U.S. equities finished with solid gains, as the mid-term elections, which offered few surprises with the Democrats taking control of the House and the Republicans expanding its Senate majority, provided the market some clarity as to the balance of power in Washington. Treasuries were mostly higher and the U.S. dollar traded lower amid a second-tier economic calendar, and as the Fed began its two-day monetary policy meeting. Meanwhile, crude oil prices fell in the face of another larger-than-expected rise in oil inventories, and gold lost ground. News on the equity front surrounded a mixed bag of earnings results.
The Dow Jones Industrial Average (DJIA) jumped 545 points (2.1%) to 26,180, the S&P 500 Index advanced 58 points (2.1%) to 2,814, and the NASDAQ Composite soared 195 points (2.6%) to 7,571. In moderate volume, 885 million shares were traded on the NYSE and 2.3 billion shares changed hands on the NASDAQ. WTI crude oil fell $0.54 to $61.67 per barrel and wholesale gasoline was $0.4 lower at $1.65 per gallon. Elsewhere, the Bloomberg gold spot price ticked $1.24 lower to $1,225.95 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.3% at 96.00.
The MBA Mortgage Application Index declined 4.0%, following the prior week’s 2.5% decrease. The decline came as a 2.5% drop in the Refinance Index was met with a 5.0% fall in the Purchase Index. The average 30-year mortgage rate rose 4 basis points (bps) at 5.15%.
Consumer credit, released in the final hour of trading, increased $10.9 billion during September, below the $15.0 billion forecast of economists polled by Bloomberg, while August’s figure was adjusted higher to an increase of $22.9 billion from the originally reported $20.1 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $11.2 billion, a 4.7% increase year-over-year (y/y), while revolving debt, which includes credit cards, fell by $300 million, a y/y decline of 0.4%.
Treasuries were mixed, as the yield on the 2-year note was up 1 bp at 2.94%, while the yield on the 10-year note declined 3 bps to 3.20% and the 30-year bond rate decreased 4 bps to 3.40%. The U.S. dollar lost ground, with the markets digesting the results from the mid-term elections, which showed the Democrats gained control of the House, though the Republicans increased their control of the Senate, likely setting up 2019 for more gridlock.
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