Stocks Mixed After Two-Day Run…..
U.S. stocks closed mixed with modest movement as the bulls took a breather following two straight positive days that helped the markets back toward record high territory. Much of this week’s early rally appeared to be bolstered by a reprieve from monetary policy skittishness as yesterday’s dovish testimony from Fed Chairman Jerome Powell countered last week’s slightly more hawkish monetary policy announcement. The day’s trading session was largely uneventful from a headline perspective but did bring in a host of global June business activity reports, with growth in the U.S. and Europe remaining robust, while activity was mixed in Australia and Japan. Meanwhile, new home sales unexpectedly fell and mortgage applications rose for a second week. In corporate news, Winnebago Industries posted stronger-than-expected Q3 results and Shake Shack announced plans to expand in China, while Southwest Airlines announced its CEO succession plan. Treasuries dipped to lift yields and the U.S. dollar nudged higher. Gold was lower and crude oil prices were higher. Asia finished mixed and Europe traded lower as the markets grappled with the June data and Fed focus.
The Dow Jones Industrial Average fell 71 points (0.2%) to 33,874, the S&P 500 Index decreased 5 points (0.1%) to 4,242, and the Nasdaq Composite increased 18 points (0.1%) to 14,272. In moderate volume, 823 million shares were traded on the NYSE and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil advanced $0.23 to $73.08 per barrel. Elsewhere, the Bloomberg gold spot price decreased $3.34 to $1,774.40 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 91.85.
June business activity remains solid, home sales remain hampered by supply issues…..
The preliminary Markit U.S. Manufacturing PMI Index for June unexpectedly improved to 62.6 from May’s unrevised 62.1 figure, moving further into expansion territory as denoted by a reading above 50. The Bloomberg consensus estimate called for the index to dip to 61.5. The preliminary Markit U.S. Services PMI Index showed growth (above 50) for the key U.S. sector decelerated more than expected, declining to 64.8 from May’s 70.4 figure, and compared to forecasts of a dip to 70.0.
Markit said U.S. private sector businesses registered a further marked expansion in activity during June, as further easing of COVID-19 restrictions boosted new orders. The report noted that the rate of expansion in business activity softened slightly from the high seen in May but remained substantial overall.
New home sales fell 5.9% month-over-month (m/m) in May to an annual rate of 769,000 units, below forecasts calling for a rate of 865,000 units, and compared to April’s downwardly revised 817,000-unit level. The median home price jumped 18.1% y/y to $374,400. New home inventory rose to a 5.1-months supply at the current sales pace from the 4.6-months level in April. Sales in the Northeast and West moved higher but sales in the Midwest were flat and dropped in the South. Sales in all the major regions were solidly higher compared to the depressed levels seen amid the pandemic’s disruption in the same period a year ago. New home sales are based on contract signings, offering a timelier read on housing activity compared to the larger contributor of existing home sales, which are based on closings.
The MBA Mortgage Application Index rose by 2.1% last week, following the prior week’s 4.2% increase. The rise came as a 2.8% gain for the Refinance Index was met with a 0.6% increase for the Purchase Index. The average 30-year mortgage rate rose 7 basis points (bps) to 3.18%.
Treasuries dipped, as the yields on the 2-year and 10-year notes rose 3 bps to 0.27% and 1.49%, respectively, and the rate on the 30-year bond increased 2 bps to 2.11%.
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