U.S. equities were solidly higher for a second day, courtesy of upbeat quarterly results from Dow member UnitedHealth and Netflix, better-than-expected reads on housing construction and industrial production, as well as steady economic growth out of China. Treasuries were mixed and the U.S. dollar rebounded, while gold and crude oil prices were modestly higher.

The Dow Jones Industrial Average (DJIA) rose 214 points (0.9%) to 24,787, the S&P 500 Index was 29 points (1.1%) higher at 2,706, and the NASDAQ Composite advanced 125 points (1.7%) to 7,181. In moderate volume, 720 million shares were traded on the NYSE and 1.9 billion shares changed hands on the NASDAQ. WTI crude oil increased $0.30 to $66.52 per barrel and wholesale gasoline was unchanged at $2.04 per gallon. Elsewhere, the Bloomberg gold spot price gained $1.16 to $1,347.09 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.1% at 89.50.

Housing starts for March rose 1.9% month-over-month (m/m) to an annual pace of 1,319,000 units, above the Bloomberg forecast of a 1,267,000 unit rate. February starts were upwardly revised to an annual pace of 1,295,000. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, grew 2.5% m/m in March to an annual rate of 1,354,000, versus expectations to match February’s upwardly revised 1,321,000 rate. For both figures, single-unit activity declined m/m, but solidly higher for multi-unit and both were above year ago levels.

The Federal Reserve’s industrial production report showed a 0.5% m/m gain in March, compared to estimates of a 0.3% gain, and February’s downwardly revised 1.0% increase. Manufacturing production ticked higher, while utilities and mining output both rose solidly. The Fed said industrial production was 4.3% higher y/y. Capacity utilization ticked higher to 78.0% from the prior month’s downwardly revised 77.7% rate, and compared to forecasts of 77.9%. Capacity utilization is 1.8 percentage points below its long-run average.

Treasuries were mixed, as the yield on the 2-year note rose 2 basis points to 2.39%, while the yield on the 10-year note fell 2 basis points to 2.81% and the 30-year bond rate declined 3 basis points to 3.00%. Treasury yields have moved higher as of late, particularly at the short end of the curve, while the U.S. dollar has rebounded from yesterday’s drop. The markets remain volatile, with a favorable earnings and economic backdrop being met with festering global trade, geopolitical and monetary policy uncertainties.

Schwab Center for Financial Research – Market Analysis Group

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