While the bulls gave it a valiant effort, with the Dow and S&P 500 clawing their way out of an early hole, pressure from the technology sector on a warning from Broadcom was hard to overcome, with stocks finishing lower, while a mixed bag of economic data domestically and abroad, as well as heightened geopolitical tensions in the Middle East added to the negative sentiment. Treasury yields were mixed and the U.S. dollar gained ground following the economic reports, while crude oil prices bounced off of their lows to trade higher, adding to yesterday’s gains in the wake of attacks on tankers in the Gulf of Oman, while gold finished slightly lower, paring solid early gains.
The Dow Jones Industrial Average (DJIA) declined 17 points (0.1%) to 26,090, the S&P 500 Index lost 5 points (0.2%) to 2,887, and the Nasdaq Composite fell 40 points (0.5%) to 7,797. In moderate volume, 732 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil advanced $0.23 to $52.51 per barrel and wholesale gasoline was up $0.01 at $1.73 per gallon. Elsewhere, the Bloomberg gold spot price traded $1.57 lower to $1,341.10 per ounce, and the Dollar Index— a comparison of the U.S. dollar to six major world currencies—rose 0.6% to 97.56. Markets were higher for the week, as the DJIA rose 0.4%, the S&P 500 Index increased 0.5%, and the Nasdaq Composite was 0.7% higher.
Advance retail sales for May rose 0.5% month-over-month (m/m), versus the Bloomberg forecast of a 0.6% increase, and April’s 0.2% decline was favorably-revised to a 0.3% gain. Last month’s sales ex-autos moved 0.5% higher m/m, compared to expectations of a 0.4% gain and April’s upwardly-revised 0.5% rise. Sales ex-autos and gas also increased 0.5%, compared to estimates of a 0.4% gain, and April’s favorably-adjusted 0.1% increase. The control group, a figure used to calculate GDP, gained 0.5%, versus projections of a 0.4% rise. Gains were seen in sales for sporting goods, hobby, musical instruments and book stores, as well as electronics and at non-store retailers, which includes online venues, while food & beverage establishments moderated slightly.
The Federal Reserve’s industrial production rose 0.4% m/m in May, compared to estimates calling for a 0.2% increase, and April’s 0.5% decline was revised to a 0.4% decrease. Manufacturing and mining output both gained ground, while utilities production also increased. Capacity utilization rose to 78.1% from the prior month’s unrevised 77.9% rate, a tick above forecasts of 78.0%. Capacity utilization is 1.7 percentage points below its long-run average.
The June preliminary University of Michigan Consumer Sentiment Index fell to 97.9 from May’s read of 100.0, slightly below the 98.0 expectation. A rise in the current conditions component of the index was tempered by a decline in the index of consumer expectations. The 1-year inflation forecast declined to 2.6% from 2.9%, and the 5-10 year inflation forecast decreased to 2.2% from the previous 2.6% rate, its lowest level in the history of the measure.
Business inventories rose 0.5% m/m in April, in line with forecasts, while March’s flat reading was unrevised.
Treasuries were mixed, as the yield on the 2-year note was up 2 basis points (bps) to 1.84%, while the yield on the 10-year note was flat at 2.08%, and the 30-year bond rate was down 1 basis point at 2.59%.
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