U.S. equities finished out the trading session higher, as some stabilization in global bond yields and confirmation from China that it and the U.S. have continued talks, without any suggestion of retaliatory measures, boosted sentiment. Global bond yields appeared to have stabilized somewhat, adding further support. In equity news, Best Buy offered mixed quarterly results, but Dollar General handily surpassed the Street’s expectations. The economic calendar was also robust, as Q2 GDP was revised slightly lower but in line with estimates and personal consumption was adjusted upward, jobless claims nudged higher and the trade deficit unexpectedly shrank. Treasury yields were higher, as was the U.S. dollar and crude oil prices, while gold was lower.
The Dow Jones Industrial Average (DJIA) rose 326 points (1.3%) to 26,362 the S&P 500 Index advanced 37 points (1.3%) to 2,925 and the Nasdaq Composite increased 117 points (1.5%) to 7,973. In moderately-light volume, 712 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.93 higher to $56.71 per barrel and wholesale gasoline was up $0.01 at $1.57 per gallon. Elsewhere, the Bloomberg gold spot price lost $10.36 to $1,528.65 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.3% higher to 98.47.
Q2 GDP revised slightly lower, jobless claims nudge higher…..
The second look (of three) at Q2 Gross Domestic Product, the broadest measure of economic output, showed a quarter-over-quarter (q/q) annualized rate of growth of 2.0%, from the first release’s 2.1% gain, matching the Bloomberg forecast. Q1 GDP grew by an unrevised 3.1% rate. Personal consumption was revised to a 4.7% increase, from the first estimate of a 4.3% gain, where it was expected to remain, and compared to the unrevised 1.1% rise seen in Q1.
On inflation, the GDP Price Index was unrevised at a 2.4% increase, matching estimates, while the core PCE Index, which excludes food and energy, was adjusted to a 1.7% rise, from the previous estimate of a 1.8% increase, compared to forecasts to be unadjusted.
Weekly initial jobless claims rose by 4,000 to 215,000, versus estimates of 214,000, with the prior week’s figure being revised higher by 2,000 to 211,000. The four-week moving average dipped by 500 to 214,500, while continuing claims increased by 22,000 to 1,698,000, north of estimates of 1,686,000.
The advance goods trade balance showed that the July deficit unexpectedly shrank, coming in at $72.3 billion versus estimates of $74.4 billion. June’s deficit was unrevised at $74.2 billion.
Preliminary wholesale inventories rose 0.2% month-over-month (m/m) for July, after June’s unrevised flat reading, and in line with expectations.
Pending home sales fell 2.5% m/m in July, versus projections of a flat reading, and following the unrevised 2.8% gain registered in June. Sales were 1.7% higher y/y, compared to the expected 1.8% rise. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.
Treasuries were lower, as the yield on the 2-year note ticked 1 basis point (basis point) higher to 1.52%, the yield on the 10-year note gained 3 bps to 1.50%, and the 30-year bond rate advanced 2 bps to 1.96%.
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