U.S. stocks mostly gave back yesterday’s rebound as the persistent pressure on global bond yields and the ensuing inversion of a key portion of the U.S. Treasury yield curve kept market uneasiness festering, along with more disappointing Chinese economic data. A favorable read on the trade deficit kept losses limited, along with a rally in the housing sector as the falling interest rates were joined by earnings reports from KB Home and Lennar, and a third-straight weekly gain in mortgage applications. The U.S. dollar rose and crude oil prices were lower following an unexpected rise in oil inventories, and gold saw some pressure.
The Dow Jones Industrial Average (DJIA) declined 32 points (0.1%) to 25,626, the S&P 500 Index was 13 points (0.5%) lower at 2,805, and the NASDAQ Composite decreased 48 points (0.6%) to 7,643. In moderate volume, 822 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil fell $0.53 to $59.41 per barrel and wholesale gasoline lost $0.04 to $1.87 per gallon. Elsewhere, the Bloomberg gold spot price moved $6.01 lower to $1,309.68 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.1% to 96.88.
The trade balance showed that the deficit shrank more than expected to $51.1 billion in January, compared to Bloomberg estimates of $57.0 billion. December’s deficit was revised higher to $59.9 billion. Exports were up 0.9% month-over-month (m/m) at $207.3 billion, while imports were down 2.6% to $258.4 billion.
The MBA Mortgage Application Index rose 8.9% last week, following the prior week’s 1.6% increase. The gain came as a 12.4% jump in the Refinance Index was met with a 6.4% increase for the Purchase Index. The average 30-year mortgage rate moved 10 basis points (bps) lower to 4.45%.
Treasuries were higher, with the yield on the 2-year note falling 6 bps to 2.20%, while the yields on the 10-year note and the 30-year bond dropped 5 bps to 2.38% and 2.82%, respectively. Treasury yields resumed their decline after yesterday’s pause and the U.S. dollar extended Tuesday’s gain that came in the wake of the heightened volatility surrounding last week’s gloomier Fed global outlook and slightly more dovish tone as well as wavering global growth concerns.
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