Stocks Able to Post Modest Gains…..
U.S. stocks were able to pare early losses and finish higher, as the negative sentiment surrounding a slew of uncertainties within the U.S. political arena appeared to lessen somewhat after Republicans pledged a peaceful inauguration in January. Some upbeat housing data aided in the gains, as new home sales surpassed the one-million mark for the first time since late-2006. However, the elusive fiscal relief package, which Fed Chairman Powell continued to push for in his third and final day of Congressional testimony, remained a source of uneasiness, as well as the resurgence of virus cases in Europe. In other economic news, jobless claims remained stubbornly high. On the equity front, Darden Restaurants was solidly higher after its earnings report and E.W. Scripps rallied after announcing an agreement to acquire ION Media with help from an investment from Berkshire Hathaway. Treasury yields dipped as bond prices nudged upward and the U.S. dollar inched into the red, while crude oil prices saw modest gains and gold finished higher in choppy trading. Markets in Europe and Asia finished to the downside.
The Dow Jones Industrial Average rose 52 points (0.2%) to 26,815, the S&P 500 Index added 10 points (0.3%) to 3,247, and the Nasdaq Composite increased 39 points (0.4%) to 10,672. In moderately heavy volume, 928 million shares were traded on the NYSE and 4.0 billion shares changed hands on the NASDAQ. WTI crude oil added $0.38 to $40.31 per barrel and wholesale gasoline was $0.01 higher at $1.17 per gallon. Elsewhere, the Bloomberg gold spot price gained $3.67 to $1,867.01 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.1% lower to 94.31.
Jobless claims higher than expected, housing data unexpectedly rises…..
Weekly initial jobless claims came in at a level of 870,000 for the week ended September 19th, above the Bloomberg estimate of 840,000, and the prior week’s upwardly-revised 866,000 level. The four-week moving average declined by 35,250 to 878,250, while continuing claims for the week ended September 12th fell by 167,000 to 12,580,000, above estimates of 12,275,000. The four-week moving average of continuing claims dropped by 478,000 to 13,040,750.
New home sales rose 4.8% month-over-month (m/m) in August to an annual rate of 1,011,000, well above forecasts calling for a rate of 890,000 units from July’s upwardly-revised 965,000 unit level. The median home price was down 4.3% y/y at $312,800. New home inventory declined to a rate of 3.3 months of supply at the current sales pace from 3.6 months in July. Sales breached the 1 million mark for the first time since 2006 as sales in the Northeast and South gained solid m/m ground, more than offsetting drops in the Midwest and West. All regions were decisively higher 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.
The September Kansas City Fed Manufacturing Activity Index dipped but remained at a level depicting expansion (a reading above zero). The index declined to 11 from August’s 14 reading, where it was forecasted to remain.
Federal Reserve Chairman Jerome Powell concluded three days of Congressional testimony, speaking to the Senate Banking Committee, along with Treasury Secretary Steven Mnuchin, delivering a quarterly report on the CARES Act. Powell noted that many economic indicators showed “marked improvement” but the conditions in the employment market and overall economic activity remain well below their pre-pandemic levels. Powell also continued to stress the importance of policy actions taken on all levels of the government, suggesting fiscal relief remains a key complement to the Fed’s monetary extraordinary measures in combating the recovery from the pandemic’s disruption. They also provided an update on the $600 billion Central Bank’s Main Street Lending Program, which has seen a slow start, while reiterating that the Fed will provide support to the economy “for as long as it takes.”
Treasuries were slightly higher, as the yields on the 2-year and 10-year notes were down 1 basis point (bp) at 0.13% and 0.66%, respectively, while the 30-year bond rate dipped 2 basis point to 1.40%.
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