Markets Close Out Volatile Week Mixed…..
U.S. equities finished out a rocky week mixed, as investors appeared to assess the volatility in the Information Technology sector after being the main catalyst to a five-month surge off the March lows. The backdrop of massive monetary policy support from the Fed and other global central banks remained, while economic data continued to paint the recovery picture. However, U.S. lawmakers again failed to find common ground on a highly-anticipated new wave of fiscal relief, while the pivotal presidential election looms. The U.S. dollar declined as the euro remained strong, bolstered by yesterday’s less-dovish monetary policy decision from the European Central Bank, and choppiness for the British pound persisted following a recent drop that has come amid heightened Brexit concerns. Treasury yields were mostly lower as bond prices nudged higher after a read on consumer price inflation showed continued recovery. Gold reversed course to trade lower and crude oil prices were little changed. In equity news, Peloton topped the Street’s quarterly forecasts, along with Oracle, while analysts’ appeared to scrutinize results from Chewy. Markets in Europe and Asia also finished mixed.
The Dow Jones Industrial Average increased 131 points (0.5%) to 27,666, the S&P 500 Index rose 2 points (0.1%) to 3,341, while the Nasdaq Composite decreased 66 points (0.6%) to 10,854. In moderate volume, 827 million shares were traded on the NYSE and 3.9 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.03 higher to $37.33 per barrel and wholesale gasoline was $0.01 lower at $1.09 per gallon. Elsewhere, the Bloomberg gold spot price fell $3.32 to $1,942.77 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.1% to 93.24. Markets were lower for the week, as the DJIA fell 1.7%, the S&P 500 declined 2.5% and the Nasdaq Composite lost 4.1%.
Consumer price inflation hotter than expected…..
The Consumer Price Index (CPI) rose 0.4% month-over-month (m/m) in August, versus the Bloomberg estimate of a 0.3% gain, and compared to July’s unrevised 0.6% increase. The core rate, which strips out food and energy, also grew 0.4% m/m, versus expectations of a 0.2% gain and July’s unadjusted 0.6% rise. Y/Y, prices were 1.3% higher for the headline rate, north of forecasts of a 1.2% increase and July’s unadjusted 1.0% gain. The core rate was up 1.7% y/y, above projections calling for it to match July’s unrevised 1.6% gain.
The Department of Labor said the rise in prices came as a sharp increase in used cars and trucks was the largest factor, but prices for gasoline, shelter, recreation, and household furnishings and operations also contributed. The report also noted that apparel, motor vehicle insurance and airline fares also rose, while education and personal care prices were among the few to decline.
Treasuries were modestly higher following the inflation data, as the yields on the 2-year note and the 30-year bond were down 2 bps at 0.13% and 1.42%, respectively, while the yield on the 10-year note was unchanged at 0.67%.
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