Technology stocks led an advance that developed despite some sharp morning weakness derived from reports that China may impose targeted tariffs if the world’s two largest economies are unable to find common ground on trade issues. In other developments, services sector activity missed estimates and ADP’s employment report topped forecasts. Treasury yields and gold ticked higher, while crude oil prices and the U.S. dollar declined slightly. Homebuilder Lennar posted an upbeat Q1 earnings report and Dave & Buster’s Entertainment announced some disappointing Q4 same-store sales figures.

The Dow Jones Industrial Average (DJIA) rose 231 points (1.0%) to 24,264, the S&P 500 Index gained 30 points (1.2%) to 2,645, and the NASDAQ. Composite jumped 101 points (1.5%) to 7,042. In moderate-to-heavy volume, 855 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil was $0.14 lower at $63.37 per barrel and wholesale gasoline was unchanged at $1.97 per gallon. Elsewhere, the Bloomberg gold spot price added $1.00 to $1,333.74 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.1% lower at 90.13.

The March Institute for Supply Management (ISM) non-Manufacturing Index decelerated more than expected to 58.8, from February’s 59.5 level, and versus the Bloomberg forecast calling for a dip to 59.0. However, a reading above 50 denotes expansion. New orders and business activity declined but both continued solid expansion, with the latter remaining above 60. Employment growth accelerated and prices ticked further above 60. Non-manufacturing activity accounts for a large majority of U.S. economic output and the ISM said the majority of respondents remained positive about business conditions.

Factory orders rose 1.2% m/m in February, below expectations of a 1.7% gain, and versus January’s favorably revised 1.3% decrease. Stripping out the volatile transportation component, orders ticked 0.1% higher and January’s gain was unrevised at 0.4%. February durable goods orders—preliminarily reported two weeks ago—were adjusted lower to a 3.0% increase, from the previously-reported 3.1% gain. Also, nondefense capital goods orders excluding aircraft, a gauge of business spending, were revised down to a 1.4% increase from the initially-reported 1.8% rise.

The MBA Mortgage Application Index declined 3.3% last week, following the prior week’s 4.8% gain. The decrease came as a 4.9% drop in the Refinance Index was met with a 2.1% fall for the Purchase Index. The average 30-year mortgage rate remained at 4.69%.

Treasuries dipped, with the yield on the 2-year note increasing 1 basis point to 2.29%, and the yields on the 10-year note and the 30-year bond ticking 2 basis points higher to 2.80% and 3.04%, respectively.

Treasury yields nudged higher and the U.S. dollar dipped after yesterday’s gains, while the stock market remained volatile as it overcame an early drop and added to Tuesday’s rebound after Monday’s tumble.

Schwab Center for Financial Research – Market Analysis Group

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