U.S. stocks finished the regular trading session lower, unable to hold onto some mild early-afternoon gains, though energy shares continued to rally. Dow members Walmart and Cisco announced earnings results, along with J.C. Penney, while the economic calendar showed a rise in leading indicators and a surprising jump in regional manufacturing activity. Treasury yields were mixed and the U.S. dollar ticked higher. Gold and crude oil prices were nearly unchanged.

The Dow Jones Industrial Average (DJIA) decreased 55 points (0.2%) to 24,714, the S&P 500 Index shed 2 points (0.1%) to 2,720, and the NASDAQ Composite declined 16 points (0.2%) to 7,382. In moderate volume, 742 million shares were traded on the NYSE and 1.9 billion shares changed hands on the NASDAQ. WTI crude oil was unchanged at to $71.49 per barrel and wholesale gasoline was $0.02 higher at $2.24 per gallon. Elsewhere, the Bloomberg gold spot price added $0.43 to $1,291.16 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 93.49.

Weekly initial jobless claims rose 11,000 to 222,000, versus expectations calling for an increase to 215,000, with the prior week’s figure unrevised at 211,000. The four-week moving average declined by 2,750 to 213,250, while continuing claims fell by 87,000 to 1,707,000, south of estimates of 1,780,000.

The Philly Fed Manufacturing Index in May unexpectedly jumped further into a level depicting expansion (a reading above zero), rallying to 34.4 from 23.2 in April, compared to estimates of a decline to 21.0.

Treasuries finished mixed, with the yield on the 2-year note decreasing 2 basis points (bps) to 2.57%, the yield on the 10-year note gaining 2 bps to 3.11% and the 30-year bond rate ticking 3 bps higher to 3.25%.

Treasury yields and the U.S. dollar have rallied as of late, with the rate on the 10-year note moving to highs not seen since 2011 and the greenback trading at a level not reached since December.

Fed rate hike expectations have nudged higher as of late amid favorable economic reports and increased inflation expectations despite a recent soft patch of consumer and wholesale inflation data, while the rally in crude oil prices has garnered attention. Geopolitical concerns have flared up with North Korea threatening to pull out of the highly-anticipated summit with the U.S., while China and the U.S. have started another round of trade talks.

Schwab Center for Financial Research – Market Analysis Group

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