Markets Add to Record Run on Data, Subdued Trade Worries…..

U.S. equities finished higher, with the Dow adding to its record run, amid better-than-expected reads on jobs and services sector activity, as well as continued subdued trade concerns. Treasury yields rallied, with the 10-year note hitting a 7-year high, and the U.S. dollar advanced. Crude oil prices also gained ground and gold was lower.

The Dow Jones Industrial Average (DJIA) increased 54 points (0.2%) to 26,828, the S&P 500 Index was 2 points (0.1%) higher at 2,926, and the NASDAQ. Composite gained 26 points (0.3%) to 8,025. In moderately-heavy volume, 874 million shares were traded on the NYSE and 3.0 billion shares changed hands on the NASDAQ. WTI crude oil rose $1.18 to $76.41 per barrel and wholesale gasoline was up $0.01 at $2.14 per gallon. Elsewhere, the Bloomberg gold spot price lost $4.67 to $1,198.65 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% higher at 95.78.

The September Institute for Supply Management (ISM) non-Manufacturing Index unexpectedly rose to 61.6—near the all-time high of 62 reached in 1997—from August’s 58.5 level, and versus the Bloomberg forecast of a dip to 58.0. A reading above 50 denotes expansion. New orders and business activity expansion both improved to levels further north of 60, and employment growth jumped to 62.4. Prices ticked higher to 64.2. Non-manufacturing activity accounts for a large majority of U.S. economic output and the ISM said overall, the respondents remain positive about business conditions and the current and future economy, while concerns remain about capacity, logistics and the uncertainty with global trade.

The ADP Employment Change Report showed private sector payrolls rose by 230,000 jobs in September, above forecasts of a 184,000 gain, while August’s increase of 163,000 jobs was revised to a 168,000 rise. Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader September nonfarm payroll report, expected to show job growth of 184,000 and private sector employment rose by 180,000. The unemployment rate is forecasted to dip to 3.8% from 3.9% and average hourly earnings are projected to rise 0.3% month-over-month (m/m), and are projected to be up 2.8% y/y, after rising 2.9% in the prior month.

The MBA Mortgage Application Index came in flat last week, following the prior week’s 2.9% rise. The unchanged reading came as a 0.1% dip in the Refinance Index was countered by a 0.1% increase in the Purchase Index. The average 30-year mortgage rate edged 1 basis point (bp) lower to 4.96%.

Treasuries fell on the economic data, as the yield on the 2-year note rose 6 bps to 2.86%, while the yields on the 10-year note and the 30-year bond rallied 10 bps to 3.15% and 3.30%, respectively.

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