U.S. equities finished higher, with the S$P 500 notching another record high, as optimism of a U.S.-China trade deal continued to lend support, and ahead of a heavy dose of earnings and economic data, headlined by the Fed’s monetary policy decision, set for this week. In earnings news, AT&T and Dow member Walgreens Boots Alliance posted upbeat results. Outside of earnings, the United Auto Workers have reportedly ended a 40-day strike at GM and Tiffany & Co surged after confirming that it received a $14.5 billion takeover proposal from French luxury goods maker LVMH. Treasury yields were higher, while crude oil prices, gold and the U.S. dollar were lower. The trade deficit unexpectedly narrowed in September, but regional manufacturing activity unexpectedly fell back into contraction territory.

The Dow Jones Industrial Average (DJIA) increased 133 points (0.5%) to 27,091, the S&P 500 Index gained 17 points (0.4%) to 3,039 and the Nasdaq Composite advanced 83 points (1.0%) to 8,326. In moderate volume, 771 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.85 to $55.81 per barrel and wholesale gasoline was down $0.01 at $1.63 per gallon. Elsewhere, the Bloomberg gold spot price was $12.10 lower at $1,492.53 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.1% to 97.73.

Trade deficit narrows, regional manufacturing activity falls into contraction…..

The advance goods trade balance showed that the September deficit unexpectedly narrowed, coming in at $70.4 billion versus the Bloomberg estimate of $73.5 billion. August’s deficit was revised higher to $73.1 billion.

Preliminary wholesale inventories declined 0.3% month-over-month (m/m) for September, compared to expectations of a 0.2% gain, and versus August’s negatively-revised flat reading.

The October Dallas Fed Manufacturing Index surprisingly fell to a level depicting contraction (a reading below zero), dropping to -5.1 from 1.5 in September, and versus expectations of a decline to 1.0.

Treasuries were lower, as the yield on the 2-year note rose 2 basis points (bps) to 1.65%, while the yields on the 10-year note and the 30-year bond increased 5 bps to 1.84% and 2.34%, respectively.

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