Stocks Dip Following Day One of Powell, Yellen Testimony…..
U.S. equities closed lower, as the markets eyed the first day of congressional testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen. The testimony provided scarce new details as the duo largely stuck to the expected script with an acknowledgement of an uneven recovery for the U.S. economy, while Chairman Powell continued to downplay fears of inflation. Elsewhere, talks of a potential infrastructure spending bill remained top of mind for the markets, as various outlets reported that the White House is considering spending upwards of $3 trillion on infrastructure and other priorities. Economic reopening related issues struggled, while Financials were lower amid a softening in Treasury yields, and Energy issues fell in the wake of a sharp decline in crude oil prices. Treasuries were higher amid the decline in yields, the U.S. dollar bounced back after a tumble to multi-month lows, and gold traded lower. The economic calendar served up another disappointing housing report, but upbeat regional manufacturing data. In equity news, Microsoft is reportedly in talks to acquire video-game chat community provider Discord for $10 billion, and in M&A activity, Hartford Financial rejected Chubb’s unsolicited offer to acquire the company, while Lumentum upped its proposal to purchase Coherent. Asia finished lower on some weakness in tech shares in the region, and markets in Europe closed mixed amid heightened virus concerns.
The Dow Jones Industrial Average fell 308 points (0.9%) to 32,423, the S&P 500 Index decreased 37 points (0.8%) to 3,911, while the Nasdaq Composite was down 150 points (1.1%) at 13,228. In heavy volume 1.1 billion shares were traded on the NYSE and 5.5 billion shares changed hands on the Nasdaq. WTI crude oil lost $3.80 to $57.76 per barrel. Elsewhere, the Bloomberg gold spot price was $11.49 lower to $1,727.53 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.7% to 92.35.
Housing disappoints, but regional manufacturing remains upbeat, Treasury yields soften…..
New home sales tumbled 18.3% month-over-month (m/m) in February to an annual rate of 775,000 units, versus the Bloomberg consensus forecast calling for a rate of 870,000 units and compared to January’s upwardly revised 948,000-unit level. The median home price was up 5.3% y/y at $349,400. New home inventory rose to a 4.8-months supply at the current sales pace from the downwardly-revised 3.8-months level in January. Sales in all regions declined m/m, as severe weather in parts of the country limited foot traffic, while higher prices as a backdrop may be taking some of the luster off of what has been a bright spot for the economy during the pandemic. Sales in the Midwest and South were up y/y, while down in the Northeast and West. 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.
The Richmond Fed Manufacturing Activity Index moved slightly higher than expected and remained solidly in expansion territory (a reading above zero) for this month. The index rose to 17 from January’s 14 reading versus forecasts of a rise to 16.0. Growth in shipments jumped and new orders were unchanged, while order backlogs and inventories declined.
Treasuries were higher, as the yield on the 2-year note was little changed at 0.15%, while the yield on the 10-year note declined 8 basis points (bps) to 1.62%, and the 30-year bond rate moved 7 bps lower to 2.33%.
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