U.S. equities were able to snap a recent streak to finish higher, as a slew of upbeat economic data and some favorable earnings, as well as a report from Bloomberg that China and the U.S. are trying to resume trade talks, lent some support. However, the gains appeared to be held at bay with investors looking ahead to tomorrow’s monetary policy decision from the Fed and Thursday’s report from the Bank of England, as well as earnings results from Dow member Apple after the close. Treasuries and the U.S. dollar were modestly higher, while gold gained ground and crude oil prices fell.

The Dow Jones Industrial Average (DJIA) rose 108 points (0.4%) to 25,415, the S&P 500 Index increased 14 points (0.5%) to 2,816, and the NASDAQ Composite gained 42 points (0.6%) to 7,672. In heavy volume, 1.0 billion shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil fell $1.37 to $68.76 per barrel and wholesale gasoline lost $0.03 to $2.08 per gallon. Elsewhere, the Bloomberg gold spot price advanced $3.40 to $1,224.85 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.2% at 94.50.

Personal income rose 0.4% month-over-month (m/m) in June, matching the Bloomberg forecast and May’s unrevised gain. Personal spending also gained 0.4%, as expected, and versus May’s upwardly revised 0.5% increase. The June savings rate as a percentage of disposable income was 6.8%. The PCE Deflator was up 0.1% m/m, in line with expectations and compared to the prior month’s unrevised 0.2% rise. Compared to last year, the deflator was 2.2% higher, below estimates of a 2.3% gain, and versus May’s downwardly revised 2.2% increase. Excluding food and energy, the PCE Core Index was 0.1% higher m/m, matching expectations and versus the prior month’s unrevised 0.2% gain. The index was 1.9% higher y/y, below estimates to match May’s unrevised 2.0% rise.

The Consumer Confidence Index surprisingly improved to 127.4 in July, from June’s upwardly revised 127.1, and versus estimates of 126.0. The Present Situation Index rose solidly but the Expectations Index of business conditions for the next six months declined. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—jumped to 28.1 from the 25.3 level posted in June.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 6.5% y/y gain in home prices in May, versus forecasts of a 6.4% rise. Month-over-month, home prices were up 0.2% on a seasonally adjusted basis for May, matching expectations.

Treasuries were mostly higher, with the yield on the 2-year note little changed at 2.66%, while the yield on the 10-year note declined 1 bp to 2.96% and the 30-year bond rate fell 2 bps to 3.09%.

Schwab Center for Financial Research – Market Analysis Group

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