U.S. equities finished mixed, as investors processed the recent central bank decisions, while looking ahead to what tomorrow’s Bank of Japan meeting holds. News on the domestic economic front was positive, as retail sales increased by twice forecasts, import prices and business inventories rose and jobless claims fell. More M&A happenings in the media space highlighted equity news. Treasuries were higher, the U.S. dollar jumped, and gold also traded to the upside, while crude oil prices were mixed.

The Dow Jones Industrial Average (DJIA) declined 26 points (0.1%) to 25,175, the S&P 500 Index rose 7 points (0.3%) to 2,783, and the NASDAQ Composite gained 65 points (0.9%) to 7,761. In moderately heavy volume, 931 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil traded $0.25 higher to $66.89 per barrel and wholesale gasoline was down $0.03 at $2.09 per gallon. Elsewhere, the Bloomberg gold spot price moved $3.61 higher to $1,302.92 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 1.1% to 94.75.

Advance retail sales for May rose 0.8% month-over-month (m/m), double the Bloomberg forecast calling for a 0.4% rise, while April’s figure was upwardly revised to a 0.4% gain. Last month’s sales ex-autos were up 0.9% m/m, versus expectations calling for a 0.5% rise and the favorably revised 0.4% gain seen in April. Sales ex-autos and gas grew 0.8% m/m, compared to estimates of a 0.4% gain and April’s unrevised 0.3% increase.

The Import Price Index rose 0.6% month-over-month (m/m) for May, topping the Bloomberg projection of a 0.5% gain, following April’s upwardly revised 0.6% increase. Compared to last year, prices were higher by 4.3%, north of forecasts of a 3.9% increase and up from the previous month’s upwardly revised 3.6% gain.

Weekly initial jobless claims surprisingly declined by 4,000 to 218,000, versus the Bloomberg estimate calling for an increase to 223,000, with the prior week’s figure unrevised at 222,000. The four-week moving average declined by 1,250 to 224,250, while continuing claims decreased by 44,000 to 1,697,000, south of estimates of 1,732,000.

Business inventories increased 0.3% m/m in April, matching forecasts and up from March’s downwardly revised 0.1% m/m decline.

Treasuries were mostly higher, with the yield on the 2-year note nearly unchanged at 2.57% and the yields on the 10-year note and the 30-year bond declining 5 bps to 2.93% and 3.05%, respectively. Tomorrow will be another busy day for the economic calendar, beginning with the Empire Manufacturing Index, forecasted to show activity in the New York region declined to a level of 18.8 for June from the 20.1 posted in May, followed shortly thereafter by the Federal Reserve’s industrial production and capacity utilization report for May, with economists projecting a 0.2% increase for production and a flat reading for utilization. Rounding out the day will be the preliminary University of Michigan Consumer Sentiment Index, expected to rise to 98.5 for June from the 98.0 registered the month prior.

Schwab Center for Financial Research – Market Analysis Group

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