U.S. stocks continued to lack a catalyst to meaningfully extend the sharp jump off the December lows, with the boost from optimism of a U.S.-China trade deal remaining subdued, while the broader markets failed to find conviction after upbeat earnings results from Target and Kohl’s. The markets grappled with early global growth concerns as China delivered disappointing services sector data and a lowered growth outlook. However, these concerns were offset by a much stronger-than-expected U.S. services sector report and relatively favorable PMI data out of Europe and the U.K. Treasury yields and crude oil prices were little changed, while the U.S. dollar and gold nudged higher.

The Dow Jones Industrial Average (DJIA) declined 13 points (0.1%) to 25,807, the S&P 500 Index decreased 3 points (0.1%) to 2,790, and the NASDAQ Composite dipped 1 point to 7,576. In moderate volume, 864 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil dipped $0.03 to $56.56 per barrel and wholesale gasoline was up $0.02 to $1.77 per gallon. Elsewhere, the Bloomberg gold spot price traded $1.15 higher to $1,287.89 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.2% to 96.83.

ISM non-manufacturing data surpasses estimates

The February Institute for Supply Management (ISM) non-Manufacturing Index increased to 59.7 from January’s 56.7 level, and versus the Bloomberg forecast of a rise to 57.4. A reading above 50 denotes expansion. New orders and business activity both jumped north of 60 and to the highest levels of expansion since August 2005, while employment growth ticked lower to 55.2 and prices fell to 54.4. Non-manufacturing activity accounts for a large majority of U.S. economic output and the ISM said the respondents noted concern about the uncertainty of tariffs, capacity constraints and employment resources. However, they remain mostly optimistic about overall business conditions and the economy.

Today’s report is likely welcomed news as recent U.S. economic data has deteriorated and the threat of recession, while still relatively low, has risen.

New home sales rose 3.7% month-over-month (m/m) in December to an annual rate of 621,000 units, versus forecasts calling for 600,000 units and the downwardly revised 599,000 unit pace in November. The median home price was down 7.2% y/y to $318,600. New home inventory fell to 6.6 months of supply at the current sales pace from 6.7 in November. Sales rose in the Northeast, West, and the South m/m but fell in the Midwest. New home sales are based on contract signings instead of closings.

Treasuries were little changed, with the yield on the 2-year note flat at 2.55%, while the yields on the 10-year note and the 30-year bond dipped 1 basis point to 2.72% and 3.08%, respectively. Bond yields were nearly unchanged and the U.S. dollar gained modest ground, as mostly positive U.S. data countered Chinese growth and trade concerns.

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