Stocks Higher in Choppy Trading, Data and Fiscal Deal in Focus…..
U.S. stocks are mixed in early afternoon trading as they struggle to find footing despite a host of upbeat earnings and economic data. Capitol Hill lawmakers remain at a stalemate on a highly-anticipated fiscal relief package which continues to keep a lid on investor enthusiasm. Dow member Coca-Cola highlights a busy earnings calendar, however the markets have had mixed reactions to results out of the transportation sector, as Southwest Airlines and CSX are moving higher, though Union Pacific is seeing some pressure. On the economic front, jobless claims came in well below expectations, Leading Indicators were positive for a fifth-straight month, and existing home sales remained robust. Treasury yields have overcome early losses as bond prices give up gains, and the U.S. dollar is regaining some footing following a recent stumble. Crude oil prices are recovering from yesterday’s drop and gold is seeing solid pressure. Europe was mixed, but nearly flat across the board.
The Dow Jones Industrial Average rose 153 points (0.5%) to 28,364, the S&P 500 Index was up 18 points (0.5%) at 3,453, and the Nasdaq Composite gained 21 points (0.2%) to 11,506. In moderate volume, 844 million shares were traded on the NYSE and 3.3 billion shares changed hands on the Nasdaq. WTI crude oil was $0.61 higher at $40.64 per barrel and wholesale gasoline rose $0.02 to $1.16 per gallon. Elsewhere, the Bloomberg gold spot price fell $19.34 to $1,904.99 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.3% at 92.94.
Jobless claims improve, Leading Index and existing home sales both top forecasts…..
Weekly initial jobless claims came in at a level of 787,000 for the week ended October 17th, below the Bloomberg estimate of 870,000 and south of the prior week’s downwardly-revised 842,000 level. The four-week moving average fell by 21,500 to 811,250, while continuing claims for the week ended October 10th fell by 1,024,000 to 8,373,000, below estimates of 9,625,000. The four-week moving average of continuing claims dropped by 1,093,500 to 10,085,750.
The Conference Board’s Index of Leading Economic Indicators (LEI) for September rose 0.7% month-over-month (m/m), compared to projections of a 0.6% gain, following August’s upward revision to a 1.4% advance. The LEI has been positive for five-straight months after the plunges in March and April, due to positive contributions from jobless claims, building permits, the yield curve and ISM new orders.
Existing home sales continued to rise in September, increasing 9.4% m/m to an annual rate of 6.54 million units—the fourth consecutive month of gains—topping expectations of 6.30 million and versus August’s modestly-revised 5.98 million rate.
Each of the four major regions experienced m/m and y/y growth, with the Northeast seeing the greatest improvement from both periods. Sales of single-family homes and purchases of condominiums and co-ops were up m/m and y/y. The median existing home price was up 14.8% from a year ago to $311,800, marking the 103rd straight month of y/y gains as prices rose in every region. Unsold inventory came in at a 2.7-months pace at the current sales rate, down from 3.0-months in August and the 4.0-months pace a year earlier. Existing home sales reflect contract closings instead of signings and account for a large majority of the home sales market.
National Association of Realtors Chief Economist Lawrence Yun said, “Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season.” He added that, “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”
The October Kansas City Fed Manufacturing Activity Index moved further into a level depicting expansion (a reading above zero). The index rose to 13 from September’s 11 reading, where it was forecasted to remain.
Treasuries gave up early gains and moved lower, with the yield on the 2-year note ticking 1 bp higher to 0.15%, while the yields on the 10-year note and the 30-year bond rose 4 bps at 0.86% and 1.67%, respectively.
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