Stocks Put Positive Finishing Touches to Choppy Week…..
U.S. stocks finished higher with the technology sector extending a recent surge that returned the Nasdaq back to record highs, while equities that have been punished by uneasiness regarding the persistent rise in new COVID-19 cases in the U.S. rebounded. Gilead Sciences contributed to the rebound of economic “reopening” stocks after it announced more positive results from a study of its COVID-19 treatment candidate known as Remdesivir. WD-40 missed quarterly expectations, Ford Motor Company warned of supply shortages out of Mexico, United Airlines reportedly reached a tentative deal on furloughs and retirement packages, and Carnival Corporation provided a relatively upbeat business update. Treasury yields reversed modestly higher as bond prices gave up early gains and the U.S. dollar dipped amid the upbeat virus treatment data, which appeared to counter some of the disappointment from a read on wholesale price inflation. Gold was lower and crude oil prices traded higher. Europe advanced on upbeat data in the region, while Asia fell as China snapped a string of rallies.
The Dow Jones Industrial Average rose 369 points (1.4%) to 26,075, the S&P 500 Index increased 33 points (1.1%) to 3,185, and the Nasdaq Composite advanced 70 points (0.7%) to 10,617. In moderate volume, 876 million shares were traded on the NYSE and 3.5 billion shares changed hands on the NASDAQ. WTI crude was up $0.93 at $40.55 per barrel and wholesale gasoline advanced $0.03 to $1.28 per gallon. Elsewhere, the Bloomberg gold spot price declined $4.20 to $1,799.35 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—dipped 0.1% to 96.64. Markets finished higher for the week, as the DJIA advanced 1.0%, the S&P 500 rose 1.8%, and the Nasdaq Composite rallied 4.0%.
Wholesale price inflation misses…..
The Producer Price Index (PPI) showed prices at the wholesale level in June declined 0.2% month-over-month (m/m), versus the Bloomberg consensus forecast calling for it to match May’s unrevised 0.4% gain. The core rate, which excludes food and energy, decreased 0.3% m/m, below estimates of a 0.1% increase and compared to May’s unadjusted 0.1% dip. Y/Y, the headline rate was 0.8% lower, compared to projections of a 0.2% decline and matching the prior month’s unadjusted fall. The core PPI rose 0.1% y/y last month, south of estimates of a 0.4% increase and May’s unrevised 0.3% gain.
Treasuries gave up early gains and dipped slightly despite the data and amid the choppiness in the stock markets, with the yield on the 2-year note little changed at 0.15%, while the yield on the 10-year note gained 2 basis points (bps) to 0.63%, and the 30-year bond rate ticked 1 bp higher to 1.33%.
Treasury yields declined this week, along with the U.S. dollar, but gold extended a rally and touched a near nine-year high and crude prices were little changed. The moves came as the markets grappled with the volatility in the stock market and the implications of the persistent rise in COVID-19 cases, along with the backdrop of the flood of monetary and fiscal policy relief measures and progress on finding an answer to the pandemic.
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