U.S. equities finished with modest increases, but snapped a string of weekly gains, amid palpable caution ahead of the highly-anticipated meeting between President Trump and Chinese President Xi tomorrow. An unexpected contraction in domestic regional manufacturing activity and an earnings miss by Dow member Nike also helped to keep gains in check. Treasury yields and the U.S. dollar were nearly unchanged as the data was joined by a mixed personal income and spending report and slight upward revision to consumer sentiment. Crude oil prices were lower and gold was higher. Elsewhere on the equity front, Constellation Brands was higher following an upbeat earnings report and increased guidance.
The Dow Jones Industrial Average (DJIA) rose 73 points (0.3%) to 26,600, the S&P 500 Index gained 17 points (0.6%) to 2,942, and the Nasdaq Composite added 39 points (0.5%) to 8,006. In heavy volume, 2.0 billion shares were traded on the NYSE and 3.7 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.96 to $58.47 per barrel and wholesale gasoline was down $0.01 at $1.90 per gallon. Elsewhere, the Bloomberg gold spot price inched $0.90 higher to $1,410.68 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 96.19. Markets were lower for the week, as the DJIA declined 0.5%, while the S&P 500 Index and the Nasdaq Composite decreased 0.4%.
Personal income rose 0.5% month-over-month (m/m) in May, versus the Bloomberg forecast of a 0.3% gain, and matching April’s unrevised rise. Personal spending increased 0.4%, below estimates of a 0.5% increase, and following April’s upwardly-revised 0.6% rise. The May savings rate as a percentage of disposable income was 6.1%. The PCE Deflator was up 0.2% m/m, matching expectations and below the prior month’s unrevised 0.3% advance. Compared to last year, the deflator was 1.5% higher, in line with expectations and compared to the upwardly-revised 1.6% rise seen in April. Excluding food and energy, the PCE Core Index was up 0.2% m/m, matching expectations and April’s unadjusted increase. The index was 1.6% higher y/y, above estimates of a 1.5% rise, and in line with April’s unrevised rise.
The final June University of Michigan Consumer Sentiment Index was unexpectedly adjusted higher to 98.2, from the preliminary figure of 97.9, where it was expected to remain. The index was below May’s 100.0 level. The 1-year inflation forecast fell to 2.7% from May’s 2.9% rate, and the 5-10 year inflation outlook dropped to 2.3% from 2.6%.
The Chicago PMI Index fell to 49.7 in June from May’s 54.2 level and compared to the expected decrease to 53.5. This was the first figure in contraction territory (a reading below 50) since January 2017 as new orders and order backlogs both contracted, more than offsetting continued expansion in production and employment.
Treasuries finished unchanged, as the yields on the 2-year and 10-year notes, along with the 30-year bond, were flat at 1.73%, 2.01% and 2.53%, respectively.
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