Fall in Rates Unnerving Markets…..
U.S. equities fell sharply, as the persistent drop in Treasury yields amid demand for bonds continued to worry investors. Concerns about the potential global economic impact of the festering Delta coronavirus variant also seemed to add to the negative tone. Most sectors finished in the red, with Utilities and Real Estate stocks seeing the least pressure, while Information Technology and Financials led to the downside. Along with the drop in Treasury yields, the U.S. dollar trimmed a recent bounce, gold lost ground and crude oil prices finished higher to pare the week’s slide that has come amid the OPEC+ impasse regarding oil production levels. News on the equity front remained light ahead of next week’s unofficial start of Q2 earnings season, but WD-40 Company topped quarterly forecasts and issued upbeat guidance. Moreover, railroad companies saw pressure, along with transportation stocks, following news that the Biden Administration will order increased regulations in the ocean shipping and railroad industries. The economic calendar showed initial jobless claims unexpectedly ticked higher, while consumer credit surged in May. Markets in Europe and Asia finished lower amid the focus on global bond yields and the Delta variant, while China’s suggestion of further stimulus seemed to exacerbate economic growth uncertainty.
The Dow Jones Industrial Average fell 260 points (0.8%) to 34,422, the S&P 500 Index declined 37 points (0.9%) to 4,321, and the Nasdaq Composite lost 105 points (0.7%) to 14,560. In heavy volume, 972 million shares were traded on the NYSE and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.74 to $72.94 per barrel. Elsewhere, the Bloomberg gold spot price shed $1.20 to $1,802.43 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.3% to 92.40.
Jobless claims unexpectedly ticked higher, Treasury yields continue to slide, borrowing jumps…..
Weekly initial jobless claims came in at a level of 373,000 for the week ended July 3, versus the Bloomberg forecast calling for 350,000 and compared to the prior week’s upwardly-revised 371,000 level. The four-week moving average dipped by 250 to 394,500, and continuing claims for the week ended June 26 fell by 145,000 to 3,339,000, below estimates of 3,350,000. The four-week moving average of continuing claims fell by 44,500 to 3,440,750.
Consumer credit, released in the final hour of trading, showed consumer borrowing surged by $35.3 billion during May, the largest jump on record, and well above the $18.0 billion forecast of economists polled by Bloomberg, while April’s figure was adjusted upward to an increase of $20.0 billion from the originally reported $18.6 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $26.1 billion, a 9.4% increase y/y, while revolving debt, which includes credit cards, expanded by $9.2 billion, an 11.4% y/y rise.
Treasuries extended the week’s gains that has applied noticeable downside pressure on yields. The yields on the 2-year note and the 30-year bond decreased 2 basis points (bps) to 0.19% and 1.92%, respectively, while the yield on the 10-year note was down 3 bps to 1.29%.
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