Stocks Mostly Higher as Markets Digest an Abundance of Headlines…..

U.S. stocks closed the day mostly higher, with a wide range of headlines competing for investor attention. Positive trade and COVID-19 vaccine/treatment headlines provided support, while data showed U.S. Consumer Confidence unexpectedly fell to a six-year low. The markets continued to look towards a speech from Fed Chairman Jerome Powell later this week to get a sense of the Fed’s policy steps moving forward, and digested a shakeup for the Dow as, Honeywell and Amgen will replace Exxon Mobil, Raytheon Technologies and Pfizer. Additionally, new home sales surged, regional manufacturing activity surprisingly jumped and J.M. Smucker posted stronger-than-expected quarterly results and raised its outlook. In other equity news, Best Buy topped quarterly estimates but tempered expectations regarding future growth. Treasury yields gained on the long end of the curve as bond prices dipped, while the U.S. dollar continued a soft patch. Gold saw slight pressure and oil prices moved higher. Asia and Europe finished mixed.

The Dow Jones Industrial Average lost 60 points (0.2%) to 28,248, while the S&P 500 Index rose 12 points (0.4%) to 3,444, and the Nasdaq Composite advanced 87 points (0.8%) to 11,466. In moderate volume, 713 million shares were traded on the NYSE and 3.4 billion shares changed hands on the NASDAQ. WTI crude oil was $0.73 higher at $43.35 per barrel and wholesale gasoline added $0.01 to $1.27 per gallon. Elsewhere, the Bloomberg gold spot price was down $0.39 to $1,928.49 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.3% lower to 93.04.

Consumer Confidence disappoints, but new home sales surge…..

The Conference Board’s Consumer Confidence Index unexpectedly fell to 84.8 in August, from July’s downwardly-revised 91.7 level, and versus the Bloomberg estimate calling for a modest improvement to 93.0. The index surprisingly fell to a low not seen since May 2014 as both the Present Situation Index and the Expectations Index of business conditions for the next six months declined with the former dropping decisively. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—dropped to -3.7 from the 2.2 level posted in July.

New home sales jumped 13.9% month-over-month (m/m) in July to an annual rate of 901,000, well above forecasts calling for a rate of 790,000 units from June’s upwardly-revised 791,000 unit level. The median home price was up 7.2% y/y at $330,600. New home inventory fell to a rate of 4.0 months of supply at the current sales pace from 4.6 months in June. July’s annual rate was the highest since December 2006 as sales in the Midwest, South and West were solidly higher m/m, with the former surging nearly 59%, but sales in the Northeast were down over 23%. All regions were higher y/y, with the Midwest up over 81%. 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.

The Richmond Fed Manufacturing Activity Index for August unexpectedly improved further into a level depicting expansion (a reading above zero). The index rose to 18.0, the highest rate since October 2018, versus forecasts calling for the figure to remain at July’s 10.0 level.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index posted a 3.5% y/y gain in home prices in June, versus estimates of a 3.6% increase. Compared to the prior month, home prices were little changed on a seasonally adjusted basis, below forecasts of a 0.1% gain.

Treasuries saw some pressure on the mixed data and recent positive COVID-19 treatment/vaccine and trade headlines. The yield on the 2-year note was little changed at 0.15%, while the yield on the 10-year note gained 3 basis points (bps) to 0.68%, and the 30-year bond added 4 bps to 1.39%.

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