U.S. equities finished lower, despite more dovish comments from European Central Bank President Draghi following the central bank’s monetary policy decision, as investors were treated to a slew of mixed earnings and economic data. Tesla and Ford, along with Dow member Dow Inc, posted disappointing quarterly results, while Dow member 3M and Southwest Airlines topped expectations. Treasury yields were higher following a better-than-expected durable goods orders report and an unexpected fall in jobless claims. Crude oil prices gained ground, while the U.S. dollar ticked modestly higher and gold was lower.
The Dow Jones Industrial Average (DJIA) declined 129 points (0.5%) to 27,141, the S&P 500 Index shed 16 points (0.5%) to 3,004 and the Nasdaq Composite decreased 83 points (1.0%) to 8,239. In moderate volume, 842 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq. WTI crude oil inched $0.14 higher to $56.02 per barrel and wholesale gasoline was up $0.03 at $1.83 per gallon. Elsewhere, the Bloomberg gold spot price fell $11.94 to $1,413.92 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 97.82.
June preliminary durable goods orders rose 2.0% month-over-month (m/m), compared to the Bloomberg estimate of a 0.7% gain and May’s downwardly-revised 2.3% drop. Ex-transportation, orders were up 1.2% m/m, well above forecasts of a 0.2% rise and compared to May’s upwardly-adjusted 0.5% increase. Moreover, orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, advanced 1.9%, compared to projections of a 0.2% gain, and the prior month’s figure was downwardly-revised to a 0.3% rise. The main highlight of the report was the jump for non-defense capital goods excluding aircraft, which posted the largest gain in more than a year, per Bloomberg, and an unexpected increase in shipments of business equipment.
Weekly initial jobless claims fell by 10,000 to 206,000, versus estimates of 218,000, with the prior week’s figure being unrevised at 216,000. The four-week moving average fell by 5,750 to 213,000, while continuing claims declined by 13,000 to 1,676,000, south of estimates of 1,688,000.
The advance goods trade balance showed that the June deficit shrank by a smaller amount than anticipated, coming in at $74.2 billion versus estimates of $72.5 billion. May’s deficit was upwardly-revised to $75.0 billion.
Preliminary wholesale inventories rose 0.2% m/m for June, after May’s unrevised 0.4% increase, and compared to expectations of a 0.5% rise.
The July Kansas City Fed Manufacturing Activity Index unexpectedly slipped back to a level depicting contraction (a reading below zero), dipping to -1 from June’s unrevised level of 0, and versus forecasts of an increase to 3.
Treasuries were lower, as the yield on the 2-year note rose 3 basis points (bps) to 1.85%, while the yields on the 10-year note and the 30-year bond gained 2 bps to 2.07% and 2.61%, respectively.
The week’s economic calendar will culminate tomorrow with the first look (of three) at Q2 Gross Domestic Product (GDP), forecasted to show a 1.8% quarter-over-quarter (q/q) annualized growth rate, while personal consumption is expected to have increased 4.0% q/q, and the GDP Price Index and the core PCE Index are projected to have both advanced 2.0% q/q.
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