Markets Search for Direction…..

U.S. stocks finished mixed, as optimism surrounding signs of improving economic conditions, the flood of monetary and fiscal relief efforts, as well as progress out of the Health Care sector on finding a COVID-19 answer continued to provide support. However, worries of a potential second wave of the pandemic are high amid reports of new cases in the U.S. and China, tempered the enthusiasm. On the economic front, initial jobless claims remained severely elevated but continued to moderate, manufacturing activity in Philadelphia surprisingly jumped into expansion territory, and the Leading Index rebounded more than expected. Treasury yields were mostly lower as bond prices moved higher, and the U.S. dollar rose. In equity news, Carnival Corporation posted a much larger-than-expected loss and Kroger topped quarterly forecasts but noted heightened COVID-19 uncertainty, while T-Mobile US raised its guidance for a key subscriber metric. Gold was lower and crude oil prices gained ground. Europe finished lower on the COVID-19 tepidness and as the Bank of England boosted its asset purchase program, while markets in Asia were mixed.

The Dow Jones Industrial Average fell 40 points (0.2%) to 26,080, the S&P 500 Index increased 2 points (0.1%) to 3,115 and the Nasdaq Composite gained 33 points (0.3%) to 9,943. In moderately-heavy volume, 1.0 billion shares were traded on the NYSE and 4.2 billion shares changed hands on the NASDAQ. WTI crude oil moved $0.88 higher to $38.84 per barrel and wholesale gasoline gained $0.04 to $1.26 per gallon. Elsewhere, the Bloomberg gold spot price declined $1.98 to $1,724.97 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.3% at 97.43.

Jobless claims remain severely elevated, Philly surprisingly sees growth, LEI rebounds…..

Weekly initial jobless claims came in at 1,508,000 for the week ended June 13th, above the Bloomberg estimate of 1,290,000, and compared to the prior week’s upwardly-revised 1,566,000 level. The four-week moving average fell by 234,500 to 1,773,500, while continuing claims declined by 62,000 to 20,544,000, north of estimates of 19,850,000. The four-week moving average of continuing claims for the week ended June 6th dropped by 1,092,000 to 20,814,750.

The Philly Fed Manufacturing Index in June unexpectedly surged into expansion territory (a reading above zero), jumping to 27.5 from the -43.1 posted the month prior, and versus expectations of an improvement to -21.4. New orders and shipments led the surprising charge back to growth, while the contraction in employment decelerated.

The Conference Board’s Index of Leading Economic Indicators (LEI) for May rose 2.8% month-over-month (m/m), compared to projections of a 2.4% rise, rebounding from April’s downwardly-revised 6.1% drop and March’s 7.5% fall, which was the biggest monthly decline on record. The LEI saw a sharp positive contribution from the moderation in severely elevated jobless claims, the average workweek, building permits and stocks prices, while ISM new orders continued to weigh noticeably on the index.

Treasuries were mixed amid continued choppiness, as the yield on the 2-year note was little changed at 0.19%, the yield on the 10-year note declined 3 basis points (bps) to 0.70%, and the 30-year bond rate decreased 6 bps to 1.47%.

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