Global Rout Continues…..
U.S. equities were sharply lower in today’s session amid continued anxiety over a resolution to the trade conflict, some disappointing manufacturing reports domestically and abroad, as well as some increased drama in Washington. Treasury yields were sharply lower and crude oil prices tumbled, while gold rallied and the U.S. dollar ticked lower. Earnings from the retail sector remained in focus, with shares of Best Buy down, despite beating the Street’s expectations, and L Brands benefiting from its results.
The Dow Jones Industrial Average (DJIA) fell 286 points (1.1%) to 25,490, the S&P 500 Index lost 34 points (1.2%) to 2,822, and the NASDAQ Composite plunged 123 points (1.6%) to 7,628. In moderate volume, 869 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil tumbled $3.51 to $57.91 per barrel and wholesale gasoline was down $0.08 at $1.91 per gallon. Elsewhere, the Bloomberg gold spot price jumped $10.98 to $1,284.32 per ounce, and the Dollar Index— a comparison of the U.S. dollar to six major world currencies—was down 0.2% at 97.87.
Weekly initial jobless claims declined by 1,000 to 211,000, compared to the Bloomberg estimate of a rise to 215,000, with the prior week’s figure being unrevised at 212,000. The four-week moving average fell by 4,750 to 220,250, while continuing claims rose by 12,000 to 1,676,000, north of estimates of 1,666,000.
The preliminary Market U.S. Manufacturing PMI Index showed growth unexpectedly slowed in May, declining to 50.6 from April’s unrevised 52.6 figure, where it was expected to remain. In addition, the preliminary Market U.S. Services PMI Index showed growth also surprisingly decelerated for the key U.S. sector this month, falling to 50.9 from April’s 53.0 figure, and versus expectations of a rise to 53.5. Readings above 50 for both indexes denote expansion.
New home sales fell 6.9% month-over-month (m/m) in April to an annual rate of 673,000 units versus forecasts calling for 675,000 units and the upwardly-revised 723,000 unit pace in March, which was the highest since October 2007. The median home price was up 8.8% y/y to $342,200, after hitting a two-year low. New home inventory rose to 5.9 months of supply at the current sales pace from 5.6 in March. Sales rose solidly m/m in the Northeast, but declined in Midwest, South and West. New home sales are based on contract signings instead of closings.
The May Kansas City Fed Manufacturing Activity Index declined to 4, from April’s unrevised level of 5, and versus forecasts of a rise to 6. However, a reading above zero denotes expansion.
Treasuries rallied, as the yields on the 2-year and 10-year notes dropped 8 basis points (bps) to 2.14% and 2.32%, respectively, and the 30-year bond rate declined 7 bps to 2.75%. The U.S. dollar gave up a solid early advance on the data and finished modestly lower. The markets have been choppy as of late, led by heightened volatility in the technology sector, amid escalated trade tensions and some mixed global economic data.
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