U.S. stocks followed yesterday’s sharp drop with a late-day slip, as the energy sector saw heavy pressure with crude oil prices continuing to plunge on festering oversupply uneasiness. Equities found early support from resumed trade talks between China and the U.S., while the technology sector rebounded slightly from Monday’s tumble. Treasury yields declined and the U.S. dollar gave back some of yesterday’s rally to a multi-month high. Gold finished modestly higher.
The Dow Jones Industrial Average (DJIA) dropped 101 points (0.4%) to 25,286 and the S&P 500 Index declined 4 points (0.2%) to 2,722, while the NASDAQ Composite was little changed at 7,201. In heavy volume, 952 million shares were traded on the NYSE and 2.3 billion shares changed hands on the NASDAQ. WTI crude oil fell $4.24 to $55.69 per barrel and wholesale gasoline dropped $0.10 to $1.54 per gallon. Elsewhere, the Bloomberg gold spot price traded $1.73 higher to $1,202.10 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.4% at 97.18.
Small business optimism remains elevated, inflation concerns noted:
The National Federation of Independent Business (NFIB) Small Business Optimism Index for October declined to 107.4, from the prior month’s unrevised 107.9 level, and versus the Bloomberg expectation to tick higher to 108.0. The report said overall, small businesses continue to support three percent-plus growth of the economy and add significant numbers of new workers to the employment pool. Also, the report added that owners believe the current period is a good time to expand substantially, are planning to invest in more inventory, and are reporting high sales figures. However, the NFIB said with reports of increased compensation running at record levels, there is more pressure to pass these costs on in higher selling prices.
Tomorrow, the economic calendar will bring a key read on inflation, courtesy of the Consumer Price Index (CPI), projected to increase 0.3% month-over-month (m/m) in October, after September’s 0.1% rise. The core rate, excluding food and energy, is estimated to rise 0.2% after September’s 0.1% gain. Compared to last year, the CPI is forecasted to be up 2.5%, after the prior month’s 2.3% gain, while the core rate is expected to match September’s 2.2% increase.
Treasuries were higher, with the yield on the 2-year note declining 3 basis points (bps) to 2.89%, the yield on the 10-year note falling 4 bps to 3.14%, and the 30-year bond rate decreasing 2 bps to 3.36%.
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