After yesterday’s rally, U.S. equities finished mixed, as lackluster reports from Dow members Dow DuPont and Microsoft were a drag on the blue chip index, while gains in the communications services sector gave the NASDAQ a solid boost. Treasury yields were lower and the U.S. dollar was modestly higher amid mixed reports on the economic front, as November new home sales jumped well above forecasts, and jobless claims rose to a 16-month high. Meanwhile, crude oil prices and gold were higher.

The Dow Jones Industrial Average (DJIA) lost 15 points (0.1%) to 25,000, while the S&P 500 Index gained 23 points (0.9%) to 2,704, and the NASDAQ Composite advanced 99 points (1.4%) to 7,282. In heavy volume, 1.4 billion shares were traded on the NYSE and 2.9 billion shares changed hands on the NASDAQ. WTI crude oil declined $0.44 to $53.79 per barrel and wholesale gasoline was down $0.02 at $1.38 per gallon. Elsewhere, the Bloomberg gold spot price ticked $0.17 higher to $1,320.08 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.3% to 95.59.

Weekly initial jobless claims were 200,000. The four-week moving average rose by 5,000 to 220,250, while continuing claims ascended 69,000 to 1,782,000, north of estimates of 1,721,000.

The Q4 Employment Cost Index rose by 0.7% quarter-over-quarter (q/q), below forecasts and last quarter’s gain of 0.8%.

New home sales rose 16.9% month-over-month (m/m) in November to an annual rate of 657,000 units, versus the Bloomberg forecast calling for 570,000 units and the upwardly revised 562,000 unit pace in October. The median home price was down 11.9% y/y to $302,400. New home inventory fell to 6.0 months of supply at the current sales pace from 7.0 months in October. Sales rose in the Northeast, Midwest, and the South but fell in the West. New home sales are based on contract signings instead of closings.

The Chicago Purchasing Managers Index decreased to 56.7 in January, from 63.8 in December, and well below expectations of 61.5, with a reading above 50 denoting expansion. Notable drags in the headline index were a two-year low in the New Orders component, and a 10-month low in the Production component.

Treasuries were higher, as the yields on the 2-year and the 10-year notes declined 5 basis points (bps) to 2.46% and 2.63%, respectively, while the 30-year bond rate was down 3 bps to 3.00%. The Federal Open Market Committee (FOMC) kept its monetary policy stance unchanged yesterday as widely expected. Fed Chair Jerome Powell noted in a press conference after the rate decision that “the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.” Powell also said that the FOMC will finalize balance sheet plans at future meetings. 

©2019 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.