Stocks Snap Three-Day Losing Streak…..
For a second week in a row, the bulls came alive after hump day to snap a string of losses for U.S. stocks, with the Information Technology sector taking control. Resiliency reigned in the face of festering inflation concerns and worries that the Fed may be getting too complacent in the face of rising pricing pressures. Yesterday’s minutes from the Fed’s April meeting continued to command some attention, which showed continued priority toward the labor market but that some viewed a discussion on tapering asset purchases may need to begin at some point if the economy heats up faster than expected. Earnings remained in focus, with Dow component Cisco Systems topping quarterly estimates but issuing softer-than-expected earnings guidance, while Kohl’s Corporation’s sales outlook found some scrutiny on the Street. Treasuries gained ground to apply some downside pressure on yields and the U.S. dollar gave back yesterday’s late-session gains. Gold was higher and crude oil prices traded lower. In economic news, jobless claims data was mixed, regional manufacturing activity decelerated more than expected, and Leading Indicators improved for a second-straight month. Asia finished mixed and Europe traded broadly higher on the Tech rebound.
The Dow Jones Industrial Average rose 188 points (0.6%) to 34,084, the S&P 500 Index increased 43 points (1.1%) to 4,159, and the Nasdaq Composite advanced 236 points (1.8%) at 13,536. In moderate volume, 857 million shares were traded on the NYSE and 3.9 billion shares changed hands on the Nasdaq. WTI crude oil declined $1.41 to $61.94 per barrel. Elsewhere, the Bloomberg gold spot price was $8.61 higher at $1,878.23 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.4% to 89.78.
Jobless claims continue to decelerate, Leading Index higher for second-straight month…..
Weekly initial jobless claims came in at a level of 444,000 for the week ended May 15, better than the Bloomberg consensus estimate of 450,000, and compared to the prior week’s upwardly revised 478,000 level. The four-week moving average declined by 30,500 to 504,750, but continuing claims for the week ended May 8 rose by 111,000 to 3,751,000, north of estimates of 3,620,000. The four-week moving average of continuing claims rose by 24,750 to 3,681,000.
The Philly Fed Manufacturing Business Outlook Index declined by a larger amount than expected but remained solidly in expansion territory (a reading above zero) for May. The index fell to 31.5 versus estimates to drop to 41.5 from April’s 50.2 level. Growth in new orders, shipments and employment all decelerated, while inflation pressures remained as prices paid continued to surge.
The Conference Board’s Index of Leading Economic Indicators (LEI) for April rose 1.6% month-over-month (m/m), above estimates calling for a match of March’s unrevised 1.3% increase. The LEI was positive for the second-straight month due to positive net contributions from jobless claims, ISM new orders, stock prices, credit, the yield curve and consumer expectations.
Treasuries were higher, with the yield on the 2-year note dipping 1 basis point (basis point) to 0.15%, the yield on the 10-year note declining 4 bps to 1.63%, and the 30-year bond rate decreasing 3 bps to 2.34%.
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