Stocks Mixed, but Nasdaq Adds Another Record…..

U.S. equities were mixed, paring some of the rally that the markets have seen of late that has pushed the Nasdaq back to record highs and has the S&P 500 within shouting distance of positive territory for the year. Investors weighed the move off of the March lows that has come amid optimism surrounding economic momentum as global economies have reopened from the severe COVID-19 disruption, as well as the flood of fiscal and monetary policy stimulus measures. The Fed began its two-day monetary policy meeting today, in the wake of last-Friday’s surprisingly positive May employment report. Meanwhile, economic news was mixed, as small business optimism improved, but job openings fell more than expected. Treasury yields finished lower, as bond prices rebounded, and the U.S. dollar added to a recent decline, while crude oil prices reversed to the upside and gold advanced. In equity news, Tiffany & Co posted an unexpected loss, but its relatively upbeat commentary boosted its shares, Macy’s posted a smaller-than-forecasted shortfall, while shares of Chesapeake Energy plunged lower after being halted for news pending. Europe was mostly lower and markets in Asia were mixed.

The Dow Jones Industrial Average fell 300 points (1.1%) to 27,272 and the S&P 500 Index lost 25 points (0.8%) to 3,207, while the Nasdaq Composite advanced 29 points (0.3%) to 9,954. In heavy volume, 1.2 billion shares were traded on the NYSE and 5.3 billion shares changed hands on the NASDAQ. WTI crude oil gained $0.75 to $38.94 per barrel and wholesale gasoline added $0.01 to $1.21 per gallon. Elsewhere, the Bloomberg gold spot price increased $15.41 to $1,713.94 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.3% at 96.36.

Small business optimism improves, job openings decline, Fed begins policy meeting…..

The National Federation of Independent Business (NFIB) Small Business Optimism Index for May rose to 94.4, from April’s 90.9 level, compared to the Bloomberg estimate of an increase to 92.5. The NFIB said, “As states begin to reopen, small businesses continue to navigate the economic landscape rocked by COVID-19 and new government policies,” but “It’s still uncertain when consumers will feel comfortable returning to small businesses and begin spending again, but owners are taking the necessary precautions to reopen safely.”

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, declined by a larger amount than expected to 5.05 million jobs available to be filled in April, from March’s downwardly-revised 6.01 million figure and compared to forecasts calling for 5.75 million. The report showed the hiring rate fell to 2.7% from March’s 3.4% rate and separations dropped to 7.5% from 9.7%.

April wholesale inventories were revised lower to a 0.3% month-over-month (m/m) rise, versus expectations to remain at the preliminary estimate of a 0.4% increase, and compared to March’s negatively-revised 1.1% drop. Sales tumbled 16.9%, following March’s favorably-revised 5.1% drop.

Finally, the Federal Open Market Committee (FOMC) began its two-day monetary policy meeting today, and in light of last-Friday’s unexpectedly positive Labor Report, the FOMC’s is not expected to change its monetary policy stance but its accompanying updated economic projections from policymakers and subsequent press conference from Fed Chairman Jerome Powell are likely to be highly scrutinized.

Treasuries rose, as the yield on the 2-year note declined 3 basis points (bps) to 0.20%, the yield on the 10-year note decreased 6 bps to 0.82%, and the 30-year bond rate dropped 7 bps to 1.58%.

Bond yields trimmed a recent rise that has been especially noticeable on the mid-to-long end of the curve, amid the rally in the stock markets and the backdrop of the massive amount of monetary and fiscal policy stimulus and last-Friday’s unexpected rise in May employment.

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