Equities Take Advantage of a Lull in Rising Yields, Closing Higher…..
U.S. equities closed higher in a subdued session, as Treasury yields took a break from the recent rate backup which enabled the yield on the 10-year note to a 14-month high last week. Today’s decrease in Treasury yields provided some relief to the Information Technology sector and other growth-oriented issues that had come under recent pressure, while the Financial sector was the main laggard. Economic news in the U.S. disappointed, as existing home sales fell more than double expectations. Meanwhile, the U.S. dollar and gold both lost ground, while crude oil prices saw a modest increase. M&A activity was back in focus, with Canadian Pacific Railway agreeing to acquire Kansas City Southern for $25 billion to create the first rail route to connect the U.S., Canada and Mexico. Markets in Asia and Europe finished mixed amid a host of news and events in their respective regions.
The Dow Jones Industrial Average rose 103 points (0.3%) to 32,731, the S&P 500 Index increased 27 points (0.7%) to 3,941, while the Nasdaq Composite was up 162 points (1.2%) at 13,378. In heavy volume 1.0 billion shares were traded on the NYSE and 5.1 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.12 to $61.44 per barrel. Elsewhere, the Bloomberg gold spot price was $5.65 lower to $1,739.58 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.2% to 91.79.
Existing home sales fell 6.6% month-over-month (m/m) in February to an annual rate of 6.22 million units, a six-month low, versus expectations of a decline to 6.49 million units from January’s downwardly revised 6.66 million rate. Existing home sales were down a record 29.5% year-over-year (y/y).
Compared to last month, the National Association of Realtors (NAR) said buying activity in all the major regions fell, except for the West, but all regions rose y/y. Sales of single-family homes and purchases of condominiums and co-ops were both down month-over-month (m/m), but higher y/y. The median existing home price jumped 15.8% from a year ago to $313,000, marking the 108th straight month of y/y gains as prices rose in every region. Unsold inventory came in at a 2.0-months pace at the current sales rate, nudging off last month’s all-time low of a 1.9-months pace, and down sharply from the 3.1-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.
Treasuries were higher, with the yield on the 2-year note little changed at 0.15%, while the yield on the 10-year note decreased 4 basis points (bps) to 1.68%, and the 30-year bond rate declined 6 bps to 2.38%.
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