U.S. equities finished lower, paring back on a record-breaking run that has come courtesy of soothed trade concerns, eased recession worries, as well as continued accommodative monetary policies from global central banks. Equity news was on the light side, with Restaurant Brands International making some management changes and Wave Life Sciences sharply lower after announcing mixed results from a trial of its treatment for Huntington’s disease. Treasury yields were mixed following some economic news that showed the trade deficit unexpectedly narrowed, Chicago manufacturing output improved but remained in contraction territory, and pending home sales missed forecasts. Elsewhere, gold was higher, while crude oil prices and the U.S. dollar were lower.
The Dow Jones Industrial Average fell 183 points (0.6%) to 28,462, the S&P 500 Index was down 19 points (0.6%) to 3,221 and the Nasdaq Composite declined 61 points (0.7%) to 8,946. In light-to moderate volume, 689 million shares were traded on the NYSE and 2.0 billion shares changed hands on the NASDAQ. WTI oil nudged $0.04 lower to $61.72 per barrel and wholesale gasoline shed $0.02 to $1.72 per gallon. Elsewhere, the Bloomberg gold spot price rose $4.69 to $1,515.25 per ounce and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.2% to 96.77.
The advance goods trade balance showed that the November deficit surprisingly narrowed, coming in at $63.2 billion versus the Bloomberg estimate of $68.7 billion. October’s deficit was unrevised at $66.5 billion.
The Chicago PMI improved more than expected but remained at a level depicting contraction (a reading below 50) for a fourth-straight month, rising to 48.9 in December from November’s 46.3 level and compared to expectations of a 47.9 reading. Production fell at a slower pace but new orders and employment contracted at faster paces.
Preliminary wholesale inventories came in flat month-over-month (m/m) for November, below expectations of a 0.2% increase, and versus October’s downwardly-revised flat pace.
Pending home sales rose 1.2% m/m in November, versus projections of a 1.4% gain, and following the downwardly-revised 1.3% fall registered in October. Sales were 5.6% higher y/y, compared to the expected 7.4% rise. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.
The December Dallas Fed Manufacturing Index surprisingly fell further into a level depicting contraction (a reading below zero), dropping to -3.2 from -1.3 in November, and versus expectations of an increase to 0.0.
Treasuries were mixed, as the yield on the 2-year note lost 2 basis points (bps) to 1.56%, while the yields on the 10-year note and the 30-year bond gained 3 bps to 1.89% and 2.34%, respectively. Bond yields have moved higher as of late, with the U.S. and China reaching a “phase one” trade deal, the U.S. Mexico and Canada trade agreement (USMCA) receiving approval, and global economic data showing signs of a potential bottom, all amid the backdrop of highly accommodative monetary policies across the globe.
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