Stocks Give Back Some of Yesterday’s Rebound on Tax Headlines…..

U.S. stocks finished lower, following a flood of economic data, and as reports suggested that the Biden Administration was mulling a sizeable increase in capital gains taxes to help pay for his spending plans. It was a relatively quiet session from a headline perspective with markets continuing to wrestle with the implications of rising COVID-19 cases in pockets of the world and optimism of strong 2021 economic growth. Sector performance was broadly negative and defensive, with the Information Technology, Financials and Consumer Discretionary sectors leading to the downside, while Real Estate and Utilities outperformed. The economic calendar for the week came alive, as existing home sales declined more than expected, leading indicators topped expectations, jobless claims decelerated for a second-straight week, and manufacturing activity expanded. Earnings season continued to roll on and help preserve the optimism for the year, with the Street’s digesting results from AT&T, Chipotle Mexican Grill, Southwest Airlines and Whirlpool. Treasuries ticked higher, adding slight downside pressure on yields, while the U.S. dollar moved higher after a recent soft patch. Gold was lower and crude oil prices turned modestly higher. Asia finished mostly higher and Europe rose on the heels of strong earnings results and the unchanged monetary policy stance from the European Central Bank.

The Dow Jones Industrial Average declined 321 points (0.9%) to 33,816, the S&P 500 Index decreased 38 points (0.9%) to 4,135, and the Nasdaq Composite was down 132 points (0.9%) at 13,818. In moderate volume, 865 million shares were traded on the NYSE and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil rose $0.08 to $61.43 per barrel. Elsewhere, the Bloomberg gold spot price was $9.70 lower at $1,784.09 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—nudged 0.1% higher to 91.29.

Existing home sales fall, leading indicators beat expectations and jobless claims unexpectedly decelerate again…..

Existing home sales fell 3.7% month-over-month (m/m) in March to an annual rate of 6.01 million units, a seven-month low, versus expectations of a decline to 6.14 million units from February’s upwardly revised 6.24 million rate. However, existing home sales were up 12.3% year-over-year (y/y).

Compared to last month, the National Association of Realtors (NAR) said buying activity in all the major regions fell, 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 17.2% from a year ago to $329,100, marking the 108th straight month of y/y gains as prices rose in every region. Unsold inventory came in at a 2.1-months pace at the current sales rate, nudging off last month’s 2.0-months pace, and down sharply from the 3.3-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.

NAR Chief Economist Lawrence Yun said, ” Consumers are facing much higher home prices, rising mortgage rates, and falling affordability, however, buyers are still actively in the market,” adding that, “The sales for March would have been measurably higher, had there been more inventory,” he added. “Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

The Conference Board’s Index of Leading Economic Indicators (LEI) for March rose 1.3% m/m, above the Bloomberg consensus estimate calling for a 1.0% m/m increase from February’s downwardly revised 0.1% decrease. The LEI was positive for the tenth-straight month after the plunges in March and April of last year, due to all ten components contributing positively, suggesting economic momentum is increasing in the near term.

The April Kansas City Fed Manufacturing Activity Index moved further into a level depicting expansion (a reading above zero). The index rose to 31 from March’s 26 reading, topping analyst forecasts.

Weekly initial jobless claims came in at a level of 547,000 for the week ended April 17, compared to the Bloomberg estimate of an acceleration to 610,000 from the prior week’s upwardly revised 576,000 level. The four-week moving average declined by 27,750 to 651,000, and continuing claims for the week ended April 10 decreased by 34,000 to 3,674,000, north of estimates of 3,650,000. The four-week moving average of continuing claims declined by 41,750 to 3,713,000.

Treasuries finished slightly higher in choppy trading, with the yield on the 2-year note little changed at 0.15%, while the yield on the 10-year note dipped 1 basis point to 1.54% and the rate on the 30-year bond declined 3 bps to 2.23%.

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