Stocks Fall in Bumpy Session…..
U.S. stocks finished lower in a choppy session, with the markets losing steam in the final minutes of trading courtesy of pressure from tech issues. Hopes of a next wave of fiscal support remained, even though lawmakers remain at odds regarding the size and scope of a new package. Moreover, President Donald Trump said he is considering capital gains tax cuts after deploying executive orders to try to offer support as lawmakers hammer out a deal. Meanwhile, Russia announced it has approved a COVID-19 vaccine but data on the treatment is scarce and skepticism of such is high. Treasury yields were higher as bond prices declined following a hotter-than-expected read on producer price inflation and an unexpected decline in U.S. small business optimism. The U.S. dollar ticked higher but remained near a two-year low and gold plunged after a record bullish run, while crude oil prices lost modest ground. In light equity news, HD Supply announced a deal to sell its White Cap business for about $2.9 billion, Bed Bath & Beyond offered mixed sales data for July, and Bristol-Meyers Squibb announced positive trial results for Opdivo. Europe finished solidly higher, while most markets in Asia saw gains.
The Dow Jones Industrial Average fell 105 points (0.4%) to 27,687, the S&P 500 Index decreased 27 points (0.8%) to 3,334, while the Nasdaq Composite declined 186 points (1.7%) to 10,783. In heavy volume, 956 million shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ. WTI crude lost $0.33 to $41.61 per barrel and wholesale gasoline shed $0.03 to $1.20 per gallon. Elsewhere, the Bloomberg gold spot price plummeted $109.44 to $1,917.90 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 93.74.
Small business optimism declines, wholesale price inflation hotter than expected…..
The National Federation of Independent Business (NFIB) Small Business Optimism Index for July declined to 98.8, from June’s 100.6 level, and compared to the Bloomberg estimate of a dip to 100.5. The NFIB said, “Owners continue to temper their expectations of future economic conditions as the COVID-19 public health crisis is expected to continue.”
The Producer Price Index (PPI) showed prices at the wholesale level in July rose 0.6% month-over-month (m/m), versus forecasts calling for a 0.3% gain and June’s unrevised 0.2% decline. The core rate, which excludes food and energy, increased 0.5% m/m, above estimates of a 0.1% increase and compared to June’s unadjusted 0.3% decrease. Y/Y, the headline rate was 0.4% lower, compared to projections of a 0.7% decline and versus the prior month’s unadjusted 0.8% fall. The core PPI rose 0.3% y/y last month, topping estimates of a flat reading and June’s unrevised 0.1% rise.
Treasuries were lower following the inflation data, as the yield on the 2-year note was up 3 basis points (bps) to 0.15%, the yield on the 10-year note gained 6 bps to 0.63% and the 30-year bond rate rose 7 bps to 1.31%.
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