, with forecasts calling for a 19.0 reading.
Treasuries reversed course to finish higher, as the yield on the 2-year note was flat at 2.01%, the yield on the 10-year note ticked 1 basis point lower to 2.54%, while the 30-year bond rate was down 2 bps at 2.83%. Treasury yields trimmed a recent rally and the U.S. Dollar Index was steady following a drop as of late. These moves come as the stock markets have run to fresh record highs fueled by synchronized global economic growth and lingering U.S. tax reform optimism, while the markets eye the ramp up of earnings season and signs that global central banks may be becoming a bit more hawkish.
Schwab Center for Financial Research – Market Analysis Group
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