U.S. equities started the week off on a positive note, as hopes that the Fed’s meeting later in the week may provide more clarity to the increased notion of a rate cut in the offing aided sentiment. But, caution ahead of the meeting, an unexpected drop in regional manufacturing activity, and a decline in homebuilder sentiment kept the gains in check. M&A headlines were the main theme for the equity front, as Dow member Pfizer agreed to acquire Array BioPharma for about $10.6 billion and Sotheby’s will be taken private by media and telecom entrepreneur Patrick Drahi in a $3.7 billion deal. Treasury yields were mixed and the U.S. dollar was little changed, while gold dipped, and crude oil prices were modestly lower.
The Dow Jones Industrial Average (DJIA) rose 23 points (0.1%) to 26,113, the S&P 500 Index gained 3 points (0.1%) to 2,890, and the Nasdaq Composite advanced 48 points (0.6%) to 7,845. In light volume, 682 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.58 to $51.93 per barrel and wholesale gasoline was down $0.04 at $1.69 per gallon. Elsewhere, the Bloomberg gold spot price traded $1.72 lower to $1,339.98 per ounce, and the Dollar Index— a comparison of the U.S. dollar to six major world currencies—was unchanged at 97.56.
The Empire Manufacturing Index showed output from the New York region surprisingly fell to contraction territory (a reading below zero) for June. The index dropped to -8.6 from May’s unrevised 17.8 level, with the Bloomberg forecast calling for a decline to 11.0. This was the lowest level for the index since 2016 as new orders and employment both fell.
The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in June decreased to 64 from May’s unrevised 66 level, versus estimates of 67, with a level of 50 separating good and poor conditions. The NAHB said, “While demand for single-family homes remains sound, builders continue to report rising development and construction costs, with some additional concerns over trade issues.”
Treasuries were mixed, as the yield on the 2-year note rose 2 basis points (bps) to 1.86%, while the yields on the 10-year note and 30-year bond ticked 1 basis point lower to 2.08% and 2.58%, respectively.
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