Markets Plunge on Continued Growth Worries…..
U.S. equities were solidly lower, with losses accelerating into the close to push the NASDAQ into correction territory, as a mixed bag of earnings, more soft housing data, and continued worries over trade and geopolitics overshadowed upbeat reads on manufacturing and service activity. Boeing offered solid earnings and guidance, but AT&T missed forecasts and Texas Instruments’ guidance disappointed, helping to put technology and communication services stocks as the biggest losers on the day. Treasury yields fell and the U.S. dollar was higher, while a Fed report released in afternoon action showed continued wage and economic growth. Crude oil prices were mixed following a larger-than-expected rise in oil inventories, and gold was slightly higher.
The Dow Jones Industrial Average (DJIA) tumbled 608 points (2.4%) to 24,583, the S&P 500 Index plummeted 85 points (3.1%) to 2,656, and the NASDAQ Composite plunged 329 points (4.4%) to 7,108. In heavy volume, 1.1 billion shares were traded on the NYSE and 2.8 billion shares changed hands on the NASDAQ. WTI crude oil rose $0.39 to $66.82 per barrel and wholesale gasoline was $0.01 lower at $1.82 per gallon. Elsewhere, the Bloomberg gold spot price increased $2.67 to $1,232.97 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% higher at 96.42.
Business activity tops forecasts, new home sales drop
The preliminary MARKIT U.S. Manufacturing PMI Index showed growth was stronger than expected, rising to 55.9 in October from September’s 55.6 figure, and compared to the Bloomberg estimate calling for a slight dip to 55.3. Moreover, the preliminary MARKIT U.S. Services PMI Index showed growth accelerated more than expected for the key U.S. sector, increasing to 54.7 from September’s 53.5 figure, versus expectations to nudge higher to 54.0. Readings above 50 for both indexes denote expansion.
New home sales fell 5.5% month-over-month (m/m) in September to an annual rate of 553,000 units—the lowest since December 2016—versus forecasts calling for 625,000 units, and August’s figure was downwardly-revised to a 585,000 unit pace. The median home price declined 3.5% y/y to $320,000. New home inventory increased to 7.1 months of supply at the current sales pace from 6.5 months in August. Sales fell sharply in the Northeast, and declined in the South and West, while rising in the Midwest. New home sales are based on contract signings. The MBA Mortgage Application Index increased 4.9%, following the prior week’s 7.1% drop. The rise came as a 9.7% jump in the Refinance Index was met with a 2.0% gain in the Purchase Index. The average 30-year mortgage rate ticked 1 basis point higher to 5.11%. instead of closings. The data suggests the rise in interest rates, that began in September, may have had an impact, along with Hurricane Florence.
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