Strong Retail Earnings Fails to Stimulate Bullish Conviction…..

U.S. stocks finished lower, with the Dow and S&P 500 seeing red figures despite a host of strong Q1 earnings results from Dow members Walmart and Home Depot, along with Macy’s. The Nasdaq reversed to the downside late in the session as the Information Technology sector relinquished an early advance. Conviction appeared to remain stymied by uncertainty regarding if the optimism surrounding expectations for robust 2021 economic and earnings growth has been priced in, along with the backdrop of festering inflation concerns. Meanwhile, a decisive miss for April housing starts offered little reprieve from worries about the affordability impact of the severe drought in the supply of homes for sale. Treasuries were mostly little changed and the U.S. dollar continued to threaten 2021 lows after erasing Q1’s strong advance. Gold nudged higher and crude oil prices turned lower. Asia finished mostly higher despite a larger-than-expected contraction for Japan’s economy in Q1, while Europe finished mixed amid a rebound in Tech issues overseas and as the markets digested a back-to-back quarterly contraction for the Eurozone economy.

The Dow Jones Industrial Average declined 267 points (0.8%) to 34,061, the S&P 500 Index decreased 35 points (0.9%) to 4,128, and the Nasdaq Composite was down 75 points (0.6%) to 13,304. In moderate volume, 928 million shares were traded on the NYSE and 4.2 billion shares changed hands on the Nasdaq. WTI crude oil decreased $0.78 to $65.49 per barrel. Elsewhere, the Bloomberg gold spot price gained $1.66 to $1,868.55 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.4% to 89.77.

April housing construction activity disappoints as starts miss noticeably…..

Housing starts for April fell 9.5% month-over-month (m/m) to an annual pace of 1,569,000 units, well below the Bloomberg consensus forecast of 1,704,000 units, and compared to March’s downwardly revised pace of 1,733,000 units. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, ticked 0.3% higher m/m at an annual rate of 1,760,000, just shy of expectations of 1,770,000 units, and compared to the negatively revised 1,755,000 unit pace in March.

Treasuries were mostly little changed, with the yields on the 2-year note and the 30-year bond flat at 0.15% and 2.37%, respectively, while the yield on the 10-year note dipped 1 basis point to 1.64%.

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