Markets Unable to Hold Gains…..

U.S. equities lost steam in the final minutes to finish lower in a day of choppy trading, as the persistent rise of new COVID-19 cases in the U.S. and Europe and palpable uncertainty ahead of the rapidly-approaching highly-contentious presidential election kept sentiment at bay. As well, hopes of a fiscal relief deal remained elusive. Q3 earnings season continued to roll on, with Snap rallying on its results, but Netflix fell after missing profit projections and subscriber forecasts. The Treasury yield curve steepened as bond prices declined and the U.S. dollar continued to slide, while crude oil prices tumbled following oil inventory data from the Department of Energy that showed gasoline stockpiles unexpectedly rose and gold traded to the upside. In economic news, mortgage applications dipped and the Fed delivered a mostly positive read on economic activity via its Beige Book. Europe came under pressure, while markets in Asia finished mostly higher.

The Dow Jones Industrial Average fell 98 points (0.4%) to 28,211, the S&P 500 Index was down 8 points (0.2%) at 3,436, and the Nasdaq Composite lost 32 points (0.3%) to 11,485. In moderate volume, 849 million shares were traded on the NYSE and 3.4 billion shares changed hands on the Nasdaq. WTI crude oil was $1.67 lower at $40.03 per barrel and wholesale gasoline lost $0.05 to $1.14 per gallon. Elsewhere, the Bloomberg gold spot price advanced $17.22 to $1,924.17 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.5% lower at 92.61.

Mortgage applications dip, Fed report on economic activity shows continued improvement

The MBA Mortgage Application Index dipped by 0.6% last week, following the prior week’s 0.7% decline. The decrease came as a 0.2% rise in the Refinance Index was more than offset by a 2.1% drop in the Purchase Index. The average 30-year mortgage rate nudged 2 basis points (bps) higher to 3.02%.

Treasuries were mostly lower, with the yield on the 2-year note little changed at 0.15%, while the yields on the 10-year note and the 30-year bond gained 2 bps to 0.82% and 1.62%, respectively. Bond yields have rebounded this week but remain in a trading range as the markets grapple with economic data suggesting the recovery continues, while the Fed continues to pledge extremely accommodative policy for the foreseeable future and uncertainty remains palpable regarding an agreement on a new round of fiscal relief measures.

The Fed delivered its Beige Book report, a preparation tool offering an anecdotal view of economic activity across all the Fed Districts in advance of the Central Bank’s next two-day monetary policy meeting scheduled to end November 5. The report showed economic activity continued to increase across all Districts, with the pace of growth characterized as slight to modest. The release highlighted manufacturing and housing growth, along with steady demand for autos, and that consumer spending growth remained positive, but some Districts reported a leveling off of retail sales and a slight uptick in tourism activity. However, commercial real estate conditions continued to deteriorate, restauranteurs expressed concern that cooler weather could slow sales, and banking contacts expressed concern that delinquency rates may rise in coming months, though the rates thus far remain stable.

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