Stocks Lack Direction in Day Full of Data and Events…..

U.S. stocks finished mixed, as investors sifted through a slew of global data and grappled with the path and pace of economic growth as the spreading Delta coronavirus variant continues to hamper the outlook. Fed Chairman Jerome Powell concluded his two-day Congressional testimony where he maintained that the central bank believes the inflation pressures are transitory and that it remains focused on the recovery in the labor market. Earnings season kicked into gear with Morgan Stanley and Dow member UnitedHealth Group both topping the Street’s estimates and the latter raising its guidance. In domestic economic news, jobless claims decelerated, New York manufacturing growth surged to a record, industrial production grew at a slower-than-expected pace, and import prices rose. Treasuries were higher, adding to the recent plunge in yields and the U.S. dollar gained modest ground. Gold ended slightly higher in choppy trading and crude oil prices extended a slide on reports OPEC+ may be close to raising production levels. Europe finished with widespread losses, led by the Energy sector, while markets in Asia were mixed.

The Dow Jones Industrial Average advanced 54 points (0.2%) to 34,987, while the S&P 500 Index lost 14 points (0.3%) to 4,360, and the Nasdaq Composite decreased 102 points (0.7%) to 14,543. In moderate volume, 859 million shares were traded on the NYSE and 4.4 billion shares changed hands on the Nasdaq. WTI crude oil fell $1.48 to $71.65 per barrel. Elsewhere, the gold spot price moved $2.43 higher to $1,829.96 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—added 0.2% to 92.61.

Jobless claims decelerate, NY manufacturing growth jumps, Fed Chief testimony concludes…..

Weekly initial jobless claims came in at a level of 360,000 for the week ended July 10, versus the Bloomberg forecast calling for 350,000 and compared to the prior week’s upwardly-revised 386,000 level. The four-week moving average declined by 14,500 to 382,500, and continuing claims for the week ended July 3 dropped by 126,000 to 3,241,000, below estimates of 3,300,000. The four-week moving average of continuing claims fell by 71,750 to 3,376,000.

The Import Price Index increased 1.0% month-over-month (m/m) for June, versus expectations of a 1.1% gain, and compared to May’s upwardly-revised 1.4% rise. Versus last year, prices were up by 11.2%, compared to forecasts of a 11.1% increase and May’s upwardly-adjusted 11.6% gain.

The Empire Manufacturing Index, a measure of activity in the New York region, surged to 43.0 in July from 17.4 in June, and well above forecasts of a slight increase to 18.0. A reading above zero denotes growth. The index hit a record high as new orders more than doubled m/m, employment growth accelerated solidly, and inventories jumped back into expansion territory. Prices paid dipped but remained solidly in growth territory.

The Philly Fed Manufacturing Business Outlook Index declined but remained solidly in expansion territory (a reading above zero) for July. The index decreased to 21.9 versus estimates of a dip to 28.0 from June’s 30.7 level. Growth in new orders and shipments decelerated, along with employment, but all these remained comfortably in expansion territory. Prices paid slowed noticeably but continued to suggest elevated pricing pressures.

The Federal Reserve’s report on industrial production showed a 0.4% m/m gain in June, below estimates of a 0.6% increase, and versus May’s downwardly revised 0.7% rise. Manufacturing output dipped but mining and utilities production both rose solidly. Capacity utilization increased to 75.4% versus forecasts calling for a gain to 75.6% from the prior month’s downwardly-revised 75.1% rate. Capacity utilization is 4.2 percentage points below its long-run average.

Finally, Fed Chairman Jerome Powell concluded his two-day semi-annual Congressional monetary policy testimony before the Senate Banking Committee today. His prepared remarks were similar to what he told the House yesterday that inflation has increased “noticeably” and will likely remain elevated in coming months before moderating. Powell also said the Central Bank continues to expect that it will be appropriate to maintain the current target range for the federal funds rate until labor market conditions have reached levels consistent with its assessment of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.

“As always, in assessing the appropriate stance of monetary policy, we will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal,” the Chairman said. Powell added that it is continuing to increase its holdings of Treasury securities and agency mortgage-backed securities at least at their current pace until substantial further progress has been made toward its maximum-employment and price-stability goals. He stressed that these purchases have materially eased financial conditions and are providing substantial support to the economy. However, during today’s Q&A session, Powell noted that although the Fed is in active consideration of tapering, the bar to begin reining in monthly asset purchases is still a ways off.

Treasuries finished higher, adding to a recent rally that has applied noticeable downside pressure on yields. The yield on the 2-year note was flat at 0.22%, while the yields on the 10-year note and the 30-year bond fell 5 basis points (bps) to 1.30% and 1.92%, respectively.

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