Stocks Range-bound as Investors Reassess…..

U.S. equities finished very close to where they began the day in choppy action. Gains in Information Technology and Energy issues amid the optimism of global economic recoveries continued to buoy sentiment. But, the uncertainty surrounding inflation and monetary policy persisted to temper the enthusiasm, as investors appeared to reassess the economic situation following a Beige Book report from the Fed that indicated that the economic recovery gained steam, but pricing pressures also continued to increase. On the equity front, Zoom Video Communications topped quarterly estimates and raising its guidance, but its outlook was highly scrutinized, and Etsy announced an agreement to acquire fashion marketplace Depop for roughly $1.6 billion. In other economic news, mortgage applications declined. Treasuries ticked higher, putting modest pressure on yields and the U.S. dollar nudged to the upside, while gold and crude oil prices also saw gains. Europe finished higher, getting a boost from Energy stocks amid the economic optimism, while markets in Asia were again mixed.

The Dow Jones Industrial Average rose 25 points (0.1%) to 34,600, while the S&P 500 Index grew 6 points (0.1%) to 4,208 and the Nasdaq Composite increased 20 points (0.1%) to 13,756. In heavy volume, 1.1 billion shares were traded on the NYSE and 5.0 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.11 to $68.83 per barrel. Elsewhere, the Bloomberg gold spot price increased $8.31 to $1,908.75 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.1% higher to 89.89.

Mortgage applications decline, Fed Beige Book reports increased activity, but higher prices

The MBA Mortgage Application Index declined by 4.0% last week, following the prior week’s 4.2% decrease. The drop came as the Refinance Index fell 4.6% and the Purchase Index declined 3.1%. The average 30-year mortgage rate dipped 1 basis point (bp) to 3.17%.

In afternoon action, the Federal Reserve released its Beige Book report, an anecdotal read on the nation’s business activity used as a policy tool to prep for the Fed’s next two-day monetary policy meeting set to conclude on June 16. The survey showed that the U.S recovery gained steam in April and May at “a somewhat faster rate than the prior reporting period.” However, pricing pressures increased since its last read, with selling prices rising modestly, while input prices “rose more briskly.” The report noted that some businesses were able to take advantage of the increase in demand following the pandemic shortfall and were able to pass along higher input costs to customers. Many respondents said that going forward, they anticipate further cost pressures and the need to charge higher prices in the coming months.

Treasuries nudged higher, as the rate on the 2-year note was little changed at 0.14%, while the yield on the 10-year note declined 2 bps to 1.59% and the 30-year bond rate dipped 1 basis point to 2.28%.

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