Stocks Gain on Busy Day of Earnings, Events, Data…..

U.S. equities finished higher amid a slew of earnings, economic data and events. The Fed left its monetary policy stance unchanged and vowed to continue to utilize all its tools to help the economy rebound. Meanwhile, focus was also on an expected next wave of fiscal relief measures, as well as the testimony of big-tech CEOs to a Congressional antitrust committee. Advanced Micro Devices and Starbucks highlighted the heavy earnings docket, while Dow member Boeing, along with General Electric and General Motors, saw pressure following their results, but Dow component Visa was able to end higher. In other equity news, Eastman Kodak surged on news it received a $765 million loan from the government to help produce ingredients for drugs that could potentially fight the COVID-19 virus. Treasury yields were mixed and the U.S. dollar fell further, while gold continued its bullish run to notch more records, and crude oil prices gained ground. In economic news, mortgage applications dipped, the trade deficit unexpectedly narrowed, and pending home sales bounced again. Markets in Europe and Asia finished mixed.

The Dow Jones Industrial Average rose 160 points (0.6%) to 26,540, the S&P 500 Index increased 40 points (1.2%) to 3,258, and the Nasdaq Composite jumped 141 points (1.4%) to 10,543. In moderate volume, 861 million shares were traded on the NYSE and 3.9 billion shares changed hands on the NASDAQ. WTI crude moved $0.23 higher to $41.27 per barrel and wholesale gasoline lost $0.03 to $1.21 per gallon. Elsewhere, the Bloomberg gold spot price advanced $9.78 to $1,968.81 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.3% lower to 93.38.

Fed stands pat, as expected, headlining busy economic calendar…..

The Federal Open Market Committee (FOMC) concluded its two-day monetary policy meeting today, opting to leave its stance and interest rates unchanged, as was widely expected. The decision came after the Fed yesterday announced that it will extend its emergency lending facilities through the year that were scheduled to expire on or around September 30. In its statement, the Committee said, “The path of the economy will depend significantly on the course of the virus,” adding that, economic activity and employment “have picked up somewhat in recent months but remain well below their levels at the beginning of the year.” As well, the FOMC indicated that the pandemic “poses considerable risks to the economic outlook over the medium term” and that the federal funds rate would remain near zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The decision was unanimous and no updated economic projections were released with the statement.

The MBA Mortgage Application Index dipped 0.8% last week, following the prior week’s 4.1% gain. The modest decline came as a 0.4% decrease in the Refinance Index was met with a 1.5% drop for the Purchase Index. The average 30-year mortgage rate remained at 3.20%.

The advance goods-trade balance showed that the June deficit unexpectedly narrowed, coming in at $70.6 billion, versus estimates calling for it to widen to $75.4 billion from May’s upwardly-adjusted deficit of $75.3 billion.

Pending home sales bounced 16.6% month-over-month (m/m) in June, versus estimates calling for a 15.0% gain after May’s 44.3% jump. Sales were 12.7% higher y/y, compared to the expected 2.2% increase. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.

Preliminary wholesale inventories fell 2.0% m/m for June, compared to expectations of a 0.5% decrease, and versus May’s unrevised 1.2% drop.

Treasuries were mixed as the heavy week rolled on, as the yield on the 2-year note dipped 1 basis point (bp) to 0.13%, while the yield on the 10-year note was little changed at 0.58% and the 30-year bond rate rose 1 bp to 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.