U.S. stocks finished mixed to close out a wild week that saw the worst Christmas Eve session followed by a sharp rally and a huge intraday upside reversal. Equity news remained light, though the economic front delivered a stronger-than-expected read on regional manufacturing activity, while an unexpected decline in pending home sales likely added to housing market concerns. Treasury yields and the U.S. dollar dipped as a limited government shutdown is likely to continue into the New Year. Crude oil prices and gold increased.
The Dow Jones Industrial Average (DJIA) declined 76 points (0.3%) to 23,062 and the S&P 500 Index decreased 3 points (0.1%) to 2,486, while the NASDAQ Composite ticked 5 points higher (0.1%) to 6,585. In moderate volume, 897 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil rose $0.72 to $45.33 per barrel and wholesale gasoline ticked $0.01 higher to $1.30 per gallon. Elsewhere, the Bloomberg gold spot price advanced $4.56 to $1,280.27 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—dipped 0.1% to 96.34. Markets rallied for the week, as the DJIA rose 2.8%, the S&P 500 Index grew 2.9%, and the NASDAQ Composite surged 4.0%.
The Chicago Purchasing Managers Index decreased to 65.4 in December, from 66.4 in November, and versus the Bloomberg expectation of 60.2. A reading above 50 denotes expansion and this was the ninth reading north of 60 this year. The report likely eased some concerns that have nudged higher as several regional manufacturing reports have showed much larger-than-expected slowdowns in growth, with the Richmond Fed gauge surprisingly contracting for the first time since 2016.
Pending home sales fell 0.7% month-over-month in November, versus projections of a 1.0% increase, and following the unrevised 2.6% drop registered in October. Sales were 7.7% lower year-over-year. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales, which unexpectedly rose in November.
Treasuries finished higher, with the yield on the 2-year note decreasing 4 basis points (bps) to 2.52%, the yield on the 10-year note dropping 5 bps to 2.72%, and the 30-year bond rate declining 3 bps to 3.03%. The recent flattening of the yield curve and inversion of some short term yields compared to the 5-year have garnered market attention and fostered concerns.
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