Near Term Doubt of Fiscal Stimulus Helps Stocks Lower…..
U.S. equities closed lower on the day, posting back-to-back losses, as investors received a further glimpse of Q3 earnings results from the financial sector. Yesterday’s discouraging virus news of a vaccine candidate and a separate therapy trial pausing due to safety concerns tamped down any market enthusiasm over recent positive developments. Fiscal stimulus remained a focus, as comments from Treasury Secretary Mnuchin suggested the likelihood of any potential deal before the election would be difficult as lawmakers remained far apart over any potential deal on a fiscal relief package. Treasury yields were lower as bond prices rose following a hotter-than-expected read on wholesale price inflation and a decline in mortgage applications. The U.S. dollar moved lower, while crude oil and gold prices were higher. Asia finished mixed in a sluggish trading session, and markets in Europe also diverged.
The Dow Jones Industrial Average fell 166 points (0.6%) to 28,514, the S&P 500 Index decreased 23 points (0.7%) to 3,489, and the Nasdaq Composite lost 95 points (0.8%) to 11,769. In moderate volume, 764 million shares were traded on the NYSE and 3.4 billion shares changed hands on the Nasdaq. WTI crude oil was $0.84 higher at $41.04 per barrel and wholesale gasoline was up $0.02 at $1.20 per gallon. Elsewhere, the Bloomberg gold spot price added $10.33 to $1,901.69 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.2% at 93.35.
Wholesale price inflation hotter than expected, mortgage apps decline…..
The Producer Price Index (PPI) showed prices at the wholesale level in September rose 0.4% m/m, versus forecasts calling for a 0.2% gain and August’s unrevised 0.3% increase. The core rate, which excludes food and energy, also increased 0.4% m/m, above estimates of a 0.2% gain and compared to August’s unadjusted 0.4% rise. Y/Y, the headline rate was 0.4% higher, compared to projections of a 0.2% increase and versus the prior month’s unadjusted 0.2% decline. The core PPI gained 1.2% y/y last month, north of estimates of a 1.0% increase, and compared to August’s unrevised 0.6% rise.
MBA Mortgage Application Index fell by 0.7% last week, following the prior week’s 4.6% increase. The decrease came as a 0.3% decline in the Refinance Index was accompanied by a 1.6% fall for the Purchase Index. The average 30-year mortgage rate dipped 1 basis point (bp) to 3.00%.
Treasuries were higher following the inflation data, with the yield on the 2-year note little changed at 0.14%, while the yields on the 10-year note and 30-year bond were down 1 basis point at 0.72% and 1.50%, respectively.
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