Markets Add to Rebound…..

U.S. equities were able to post a third day of gains following a bumpy session that saw stocks trade in a tight range. The choppiness came as investors sifted through a host of earnings and economic data, while assessing the sharp snapback over the past couple sessions following Monday’s decisive tumble. Adding to the mix was the uneasiness surrounding the continued global spread of the Delta coronavirus variant, as well as lingering uncertainty regarding the potential peak in earnings and economic growth rates. Q2 earnings season continued in earnest, offering mixed results from AT&T, Texas Instruments, Southwest Airlines and Dow member Dow Inc. On the economic front, jobless claims unexpectedly accelerated, while existing home sales and the Leading Index both rose but at rates slightly below estimates. Treasuries rose after seeing noticeable pressure yesterday that fostered a rebound in yields, and crude oil prices finished solidly to the upside. The U.S. dollar and gold saw only modest gains. European equities were mixed after the European Central Bank kept its monetary policy stance unchanged, while markets in Asia were able to post widespread gains amid lower volume with Japan’s bourse closed for a holiday.

The Dow Jones Industrial Average rose 25 points (0.1%) to 34,823, the S&P 500 Index increased 9 points (0.2%) to 4,367, while the Nasdaq Composite advanced 53 points (0.4%) to 14,685. In moderate volume, 742 million shares were traded on the NYSE and 3.5 billion shares changed hands on the Nasdaq. WTI crude oil gained $1.61 to $71.91 per barrel. Elsewhere, the gold spot price increased $3.70 to $1,807.10 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—nudged 0.1% higher to 92.81.

Jobless claims accelerate, existing home sales and Leading Index both miss slightly….

Weekly initial jobless claims came in at a level of 419,000 for the week ended July 17, versus the Bloomberg forecast calling for 350,000 and compared to the prior week’s upwardly-revised 368,000 level. The four-week moving average ticked higher by 750 to 385,250, and continuing claims for the week ended July 10 declined by 29,000 to 3,236,000, north of estimates of 3,100,000. The four-week moving average of continuing claims fell by 44,000 to 3,338,000.

Existing home sales increased 1.4% month-over-month (m/m) in June to an annual rate of 5.86 million units, versus expectations of 5.90 million units, after May’s downwardly-revised 5.78 million rate. Existing home sales in all major regions notched double-digit y/y gains.

June’s gain snapped a string of four-straight monthly declines as three of the four major regions registered small m/m gains and the fourth remained flat. Sales of single-family homes and purchases of condominiums and co-ops were all up m/m are were solidly higher compared to a year ago. The median existing home price was up 23.4% from a year ago to a record high of $363,300, marking the 112th straight month of y/y gains as every region recorded price jumps. Unsold inventory was at a 2.6-months pace at the current sales rate, up slightly m/m but down sharply from the from the 3.9-months pace a year earlier. Existing home sales reflect contract closings instead of signings and account for a large majority of the home sales market.

National Association of Realtors Chief Economist Lawrence Yun said, “Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes,” adding that sales continue to run at a pace above the rate seen before the pandemic. Yun also noted that, “At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year.”

The Conference Board’s Index of Leading Economic Indicators (LEI) for June increased 0.7% m/m, south of estimates calling for a 0.8% gain and May’s negatively-revised 1.2% increase. The LEI was positive for the fourth-straight month due to noticeably positive net contributions from jobless claims, ISM new orders, credit, the yield curve and consumer expectations, which more than offset a decline for building permits and the average workweek.

The July Kansas City Fed Manufacturing Activity Index surprisingly moved further into a level depicting expansion (a reading above zero). The index rose to 30 from June’s 27 reading, and compared to forecasts calling for a dip to 25.

Treasuries were higher following the employment data and after yesterday’s decline that saw yields rebound from a recent drop. The yield on the 2-year note dipped 1 basis point (bp) to 0.20%, while the yield on the 10-year note decreased 3 bps to 1.26%, and the 30-year bond rate was 5 bps lower at 1.89%.

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