U.S. equities were modestly lower with investors waiting for the Fed’s monetary policy decision tomorrow, while also digesting a slew of earnings reports and economic data. Dow members Procter & Gamble and Merck & Co posted upbeat quarterly results, while Under Armour was lower on its guidance and Beyond Meat saw heavy pressure after it announced a 3.25 million secondary share offering. On the economic front, personal income and spending rose and Consumer Confidence jumped, while pending home sales were well above estimates. Treasury yields finished nearly unchanged, as did the U.S. dollar, while crude oil prices jumped and gold also gained ground.
The Dow Jones Industrial Average (DJIA) fell 22 points (0.1%) to 27,199, the S&P 500 Index declined 8 points (0.3%) to 3,013 and the Nasdaq Composite lost 20 points (0.2%) to 8,274. In moderate volume, 773 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.18 to $58.05 per barrel and wholesale gasoline was up $0.03 at $1.85 per gallon. Elsewhere, the Bloomberg gold spot price gained $4.77 to $1,431.57 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 98.06.
Personal income rose 0.4% month-over-month (m/m) in June, matching the Bloomberg forecast and versus May’s downwardly-revised 0.4% rise. Personal spending increased 0.3%, in line with estimates, and following May’s upwardly-revised 0.5% rise. The June savings rate as a percentage of disposable income was 8.1%. The PCE Deflator was up 0.1% m/m, matching expectations and the prior month’s downwardly-revised advance. Compared to last year, the deflator was 1.4% higher, compared to expectations of a 1.5% gain and in line with May’s downwardly-revised rise. Excluding food and energy, the PCE Core Index was up 0.2% m/m, in line with expectations and May’s unadjusted gain. The index was 1.6% higher y/y, below estimates of a 1.7% rise, and versus May’s downwardly-revised 1.5% rise.
The Consumer Confidence Index rose to 135.7 in July, from June’s upwardly-revised 124.3 level, above estimates of 125.0. The index posted the highest level since November 2018, as the Present Situation Index and the Expectations Index of business conditions for the next six months both improved m/m. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—rose to 33.4 from the 28.2 level posted in June.
Pending home sales gained 2.8% m/m in June, versus projections of a 0.5% increase, and following the unrevised 1.1% gain registered in May. Sales were 0.6% lower y/y, compared to the expected 0.7% rise. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.
The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 2.4% y/y gain in home prices in May, matching expectations. M/M, home prices were up 0.1% on a seasonally adjusted basis, compared to forecasts of a 0.2% gain.
The conclusion of the Federal Open Market Committee’s (FOMC) two-day monetary policy meeting, will likely garner the lion’s share of attention tomorrow, as it is highly anticipated that the central bank will deliver a rate cut. However, uncertainty continues to linger regarding the size of any reduction. The decision will not be accompanied by updated economic projections but the press conference following the announcement from Chairman Jerome Powell will likely be closely scrutinized for clues to whether further reductions may be in offing for this year.
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