Markets Stage Rousing Comeback…..
U.S. equities were able to climb out of a deep hole to finish mixed, with the S&P 500 and Nasdaq able to add to yesterday’s rebound, but the Dow remained in negative territory as Dow member Walt Disney was a drag on the blue chip index following its disappointing earnings release. The comeback came amid some stabilization in bond yields that have tanked as of late and exacerbated global growth worries, as Treasury yields bounced off their lows to finish only modestly in the red. However, persistent uncertainty amid the escalated U.S.-China trade tensions continued to keep conviction at bay. The U.S. dollar finished little changed, with a rise in mortgage applications and a lower-than-expected expansion in consumer credit providing negligible effect, while crude oil prices tumbled following a bearish oil inventory report and gold continued to rally.
The Dow Jones Industrial Average (DJIA) declined 22 points (0.1%) to 26,007, the S&P 500 Index gained 2 points (0.1%) to 2,884 and the Nasdaq Composite gained 30 points (0.4%) to 7,863. In heavy volume, 1.0 billion shares were traded on the NYSE and 2.4 billion shares changed hands on the Nasdaq. WTI crude oil tumbled $2.54 to $51.09 per barrel and wholesale gasoline was down $0.07 at $1.62 per gallon. Elsewhere, the Bloomberg gold spot price jumped $23.80 to $1,498.22 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 97.61.
Treasury yields continue to fall, mortgage applications rise, consumer credit expands…..
The MBA Mortgage Application Index rose 5.3% last week, following the prior week’s 1.4% decline. The increase came as an 11.8% jump in the Refinance Index more than offset a 2.0% decline for the Purchase Index. The average 30-year mortgage rate slipped 7 basis points (bps) to 4.01%.
Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $14.6 billion during June, below the $16.1 billion forecast of economists polled by Bloomberg, while May’s figure was adjusted upward to an increase of $17.8 billion from the originally reported $17.1 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $14.7 billion, a 5.8% increase year-over-year (y/y) and the largest increase since December, while revolving debt, which includes credit cards, fell by $0.1 billion, a 0.1% y/y decline.
Treasuries pared gains to finish modestly higher, as the yield on the 2-year note declined 2 basis points (bps) to 1.59%, the yield on the 10-year note fell 3 bps to 1.71%, and the 30-year bond rate shed 4 bps to 2.23%. Bond yields have fallen to multi-year lows, while the U.S. dollar dipped and gold prices extended a rally. The global markets have become unnerved by the escalating trade tensions between the U.S. and China.
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