With two hours before the markets close, U.S. stocks are tacking on to another weekly advance since the December lows, with lingering U.S.-China trade optimism buoying conviction, along with the Congressional compromise to avert another government shutdown, though President Donald Trump made an emergency declaration to cover the shortfall in border security funding. Stocks are shrugging off a mixed earnings front, with NVIDIA rising after its report but Deere falling after delivering its results. Treasury yields and the U.S. dollar are nudging higher despite a snapped positive streak for industrial production, while consumer sentiment rebounded more than expected. Gold and crude oil prices are higher. Europe finished broadly higher.
At 1:02 p.m. ET, the Dow Jones Industrial Average is increasing 1.4%, the S&P 500 Index is rising 0.8%, while the NASDAQ Composite is up 0.4%. WTI crude oil is advancing $1.00 to $55.41 per barrel, Brent crude oil is trading $1.47 higher at $66.04 per barrel, and wholesale gasoline is up $0.05 to $1.56 per gallon. The Bloomberg gold spot price is gaining $4.92 to $1,317.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—is ticking 0.1% higher to 97.05.
The Federal Reserve’s industrial production report showed a 0.6% month-over-month (m/m) fall in January, snapping a string of seven-straight monthly gains, compared to the Bloomberg estimate and December’s downwardly-revised increase of 0.1%. Manufacturing output decreased, primarily as a result of a large drop in motor vehicle assemblies, while mining and utilities production rose. Capacity utilization declined to 78.2% from the prior month’s upwardly-revised 78.8% rate, slightly below forecasts of 78.7%. Capacity utilization is 1.6 percentage points below its long-run average.
The February preliminary University of Michigan Consumer Sentiment Index rose to 95.5 from January’s final read at 91.2—which was a two-year low—and compared to expectations for a rise to 93.7. The consumer expectations and current economic condition components of the survey both were up. The 1-year inflation forecast decreased to 2.5% from 2.7%, and the 5-10 year inflation forecast descended to 2.3% from the previous 2.6% rate.
The Import Price Index fell 0.5% m/m for January, south of projections of a 0.2% loss, following December’s unrevised 1.0% decline. Compared to last year, prices were down by 1.7%, slightly below forecasts of a 1.6% descent and compared to December’s upwardly revised 0.5% decrease.
Treasuries are mostly lower, with the yield on the 2-year note rising 2 basis points (bps) to 2.52% and the yield on the10-year note ticking 1 bp higher to 2.67%, while the yield on the 30-year bond is flat at 3.00%. Bond yields are mostly rising after a recent tick lower and the U.S. dollar is chipping away at yesterday’s losses, but remains higher for the week. The stock markets are poised for another set of weekly gains, despite yesterday’s disappointing December retail sales data where investors seemed to reassess the health of the consumer.
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