U.S. stocks modestly trimmed a recent run as the markets digested a host of mixed earnings reports, while last night’s State of the Union Address didn’t appear to have a major impact. Video game issues fell sharply as results from Electronic Arts and Take-Two Interactive Software seemed to cause competition concerns to ramp up. Also, Dow member Walt Disney’s revenues were mixed but GM rose on its Q4 performance and guidance. Global markets also grappled with another disappointing German economic report and tomorrow’s monetary policy decision in the U.K., while the U.S. and China are expected to resume talks next week. Treasury yields were little changed and gold declined, while the U.S. dollar and crude oil prices moved higher.
The Dow Jones Industrial Average (DJIA) dipped 21 points (0.1%) to 25,390, the S&P 500 Index decreased 6 points (0.2%) to 2,732, and the NASDAQ Composite declined 27 points (0.4%) to 7,375. In moderate volume, 794 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil rose $0.35 to $54.01 per barrel and wholesale gasoline gained $0.03 to $1.46 per gallon. Elsewhere, the Bloomberg gold spot price decreased $8.80 to $1,306.52 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% higher at 96.37.
The MBA Mortgage Application Index fell 2.5% last week, following the prior week’s 3.0% decline. The decrease came as a 0.3% gain in the Refinance Index was more than offset by a 4.9% drop for the Purchase Index. The average 30-year mortgage rate fell 7 basis points (bps) to 4.69%.
The trade balance showed that the deficit narrowed more than expected, coming in at $49.3 billion in November, versus forecasts of $54.0 billion, from October’s upwardly-revised $55.7 billion. Imports dropped 2.9% month-over-month (m/m) to $259.2 billion, while exports dipped 0.6% to $209.9 billion. This report had been postponed by the government shutdown.
Preliminary Q4 nonfarm productivity was mostly unavailable due to delays related to the government shutdown. However, the report showed Q4 manufacturing productivity rose 1.3% on a quarter-over-quarter annualized rate, up solidly from the 0.7% gain posted a year ago. Also, Q3 productivity was revised at a 2.2% gain versus 2.3% in the previous reading and unit labor costs was unadjusted at a 0.9% increase.
Treasuries were mostly little changed, with the yields on the 2-year note and the 30-year bond flat at 2.52% and 3.03%, respectively, while the yield on the 10-year note dipped 1 basis point to 2.69%.
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