Stocks Mostly Higher, Shrugging Off Mixed Data and Veto Threats…..

U.S. equities weathered a late session swoon to close mostly higher, as the markets digested a plethora of economic releases and watched as the recently announced fiscal relief package hit a bit of a stumbling block. Stocks mostly shrugged off early morning economic reports which offered a mixed picture of the economic recovery, as initial jobless claims moderated a bit and mortgage applications rose for a second month, durable goods for last month were mixed, but the prior month was revised higher, while reads on new home sales and personal income and spending disappointed. Moreover, President Trump’s threat to possibly veto the announced fiscal aid package, requesting Congress to increase the direct payments to households under the package also didn’t offer too much resistance to the broad-based markets. Progress on the vaccine front remained in focus, as Pfizer and BioNTech struck a deal with the U.S. government to provide an additional 100 million doses of its serum, while Merck & Co. said it has reached an agreement with the government on the manufacture and supply of its COVID-19 therapeutic. Treasuries were lower following the deluge of data, as bond yields rose, and the U.S. dollar lost ground, while crude oil prices were higher and gold saw gains. Asia finished in the green amid virus optimism, and Europe closed higher on hopes of a Brexit deal, with Bloomberg reporting that an outline for the agreement has been reached.

The Dow Jones Industrial Average gained 114 points (0.4%) to 30,130, the S&P 500 Index increased 3 points (0.1%) at 3,690, and the Nasdaq Composite declined 37 points (0.3%) to 12,771. In heavy volume, 813 million shares were traded on the NYSE and 6.9 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.10 to $48.12 per barrel and wholesale gasoline added $0.04 to $1.38 per gallon. Elsewhere, the Bloomberg gold spot price rose $11.51 to $1,872.35 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—decreased 0.3% to 90.34.

Investors were gifted a deluge of economic of reports…..

Personal income fell 1.1% m/m in November, versus forecasts of 0.3% decline, and following October’s upwardly revised 0.6% shortfall. Personal spending shed 0.4%, a couple of ticks lower than the estimated 0.2% decrease and versus the prior month’s negatively adjusted 0.3% advance. The October savings rate as a percentage of disposable income was 13.6%. The PCE Deflator was flat m/m, below expectations for a 0.1% m/m increase and compared to October’s unadjusted flat reading. Compared to last year, the deflator was 1.1% higher, short of estimates to match October’s unadjusted 1.2% gain. Excluding food and energy, the PCE Core Index was also unchanged m/m, in line with expectations and matching October’s reading. The index was 1.4% higher y/y, matching October’s gain.

The December final University of Michigan Consumer Sentiment Index was revised lower to 80.7, versus expectations of a slight decline to 81.0 from the preliminary reading of 81.4. The downward revision came as both the current conditions and expectations components of the survey were adjusted lower. However, the overall index was higher versus November’s 76.9 level. The 1-year inflation forecast rose to 2.5% from November’s 2.3% rate, and the 5-10 year inflation forecast remained at the prior month’s 2.5% pace.

New home sales fell 11.0% m/m in November to an annual rate of 841,000 units—its lowest level since June–versus forecasts calling for a rate of 990,000 units, and compared to October’s downwardly revised 945,000 unit level. The median home price was up 2.2% y/y at $335,300. New home inventory rose to a 4.1-months supply at the current sales pace from the 3.6-months level in October. Sales in all regions declined, with the most notable losses in the Midwest and West. Sales in all regions, except the Midwest, were 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.

Weekly initial jobless claims came in at a level of 803,000 for the week ended December 19, below the Bloomberg estimate of 880,000, and compared to the prior week’s upwardly revised 892,000 level. The four-week moving average rose by 4,000 to 818,250, while continuing claims for the week ended December 12 fell by 170,000 to 5,337,000, below estimates of 5,560,000. The four-week moving average of continuing claims dropped by 188,000 to 5,538,000.

The MBA Mortgage Application Index rose by 0.8% last week, following the prior week’s 1.1% rise. The increase came as a 3.8% rise in the Refinance Index more than offset a 4.6% decrease in the Purchase Index. The average 30-year mortgage rate nudged 1 basis point (bp) higher to 2.86%.

November preliminary durable goods orders rose 0.9% month-over-month (m/m), versus estimates of a 0.6% rise and compared to October’s upwardly revised 1.8% increase. Ex-transportation, orders increased 0.4% m/m, versus forecasts of a 0.5% gain and compared to October’s favorably adjusted 1.9% rise. Moreover, orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were up 0.4%, compared to projections of a 0.6% rise, while the prior month’s figure was upwardly revised to a 1.6% increase.

Treasuries turned lower, as the yield on the 2-year note ticked 1 basis point higher to 0.12%, the yield on the 10-year note was up 3 bps to 0.95% and the 30-year bond rate advanced 4 bps to 1.68%.

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