U.S. equities finished higher, as upbeat domestic economic data, as well as President Trump’s announcement that the U.S. and Japan have reached a preliminary trade agreement and that a deal with China may be closer than originally thought, overshadowed heightened political noise out of Washington to boost sentiment. Treasury yields and the U.S. dollar gained ground after new home sales jumped and topped estimates, while gold and crude oil prices fell. In equity news, Dow member Nike bested quarterly expectations, while Altria Group and Philip Morris ended merger discussions.

The Dow Jones Industrial Average (DJIA) rose 163 points (0.6%) to 26,971, the S&P 500 Index increased 18 points (0.6%) to 2,985 and the Nasdaq Composite advanced 84 points (1.1%) to 8,077. In moderate volume, 835 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.80 to $56.49 per barrel and wholesale gasoline lost $0.03 to $1.60 per gallon. Elsewhere, the Bloomberg gold spot price plunged $27.28 to $1,504.59 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rallied 0.7% to 99.00.

New home sales rose 7.1% month-over-month (m/m) in August to an annual rate of 713,000 units, versus the Bloomberg forecast calling for 658,000 units and above July’s upwardly-revised 666,000 unit pace. The median home price was up 2.2% y/y at $328,400. New home inventory declined to 5.5 months of supply at the current sales pace from 5.9 in July. Sales jumped m/m in the West and were solidly higher in the South, but fell in the Midwest and Northeast. New home sales are based on contract signings instead of closings.

The MBA Mortgage Application Index fell 10.1% last week, following the prior week’s 0.1% dip. The decline came as a 15.2% tumble in the Refinance Index was met with a 3.1% drop for the Purchase Index. The average 30-year mortgage rate ticked 1 basis point higher to 4.02%.

Treasuries declined, as the yield on the 2-year note rose 7 bps to 1.68%, the yield on the 10-year note was up 9 bps to 1.73%, and the 30-year bond rate gained 8 bps to 2.17%.

©2019 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.