U.S. stocks finished the regular trading session lower, though the tech sector found a little support from Dow member Apple’s earnings report and as the Federal Reserve announced no changes to its current monetary policy, as was widely expected. Treasuries were mixed, while reads from the domestic economic docket showed a bit better-than-expected rise in private sector payrolls and a dip in weekly mortgage applications. Crude oil prices and the U.S. dollar traded to the upside and gold experienced a minor decline.

The Dow Jones Industrial Average (DJIA) declined 174 points (0.7%) to 23,925, the S&P 500 Index lost 19 points (0.7%) to 2,636, and the NASDAQ Composite decreased 30 points (0.4%) to 7,101. In moderate volume, 915 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil gained $0.68 to $67.93 per barrel and wholesale gasoline lost $0.02 to $2.07 per gallon. Elsewhere, the Bloomberg gold spot price ticked $0.98 higher to $1,304.83 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.4% higher at 92.80.

At 2:00 p.m. ET, the U.S. Federal Reserve announced its monetary policy decision, keeping rates unchanged as widely expected. There was no press conference or update to economic projections after the meeting, but in its released statement the Federal Open Market Committee, or FOMC, indicated that since it had met in March, the labor market continued to strengthen and economic activity has been rising at a moderate rate. The prepared statement also indicated that the Committee expects that “economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.” Look for commentary later today from Schwab’s Fixed Income Director, Collin Martin, CFA.

The ADP Employment Change Report showed private sector payrolls rose by 204,000 jobs in April, above the Bloomberg forecast of a 198,000 gain, while March’s increase of 241,000 jobs was revised to a 228,000 rise. Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader April nonfarm payroll report, expected to show jobs grew by 192,000 and private sector payrolls rose by 190,000. The unemployment rate is forecasted to dip to 4.0% from 4.1% and average hourly earnings are projected to rise 0.2% month-over-month (m/m).

The MBA Mortgage Application Index declined 2.5% last week, following the prior week’s 0.2% dip. The decrease came as a 3.5% drop in the Refinance Index was met with a 1.6% decline for the Purchase Index. The average 30-year mortgage rate rose 7 basis points (bps) to 4.80%.

Treasuries finished mixed, with the yield on the 2-year note declining 1 basis point to 2.49%, the yield on the 10-year note increasing 1 basis post to 2.97%, and the 30-year bond rate advancing 2 basis points to 3.15%.

Treasury yields paused somewhat after yesterday’s move back to near the 3.00% mark, though the U.S. dollar extended a recent run to levels not seen since January. The markets continue to grapple with a mostly positive earnings season and an economic backdrop that remains positive, though inflation is nudging higher, while central banks in Europe have sounded slightly more dovish tones.

Schwab Center for Financial Research – Market Analysis Group

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