Dow Finishes Strong, but Caution Keeps Most Stocks in Check…..

U.S. equities finished mostly higher, with the Dow flirting with record highs courtesy of strength in Industrials, while the growth-oriented sectors saw some pressure to keep the S&P 500 and Nasdaq close to the flatline. The moves came following some mixed economic reports that have kept optimism of economic recovery aloft, while signs that lawmakers are continuing to negotiate an infrastructure spending plan also appeared to somewhat lend a hand to sentiment. Jobless claims continued to decelerate, core durable goods orders came in stronger than anticipated, and personal consumption helped turn out solid Q1 GDP growth. On the earnings front, Best Buy and NVIDIA posted better-than-anticipated results and delivered upbeat guidance, while Dollar Tree offered a softer-than-expected outlook as a result of shipping delays. Treasuries weakened and yields rose, while the U.S. dollar ended slightly lower in choppy action to pare some of yesterday’s gain, gold reversed course to finish with a modest gain and crude oil prices were higher. European markets faltered late in the day, finishing mixed as the global markets continue to grapple with persisting inflation concerns and optimism of economic recoveries, while Asia also diverged.

The Dow Jones Industrial Average rose 142 points (0.4%) to 34,465, the S&P 500 Index increased 5 points (0.1%) to 4,201, while the Nasdaq Composite ticked 2 points lower to 13,736. In heavy volume, 1.9 billion shares were traded on the NYSE and 5.0 billion shares changed hands on the Nasdaq. WTI crude oil was $0.64 higher to $66.85 per barrel. Elsewhere, the Bloomberg gold spot price increased $1.58 to $1,898.25 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—dipped 0.1% to 89.96.

Jobless claims continue to decelerate, durable goods data upbeat, Q1 GDP revised slightly lower…..

Weekly initial jobless claims came in at a level of 406,000 for the week ended May 22, below the Bloomberg consensus estimate of 425,000 and the prior week’s unrevised 444,000 level. The four-week moving average fell by 46,000 to 458,750, and continuing claims for the week ended May 15 dropped by 96,000 to 3,642,000, south of estimates of 3,680,000. The four-week moving average of continuing claims dipped by 2,750 to 3,675,000.

April preliminary durable goods orders declined 1.3% month-over-month (m/m), versus estimates of a 0.8% rise and compared to March’s upwardly-revised 1.3% increase. However, ex-transportation, orders grew 1.0% m/m, above forecasts of a 0.7% gain and compared to March’s favorably-adjusted 3.2% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were up 2.3%, compared to projections of a 1.0% rise, while the prior month’s figure was revised higher to a 1.6% increase.

The second look (of three) at Q1 Gross Domestic Product, the broadest measure of economic output, showed a q/q annualized rate of expansion of 6.4%, unrevised from the first release’s figure and versus forecasts of an upwardly-revised 6.5% gain. Q4’s figure was unadjusted at a 4.3% increase. Personal consumption was revised to an 11.3% increase, north of expectations of an upwardly-revised 10.9% rise. Q4 consumption was unadjusted at a 2.3% gain.

On inflation, the GDP Price Index was revised to a 4.3% rise, versus estimates of an unadjusted 4.1% increase, while the core PCE Index, which excludes food and energy, was adjusted higher to a 2.5% gain, compared to forecasts of an unchanged 2.3% increase.

Pending home sales unexpectedly fell by 4.4% m/m in April, versus estimates calling for a 0.4% rise, after March’s downwardly-revised 1.7% gain. Sales were 53.5% higher y/y, on top of March’s downwardly-revised 25.0% increase. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.

The May Kansas City Fed Manufacturing Activity Index declined but remained comfortably at a level depicting expansion (a reading above zero). The index decreased to 26 from April’s 31 reading, and compared to forecasts calling for a dip to 30.

Treasuries are mostly lower, with the yield on the 2-year note flat at 0.15%, while the yields on the 10-year note and the 30-year bond rose 3 basis points to 1.61% and 2.28%, respectively.

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