Stocks Fall as Investors Remain Weary Following Mixed Data…..

U.S. equities closed solidly in the red after a four-day rally as investors digested a slew of mixed quarterly results with earnings season kicking into gear, and showed caution as tensions between the U.S. and China continued to simmer. Microsoft, Tesla and Chipotle Mexican Grill all bested the Street’s expectations, while Twitter fell short and Southwest Airlines suffered a massive loss as it struggles with the disruption from the pandemic. In economic news, the Leading Index continued to offer hope of a recovery in economic activity, but jobless claims increased more than expected. Treasury yields were mostly lower as bond process rose and the U.S. dollar lost ground, while crude oil prices were down and gold remained in rally mode. European equities lost steam to finish mostly lower while Asian equities ended the day mixed.

The Dow Jones Industrial Average fell 354 points (1.3%) to 26,652, the S&P 500 Index decreased 40 points (1.2%) to 3,236, and the Nasdaq Composite lost 245 points (2.3%) to 10,461. In moderate volume, 821 million shares were traded on the NYSE and 4.4 billion shares changed hands on the NASDAQ. WTI crude oil slid $0.83 lower to $41.07 per barrel and wholesale gasoline was $0.02 lower at $1.26 per gallon. Elsewhere, the Bloomberg gold spot price jumped $15.03 to $1,886.45 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.2% at 94.83.

Leading Index remains on the mend, jobless claims higher than expected…..

The Conference Board’s Index of Leading Economic Indicators (LEI) for June rose 2.0% month-over-month (m/m), compared to projections of a 2.1% rise, continuing the rebound since May which was revised to an increase of 3.2% m/m. The LEI saw a sharp positive contribution from the moderation in severely elevated jobless claims, the average workweek, building permits and stock prices, while leading credit continued to weigh noticeably on the index.

Weekly initial jobless claims came in at a level of 1,416,000 for the week ended July 18th, north of estimates of 1,300,000, and compared to the prior week’s upwardly-revised 1,307,000 level. The four-week moving average declined by 16,500 to 1,360,250, while continuing claims for the week ended July 11th fell by 1,107,000 to 16,197,000, south of estimates of 17,100,000. The four-week moving average of continuing claims decreased by 758,500 to 17,505,250.

The Kansas City Fed Manufacturing Activity Index inched further into expansionary territory (a reading above zero), posting a level of 3 for July from the 1 registered last month, but below forecasts calling for a level of 5.

Treasuries were mostly higher as the stock markets fell, with the yield on the 2-year note flat at 0.14%, while the yield on the 10-year note was 2 basis points (bps) lower at 0.58% and the 30-year bond rate was down 6 bps at 1.23%.

©2020 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.