The U.S. equity markets finished lower after soothed concerns over European political events were overshadowed by renewed trade worries after President Trump announced tariffs on aluminum and steel imports from Canada, Mexico and the European Union. News on the economic front was mixed, as personal spending beat expectations, weekly jobless claims fell and pending home sales were well short of forecasts. Meanwhile, financials were hamstrung by reports that Deutsche Bank was put on the Fed’s troubled institution list, and disappointing results from Dollar Tree and Dollar General pressured consumer stocks. Treasuries ended flat, while crude oil prices, the U.S. dollar and gold all finished lower.

The Dow Jones Industrial Average (DJIA) tumbled 252 points (1.0%) to 24,416, the S&P 500 Index decreased 19 points (0.7%) to 2,705, and the NASDAQ Composite lost 20 points (0.3%) to 7,442. In heavy volume, 1.4 billion shares were traded on the NYSE and 2.5 billion shares changed hands on the NASDAQ. WTI crude oil traded $1.48 lower to $67.04 per barrel and wholesale gasoline was down $0.01 at $2.16 per gallon. Elsewhere, the Bloomberg gold spot price moved $1.73 lower to $1,299.65 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.2% to 94.00.

Personal income rose 0.3% month-over-month (m/m) in April, matching the Bloomberg forecast and versus March’s downwardly revised 0.2% increase. Personal spending grew 0.6% in April, above expectations of a 0.4% gain, and versus March’s upwardly revised 0.5% increase. The April savings rate as a percentage of disposable income was 2.8%. The PCE Deflator was up 0.2% m/m, in line with expectations and versus the prior month’s unrevised flat reading. Compared to last year, the deflator was 2.0% higher, matching estimates and March’s unrevised gain. Excluding food and energy, the PCE Core Index was 0.2% higher m/m, above expectations of a 0.1% rise and matching the prior month’s unrevised gain. The index was 1.8% higher y/y, in line with estimates March’s downwardly revised rise.

Weekly initial jobless claims declined 13,000 to 221,000, versus expectations calling for a decrease to 228,000, with the prior week’s figure unrevised at 234,000. The four-week moving average rose by 2,250 to 222,250, while continuing claims fell by 16,000 to 1,726,000, south of estimates of 1,733,000.

Pending home sales fell 1.3% m/m in April, versus projections of a 0.4% gain, and following the upwardly revised 0.6% rise registered in March. Sales were 0.4% higher y/y. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales, which declined more than expected in April.

The Chicago Purchasing Managers Index posted the second highest level this year, rising to 62.7 for May from April’s 57.6 level, above expectations of 58.3. A reading above 50 denotes expansion.

Treasuries finished unchanged, as the yields on the 2-year and the 10-year notes, as well as the 30-year bond rate were flat at 2.42%, 2.84% and 3.02%, respectively.

Treasury yields moved very little after rebounding solidly yesterday from Tuesday’s drop that took the 10-year note well below the 3.00% mark, while the U.S. dollar has paused from a recent rally.

Schwab Center for Financial Research – Market Analysis Group

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