U.S. equities finished with solid gains, paring some of a recent tumble that has come courtesy of escalated U.S.-China trade tensions. Comments from President Trump of expectations for a “fruitful” meeting with Chinese President Xi at June G-20 summit may have calmed nerves a bit to aid in the rebound. Treasury yields were modestly higher after falling sharply yesterday, and the U.S. dollar also gained ground, as a read on small business optimism improved more than expected and import prices were cooler than forecasts. Meanwhile, crude oil prices rose and gold was slightly lower. News on the equity front was light, with shares of Ralph Lauren suffering following a large miss on earnings, while Walt Disney and Comcast came to an agreement surrounding HULU’s future.
The Dow Jones Industrial Average (DJIA) rose 207 points (0.8%) to 25,532, the S&P 500 Index increased 23 points (0.8%) to 2,835, and the NASDAQ Composite gained 88 points (1.1%) to 7,735. In moderate volume, 769 million shares were traded on the NYSE and 2.0 billion shares changed hands on the NASDAQ. WTI crude oil added $0.74 to $61.78 per barrel and wholesale gasoline was $0.02 higher at $1.96 per gallon. Elsewhere, the Bloomberg gold spot price decreased $3.19 to $1,296.72 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 97.53.
The National Federation of Independent Business (NFIB) Small Business Optimism Index for April rose to 103.5 from March’s unrevised 101.8 level, and versus the Bloomberg expectation of an increase to 102.0. The report showed sales improved in April, the inventory soft spot seen in last month’s report rebounded, and profit trends posted a very solid advance. Moreover, job creation plans gained, hiring remained strong, and expectations for sales, business conditions, and credit conditions all improved. The NFIB said, “America’s small and independent businesses are rebounding from the first quarter ‘shut down, slow down’ and don’t appear to be looking back. April’s Index is further evidence that when certainty and stability increase, so do optimism and action.”
The Import Price Index rose 0.2% month-over-month (m/m) for April, below projections of a 0.7% gain, and following March’s unrevised 0.6% gain. Compared to last year, prices were down 0.2%, versus forecasts of a 0.3% gain and compared to March’s upwardly-revised 0.1% increase.
Treasuries dipped, as the yields on the 2-year and 10-year notes, along with the 30-year bond, ticked 1 basis point higher to 2.19%, 2.42% and 2.85%, respectively. Bond yields recovered slightly from yesterday’s drop and the U.S. Dollar Index also modestly rebounded. The stock markets bounced back after yesterday’s selloff, which was the largest one-day fall for the S&P 500 since January 3rd. Volatility has ramped up amid escalated trade tensions and uncertainty after the U.S. on Friday increased tariffs on Chinese goods and U.S.-China talks ended without a deal last week, while China retaliated with increased levies on U.S. goods.
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