Stocks Close Mixed, But Still End Quarter Higher…..

U.S. equities wrapped up the final day of Q2 mixed, but were still able to finish the quarter higher, as the S&P 500 continued to trade in record high territory. With June ending, the major indexes were able to post double-digit gains in the front half of the year, largely buoyed encouraging recent economic and earnings data. Today’s trading session brought another narrowly mixed market as investors further contemplated strong data versus uncertainty regarding the path of the Fed’s monetary policy amid recent inflation pressures, as well as heightened concerns related to the Delta coronavirus variant that has hampered activity in Europe and parts of Asia. Ahead of Friday’s key June nonfarm payroll report, ADP’s private sector jobs report showed growth in excess of 500,000 for the fourth-straight month, while mortgage applications fell, pending home sales surprisingly increased and Chicago manufacturing growth slowed more than expected but remained comfortably in expansion territory. In corporate news, General Mills, Bed Bath & Beyond and Constellation Brands all moved higher on the heels of their earnings results. Treasuries were higher, as downward pressure was applied on yields, and the U.S. dollar saw a jump. Gold and crude oil prices were higher. Asia finished mixed and Europe was lower following a host of economic data and amid the Delta variant uneasiness.

The Dow Jones Industrial Average rose 210 points (0.6%) to 34,503, the S&P 500 Index increased 6 points (0.1%) to 4,298, while the Nasdaq Composite ticked 24 points (0.2%) lower to 14,504. In moderate volume, 1.1 billion shares were traded on the NYSE and 5.2 billion shares changed hands on the Nasdaq. WTI crude oil rose $0.49 to $73.47 per barrel. Elsewhere, the Bloomberg gold spot price increased $8.83 to $1,770.07 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.3% to 92.35. Markets were solidly higher for the quarter, as the DJIA rose 4.6%, the S&P 500 advanced 8.2%, and the Nasdaq Composite moved 9.5% to the upside.

Private sector job growth tops forecasts, mortgage applications drop…..

The ADP Employment Change Report showed private sector payrolls rose by 692,000 jobs in June, versus the Bloomberg forecast calling for a 600,000 gain. May’s rise of 978,000 jobs was revised to a 886,000 increase. Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader June nonfarm payroll report, expected to show headline employment grew by 711,000 jobs and private sector jobs rose by 615,000 after both figures missed in May. The unemployment rate is forecasted to decline to 5.6% and average hourly earnings are projected to rise 0.4% month-over-month (m/m) and be up 3.6% y/y.

The Chicago PMI decelerated more than expected but remained comfortably at a level depicting expansion (a reading above 50). The index declined to 66.1 in June from May’s 75.2, versus estimates calling for a decrease to 70.0. The index pulled back from the highest level since the early 1970s as growth in new orders, order backlogs and production all slowed but continued to expand, the contraction in employment accelerated and inflation pressures remained as prices paid continued to expand at a faster pace.

The MBA Mortgage Application Index fell by 6.9% last week, following the prior week’s 2.1% increase. The decline came as the Refinance Index dropped 8.2% and the Purchase Index was 4.8% lower. The average 30-year mortgage rate rose 2 basis points (bps) to 3.20%.

In other housing data, pending home sales unexpectedly rose by 8.0% m/m in May, versus estimates calling for a 1.0% drop, after April’s unrevised 4.4% decrease. Sales were 13.9% higher y/y, on the heels of April’s upwardly-revised 53.7% jump. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.

Treasuries were mostly higher, as the yield on the 2-year note was little changed at 0.25%, while the yields on the 10-year note and 30-year bond declined 1 bp to 1.46% and 2.08%, respectively.

©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.