Stocks Diverge Amid Fed Uncertainty,,,,,
U.S. equities finished mixed as investors continued to digest yesterday’s monetary policy decision from the Fed, as well as some diverging economic data. Uncertainty surrounding whether the Fed can manage its policy effectively amid festering inflation pressures and an accelerating economic recovery continued to keep conviction at bay. Information Technology issues saw strength, pushing the Nasdaq to a new high, but the sharp decline in Treasury yields appeared to weigh on Financials to temper the gains and keep the Dow underwater. The U.S. dollar rallied, gold tumbled for a second day, and crude oil prices were lower. In economic news, jobless claims surprisingly rose, Philadelphia manufacturing output remained in solid expansion territory, and the Leading Index posted a third-straight monthly gain. On the equity front, the Justice Department is suing to block Aon’s proposed $30.0 billion acquisition of Willis Towers Watson, Lennar Corporation topped quarterly forecasts and issued upbeat guidance, and Ford Motor Company offered positive guidance. Markets in Europe and Asia finished mixed as the investors reacted to the Fed’s decision.
The Dow Jones Industrial Average declined 210 points (0.6%) to 33,823, the S&P 500 Index shed 2 points to 4,222, while the Nasdaq Composite increased 122 points (0.9%) to 14,161. In heavy volume, 1.2 billion shares were traded on the NYSE and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil fell $1.11 to $71.04 per barrel. Elsewhere, the Bloomberg gold spot price plunged $35.49 to $1,775.57 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 0.9% to 91.95.
Jobless claims unexpectedly accelerate, markets continue to digest yesterday’s Fed decision…..
Weekly initial jobless claims came in at a level of 412,000 for the week ended June 12, versus the Bloomberg consensus forecast calling for a deceleration to 360,000 and compared to the prior week’s downwardly-revised 375,000 level. The four-week moving average decreased by 8,000 to 395,000, and continuing claims for the week ended June 5 rose by 1,000 to 3,518,000, north of estimates of 3,425,000. The four-week moving average of continuing claims fell by 55,000 to 3,603,750.
The Philly Fed Manufacturing Business Outlook Index dipped more than expected but remained solidly in expansion territory (a reading above zero) for June. The index declined to 30.7 versus estimates of a dip to 31.0 from May’s 31.5 level. New orders decelerated but remained solidly in expansion territory, while growth in shipments and employment both accelerated, and inflation pressures remained decisively elevated.
The Conference Board’s Index of Leading Economic Indicators (LEI) for May rose 1.3% month-over-month (m/m), in line with estimates calling for a match of April’s downwardly-revised increase. The LEI was positive for the third-straight month due to noticeably positive net contributions from jobless claims, ISM new orders, the yield curve and credit, which more than offset a decline for building permits and a dip for capital investment.
Treasuries were higher, as the yield on the 2-year note was flat at 0.21%, while the yield on the 10-year note declined 6 basis points (bps) to 1.52%, and the 30-year bond rate decreased 9 bps to 2.11%.
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