U.S. stocks were modestly higher but near the unchanged mark, with the global markets exhibiting caution ahead of tomorrow’s Fed monetary policy decision, and as investors digested stronger-than-expected reads on industrial production and homebuilder sentiment. Geopolitical concerns continued after the weekend’s attack on Saudi Arabian oil facilities. Crude oil prices gave back some of yesterday’s surge amid reports that Saudi Arabian output may be restored to normal sooner than expected. Treasury yields and the U.S. dollar were lower, while gold rose. In equity news, Kraft Heinz came under pressure after private equity firm 3G Capital Partners disclosed that it has pared its holding of the company, while Corning cut its outlook.
The Dow Jones Industrial Average (DJIA) rose 34 points (0.1%) to 27,111, the S&P 500 Index added 8 points (0.3%) to 3,006 and the Nasdaq Composite increased 32 points (0.4%) to 8,186. In moderate volume, 813 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil tumbled $3.56 to $59.34 per barrel and wholesale gasoline lost $0.07 to $1.68 per gallon. Elsewhere, the Bloomberg gold spot price increased $3.11 to $1,501.54 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.4% at 98.23.
The Federal Reserve’s industrial production rose 0.6% month-over-month (m/m) in August, above the Bloomberg estimate of a 0.2% increase, and July’s upwardly-adjusted 0.1% dip. Manufacturing, mining and utilities output all grew. Capacity utilization increased to 77.9% from the prior month’s unrevised 77.5% rate, and versus the expected 77.6%. Capacity utilization is 1.9 percentage points below its long-run average.
The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in September improved to 68 from August’s upwardly-revised 67 level, compared to forecasts of 66, with a level of 50 separating good and poor conditions. This was the eighth-straight month the index has been north of 60. The NAHB noted that, “Builders’ optimism in recent months is being fueled by low interest rates and solid home buyer demand. However, the trade dispute with China is a growing headwind for the industry, both raising the cost of construction inputs and holding back demand in parts of the country that rely on the manufacturing sector.”
Treasuries were higher, as the yield on the 2-year note declined 3 basis points (bps) to 1.72%, while the yields on the 10-year note and the 30-year bond dropped 4 bps to 1.81% and 2.27%, respectively.
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