Stocks Higher for Third-Straight Day…..
U.S. markets strung together a three-day rally to partially rebound from October losses, as President Donald Trump tweeted upbeat trade progress comments that boosted sentiment and the NASDAQ closed out of correction territory. Dow member Dow DuPont highlighted a full earnings calendar while Q3 productivity was stronger than expected and manufacturing activity continued to show expansion. Treasury yields were slightly lower and the U.S. dollar was down. Crude oil prices were lower and gold gained ground.
The Dow Jones Industrial Average (DJIA) rose 264 points (1.1%) to 25,380, the S&P 500 Index climbed 28 points (1.1%) to 2,740, and the NASDAQ Composite rallied 128 points (1.8%) to 7,434. In moderate volume, 1.0 billion shares were traded on the NYSE and 2.6 billion shares changed hands on the NASDAQ. WTI crude oil fell $1.79 to $63.52 per barrel and wholesale gasoline was $0.03 lower at $1.72 per gallon. Elsewhere, the Bloomberg gold spot price decreased $18.89 to $1,233.65 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.9% lower at 96.25.
The Institute for Supply Management (ISM) Manufacturing Index for October declined to 57.7 from the unrevised 59.8 in September, versus the Bloomberg forecast calling for a dip to 59.0, with a reading above 50 denoting expansion. New orders and production both declined, but remained solidly in expansion territory, supplier deliveries rose further above 60, inventories declined to 50.7, order backlogs nudged higher to 55.8, and prices increased to 71.6. Employment fell to 56.8 and new export orders fell to 52.2.
The final October MARKIT U.S. Manufacturing PMI Index was revised downward to 55.7 from the preliminary reading of 55.9, slightly below forecasts of 55.8. The index was up versus the 55.6 level posted in September, with a reading above 50 indicating growth in output. The release is independent and differs from ISM’s manufacturing report, as it has less historic value and MARKIT weights its index components differently.
Preliminary Q3 nonfarm productivity rose 2.2% on an annualized basis, versus the Bloomberg expectation of a 2.1% gain, and following the upwardly- revised 3.0% increase seen in Q2. Unit labor costs increased 1.2%, versus the forecast calling for a 1.0% gain. Unit labor costs were unrevised at a decrease of 1.0% in Q2.
Weekly initial jobless claims declined by 2,000 to 214,000, above estimates of a decrease to 212,000 from the prior week’s upwardly-revised 216,000 figure. The four-week moving average rose by 1,750 to 213,750, while continuing claims fell by 7,000 to 1,631,000, south of estimates of 1,640,000.
Construction spending was flat month-over-month (m/m) in September, meeting projections, and following July’s upward revision to a 0.8% gain. Residential spending increased 0.5% m/m, and non-residential spending fell 0.3%.
Tomorrow’s economic docket will feature the October nonfarm payroll report, which is expected to show 200,000 jobs were added, as compared to the prior reading of 143,000 jobs. The unemployment rate is expected to be unchanged at 3.7%. Factory orders are also on tap, with economists projecting a 0.5% m/m increase during September following the 2.3% m/m increase registered in August, and the final read on durable goods orders will round out the docket.
Treasuries were higher, as the yields on the 2-year note fell 2 basis points (bps) to 2.85%, 10-year note and 30-year bond fell 1 bp to 3.14% and 3.38%, respectively.
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