U.S. equities finished the trading session mixed, but notched solid gains for the week, as optimism surrounding cooled U.S.-China trade worries and stabilization in Treasury yields came up against some mixed earnings and economic data. As well, volume was a bit lighter than usual ahead of the three-day Labor Day holiday weekend. On the earnings front, Ulta Beauty missed expectations and lowered its guidance, but Campbell Soup provided upbeat quarterly figures. In economic news, personal income missed the Street’s forecast, but spending topped expectations, a read on regional manufacturing activity returned to expansion territory, and consumer sentiment saw a sharp decline. Treasury yields finished lower and the U.S. dollar gained solid ground, while gold and crude oil prices fell.
The Dow Jones Industrial Average (DJIA) rose 41 points (0.2%) to 26,403, the S&P 500 Index added 2 points (0.1%) to 2,926 and the Nasdaq Composite declined 11 points (0.1%) to 7,963. In moderately-light volume, 858 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq. WTI crude oil moved $1.61 lower to $55.10 per barrel and wholesale gasoline was down $0.04 at $1.53 per gallon. Elsewhere, the Bloomberg gold spot price declined $3.83 to $1,523.80 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.4% to 98.87. Markets were higher for the week, as the DJIA increased 3.0%, the S&P 500 Index gained 2.8% and the Nasdaq Composite advanced 2.7%.
Personal income ticked 0.1% higher month-over-month (m/m) in July, versus the Bloomberg forecast of a 0.3% gain, and versus June’s upwardly-revised 0.5% rise. Personal spending rose 0.6%, above estimates of a 0.5% increase, and following June’s unrevised 0.3% rise. The July savings rate as a percentage of disposable income was 7.7%. The PCE Deflator was up 0.2% m/m, in line with expectations and compared to the prior month’s unrevised 0.1% advance. Compared to last year, the deflator was 1.4% higher, matching expectations and compared to June’s downwardly-revised 1.3% rise. Excluding food and energy, the PCE Core Index was 0.2% higher m/m, in line with expectations calling for it to be in line with June’s unadjusted gain. The index was 1.6% higher y/y, in line with estimates to match June’s unrevised rise.
The final August University of Michigan Consumer Sentiment Index (chart) was downwardly-adjusted to 89.8, from the preliminary figure of 92.1, compared to estimates of 92.4. The index was below July’s 98.4 level and hit the lowest level since October 2016. Both the current conditions and expectations components of the index fell. The 1-year inflation forecast ticked higher to 2.7% from July’s 2.6% rate, and the 5-10 year inflation outlook rose to 2.6% from 2.5%.
The Chicago PMI Index surprisingly moved back to a level depicting expansions (a reading above 50), rising to 50.4 in August from July’s 44.4 level and compared to the expected increase to 47.5. This snapped a string of two months in contraction territory as new orders and order backlog regained expansion territory, while contractions in employment and production decelerated.
Treasuries finished higher, as the yields on the 2-year and 10-year notes, along with the 30-year bond were 2 basis points (bps) lower at 1.50%, 1.50% and 1.96%, respectively.
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