Markets Extend Run on Positive Economic Data…..

U.S. stocks finished the day higher with the Nasdaq again notching fresh record highs and the S&P 500 pushing toward positive territory for 2020, with a host of positive June global manufacturing and services sector reports showing improvement and some denoting expansion. Stocks overcame an overnight scare on headlines that caused some confusion regarding U.S. and China trade relations, while also being boosted by speculation that additional stimulus could be on the way. Treasury yields were mixed, while the U.S. dollar resumed a soft patch as risk aversion eases. In other economic news, new home sales jumped more than expected and regional manufacturing output improved much more than projected. Crude oil prices slipped and gold saw demand. Spirit AeroSystems warned about potentially breaching financial covenants after receiving a letter from Dow member Boeing, Huntsman Corporation offered a mixed read on its business trends, and American Airlines increased its size of convertible bonds and equity offerings. Europe and Asia closed broadly higher.

The Dow Jones Industrial Average rose 131 points (0.5%) to 26,156, the S&P 500 Index increased 13 points (0.4%) to 3,131 and the Nasdaq Composite gained 75 points (0.7%) to 10,131. In heavy volume, 1.1 billion shares were traded on the NYSE and 5.6 billion shares changed hands on the NASDAQ. WTI crude oil pulled back $0.36 to $40.37 per barrel and wholesale gasoline was $0.01 higher at $1.30 per gallon. Elsewhere, the Bloomberg gold spot price advanced $16.17 to $1,770.60 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.3% at 96.70.

June business activity improves but shy of estimates, new home sales jump…..

The preliminary Markit U.S. Manufacturing PMI Index for June improved to 49.6 from May’s unrevised 39.8 figure, just shy of the Bloomberg consensus estimate calling for a rise to 50.0. The preliminary Markit U.S. Services PMI Index showed output for the key U.S. sector increased to 46.7 from May’s 37.5 figure, south of forecasts of an improvement to 48.0. Readings south of 50 for both indexes denote contraction. Markit said manufacturers and service providers alike registered much softer declines in output compared to May, signaling a notable slowdown in the rate of output contraction in June, as businesses began to reopen on a larger scale.

New home sales jumped 16.6% month-over-month (m/m) in May to an annual rate of 676,000, well above forecasts calling for a rise to 640,000 units from April’s downwardly-revised 580,000 unit level. The median home price was up 1.7% y/y at $317,900. New home inventory fell to a rate of 5.6 months of supply at the current sales pace from 6.7 months in April. May’s stronger-than-expected increase came as sales in the Northeast surged m/m, and were nicely higher in the South and West, while slipping in the Midwest. Compared to last year, sales were higher in all the regions. New home sales are based on contract signings, offering a timelier read on housing activity compared to the larger contributor of existing home sales, which are based on closings, and yesterday came in below expectations for May.

The Richmond Fed Manufacturing Activity Index for June rose solidly to the level separating contraction from expansion (a reading of zero). The index rose to 0 versus forecasts calling for the figure to improve to -2 from May’s -27 level.

Treasuries were mixed following some upbeat global manufacturing and services sector reports, with the yield on the 2-year note little changed at 0.19%, the yield on the 10-year note also little changed at 0.71%, while the 30-year bond rate increased 3 bps to 1.49%.

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