Stocks Add to Recent Run…..

U.S. equities finished with widespread gains, as concerns about premature tightening of global monetary policies appeared to cool following this week’s dovish testimony from Fed Chairman Jerome Powell that countered last week’s hawkish Fed tilt. Meanwhile, the Bank of England acknowledged above target inflation but said it expects it to be transitory and most policymakers warned of the risk of tightening too soon. Adding to the mood, President Biden declared that the White House and a bipartisan group of Senators have struck a deal on the highly-anticipated infrastructure spending package. The Information Technology sector led the way, and Financials issues gained ground ahead of today’s stress test results released by the Fed after the close. Treasuries were little changed despite a robust economic calendar that showed durable goods orders missed but the prior month’s figures were revised higher, and jobless claims decelerated at a slower pace than expected. The U.S. dollar was nearly flat, gold lost modest ground and crude oil prices were modestly higher. On the equity front, shares of Eli Lilly and Company moved to the upside after the FDA gave is experimental Alzheimer’s treatment Breakthrough Therapy designation, while KB Home reported disappointing revenues and deliveries, and Darden Restaurants posted better-than-expected earnings and upped its dividend. Europe finished higher, as the Bank of England’s decision was met with another round of upbeat economic data, while markets in Asia were mixed in a subdued session.

The Dow Jones Industrial Average rose 323 points (1.0%) to 34,197, the S&P 500 Index increased 25 points (0.6%) to 4,266, and the Nasdaq Composite advanced 98 points (0.7%) to 14,370. In moderate volume, 810 million shares were traded on the NYSE and 4.2 billion shares changed hands on the Nasdaq. WTI crude oil advanced $0.22 to $73.30 per barrel. Elsewhere, the Bloomberg gold spot price decreased $4.24 to $1,774.44 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was unchanged at 91.81.

Durable goods orders miss, jobless claims higher than expected to headline busy economic day…..

May preliminary durable goods orders (chart) rose 2.3% month-over-month (m/m), versus the Bloomberg estimate of a 2.8% rise and compared to April’s favorably-revised 0.8% decrease. Ex-transportation, orders grew 0.3% m/m, south of forecasts of a 0.7% gain and compared to April’s upwardly-adjusted 1.7% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, dipped 0.1%, compared to projections of a 0.6% rise, while the prior month’s figure was revised higher to a 2.7% increase.

Weekly initial jobless claims (chart) came in at a level of 411,000 for the week ended June 19, versus forecasts calling for 380,000 and compared to the prior week’s upwardly-revised 418,000 level. The four-week moving average rose by 1,500 to 397,750, and continuing claims for the week ended June 12 fell by 144,000 to 3,390,000, below estimates of 3,460,000. The four-week moving average of continuing claims dropped by 55,250 to 3,552,500.

The advance goodstrade balance showed that the May deficit widened more than expected, coming in at $88.1 billion, versus estimates calling for it to increase to $87.5 billion, and compared to April’s upwardly-adjusted shortfall of $85.7 billion.

Preliminary wholesale inventories rose 1.1% m/m for May, compared to expectations of a 0.8% gain, and versus April’s upwardly-revised 1.0% rise.

The final look (of three) at Q1 Gross Domestic Product, the broadest measure of economic output, showed the quarter-over-quarter (q/q) annualized rate of expansion remained at the previous estimate of 6.4%, matching forecasts. Q4’s figure was unadjusted at 4.3% growth. Personal consumption was revised to an 11.4% rise for Q1 from the previous estimate of an 11.3% gain and in line with expectations. Q4 consumption was unrevised at a 2.3% gain.

On inflation, the GDP Price Index was unrevised at a 4.3% rise, matching forecasts, while the core PCE Index, which excludes food and energy, was also unrevised at a 2.5% advance, in line with estimates.

The June Kansas City Fed Manufacturing Activity Index unexpectedly moved further into a level depicting expansion (a reading above zero). The index rose to 27 from May’s 26 reading, and compared to forecasts calling for a dip to 24.

Treasuries were little changed, as the yields on the 2-year and 10-year notes were flat at 0.26% and 1.49%, respectively, while the 30-year bond rate dipped 1 basis point to 2.10%.

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