U.S. equities finished with modest gains after a choppy session that brought the major indexes in and out of negative territory. Optimism of a U.S./China trade deal nearing gave stocks an early boost, but caution settled in ahead of the start of this week’s Fed monetary policy meeting, while late-day developments surrounding BREXIT added some additional uncertainty to the mix. Merger news and deal speculation dominated the equity front, while scrutiny on Dow member Boeing’s plane approval process pressured its shares. Treasury yields were mostly higher and the U.S. dollar dipped, while gold and crude oil prices were slightly higher.
The Dow Jones Industrial Average (DJIA) rose 65 points (0.3%) to 25,914, the S&P 500 Index gained 11 points (0.4%) to 2,833, and the NASDAQ Composite increased 26 points (0.3%) to 7,714. In moderately-heavy volume, 950 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil was $0.57 higher at $59.09 per barrel and wholesale gasoline added $0.02 to $1.88 per gallon. Elsewhere, the Bloomberg gold spot price advanced $0.90 to $1,303.03 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.1% to 96.52.
The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in March was unchanged at 62 from February’s unrevised level, compared to an expected rise to 63. A level of 50 separates good and poor conditions. The NAHB noted that affordability still remains a key concern for builders, mentioning the challenges of a skilled worker shortage, a lack of buildable lots and stiff zoning restrictions in many major metro markets.
Treasuries finished mostly lower, as yield on the 2-year note was up 2 basis points (bps) to 2.45%, while the yield on the 10-year note ticked 1 basis point higher to 2.60%, and the 30-year bond rate was flat at 3.01%.
The volatility in the markets may continue this week, with the start of the Federal Open Market Committee’s (FOMC) two-day monetary policy meeting tomorrow. The Committee is expected to leave the target range for the fed funds rate unchanged, and there will be a press conference by Fed Chairman Jerome Powell. However, the accompanying updated economic projections—particularly the glimpse at interest rate expectations, known as the “dot plot”—will likely garner scrutiny given the uncertainty regarding if the Fed will remain on hold through the end of the year. Tomorrow’s economic calendar will also include factory orders, forecasted to have increased 0.3% month-over-month (m/m) during January, while the final read on durable goods orders will also be released, with figures for the headline rate, orders ex-transportation and nondefense capital goods orders ex-aircraft to remain unrevised from the preliminary report.
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