Stocks Notch Another Positive Day…..
U.S. equities finished modestly higher, as the S&P 500 and Nasdaq both posted record highs, with the latter topping the 15,000 mark for the first time. The Energy sector led the way amid a rebound in oil prices, while value/cyclical issues—Financials, Materials and Industrials—also contributed to the upside. However, the Information Technology and Communications Services sectors were mixed to keep the gains in check, and defensively-natured issues—Utilities, Consumer Staples and Real Estate—continued to give back a recent run. Concerns about the Delta variant appeared to ease as case counts suggest the spread may be peaking and following yesterday’s full FDA approval of Pfizer’s and BioNTech’s coronavirus vaccine. Fed tapering uneasiness seemed to cool as the Fed’s key monetary policy symposium slated for the end of the week has been changed to a virtual affair instead of the typical gathering in Jackson Hole, Wyoming. In equity news, Palo Alto Networks and Best Buy rallied after both reported better-than-expected quarterly results. On the economic front, new home sales rose more than expected but regional manufacturing growth noticeably missed forecasts. Treasuries were lower, lifting yields, while the U.S. dollar and gold were both little changed. European markets finished mixed as sectors continued to diverge, while stocks in Asia extended yesterday’s bounce.
The Dow Jones Industrial Average rose 31 points (0.1%) to 35,366, the S&P 500 Index gained 7 points (0.2%) to 4,486, and the Nasdaq Composite increased 77 points (0.5%) to 15,020. In moderate volume, 782 million shares were traded on the NYSE and 3.8 billion shares changed hands on the Nasdaq. WTI crude oil advanced $1.90 to $67.54 per barrel. Elsewhere, the gold spot price ticked $0.30 higher to $1,806.60 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—lost 0.1% to 92.89.
New home sales rose 1.0% month-over-month (m/m) in July to an annual rate of 708,000 units, above the Bloomberg forecast calling for a rate of 697,000 units, and compared to June’s upwardly-revised 701,000-unit level. The median home price rose 18.4% y/y to $390,500. New home inventory rose to a 6.2-months supply at the current sales pace from the 6.0-months level in June. Sales in the West moved solidly higher m/m and sales in the South nudged higher but sales in the Northeast and Midwest both fell. Sales in all the major regions were down solidly compared to the same period a year ago. New home sales are based on contract signings, offering a timelier read on housing activity compared to the larger contributor of existing home sales, which are based on closings.
The Richmond Fed Manufacturing Activity Index slowed much more than expected but remained in expansion territory (a reading above zero) for this month. The index fell to 9 from July’s 27 reading, and versus forecasts calling for a decline to 24. Growth in new orders and order backlog slowed decisively, and employment expanded at a slower rate, and prices paid remained elevated, though growth in wages accelerated solidly.
Treasuries were lower, as the yield on the 2-year note was little changed at 0.22%, while the yields on the 10-year note and the 30-year bond rose 4 basis points (bps) to 1.29% and 1.91%, respectively.
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