Markets Finish Day Lower, Wiping Out Early Week Gains…..

U.S. stocks closed the day lower after a bright start to the week that saw the S&P 500 get back to positive territory for the year gave way to increased uneasiness surrounding an escalation in tensions between the U.S. and China. The ordered closure of a U.S. consulate in China overshadowed upbeat global and domestic manufacturing and services data and a 13-year high in new home sales. Earnings season continued in earnest, headlined by Dow members Intel, Verizon Communications and American Express. Treasury yields were little changed and the U.S. dollar lost ground, while crude oil prices were higher and gold continued its bullish run. European equities finished solidly lower on the negative sentiment.

The Dow Jones Industrial Average declined 182 points (0.7%) to 26,470, while the S&P 500 Index decreased 20 points (0.6%) to 3,216, and the Nasdaq Composite dropped 98 points (0.9%) to 10,363. In moderate volume, 711 million shares were traded on the NYSE and 4.2 billion shares changed hands on the NASDAQ. WTI crude moved up $0.22 at $41.29 per barrel and wholesale gasoline gained $0.02 to $1.26 per gallon. Elsewhere, the Bloomberg gold spot price was $14.25 higher at $1,901.69 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.3% to 94.41. Markets finished lower for the week, as the DJIA declined 0.8%, the S&P 500 fell 0.3%, and the Nasdaq Composite lost 1.3%.

July business activity back in expansion territory, new home sales notch 13-year high…..

The preliminary Markit U.S. Manufacturing PMI Index for July improved to 51.3 from June’s unrevised 49.8 figure, moving above the demarcation point between expansion and contraction of 50 for the first time since the start of the pandemic, but shy of the Bloomberg consensus estimate calling for a rise to 52.0. The preliminary Markit U.S. Services PMI Index showed output for the key U.S. sector increased to 49.6 from June’s 47.9 figure, south of forecasts of an improvement to 51.0. Markit said private sector firms noted stabilization in business activity at the beginning of Q3, but growth was hindered by a decline in new orders, and new business was weighed down by challenges associated with the re-introduction of lockdown measures.

New home sales jumped to their highest level since July of 2007, rising 13.8% month-over-month (m/m) in June to an annual rate of 776,000, above forecasts calling for a rise to 700,000 units from May’s upwardly-revised 682,000 unit level. The median home price was up 5.6% y/y at $329,200. New home inventory fell to a rate of 4.7 months of supply at the current sales pace from 5.5 months in May. June’s stronger-than-expected increase came as sales in all regions were higher m/m and y/y. 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.

Treasuries were little changed following the data, as the yields on the 2-year note and 30-year bond were unchanged at 0.15% and 1.23%, respectively, and the yield on the 10-year note rose 1 basis point to 0.58%.

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