Stocks Snap Winning Streak in a Bumpy Session…..

U.S. stocks finished out a choppy session lower, paring a recent rally that has seen the S&P 500 and Nasdaq notch a number of fresh record highs. Investors sifted through some lackluster global economic data, with Chinese manufacturing and services sector activity decelerating more than expected and Eurozone consumer price inflation coming in hotter than expected. The U.S. economic calendar also showed August Consumer Confidence and regional manufacturing activity both declined more than anticipated. Stocks have shown some resiliency in the face of the lingering Delta variant, Fed tapering expectations, and the likelihood that we may have hit peak earnings and economic growth rates. On the equity front, shares of Zoom Video Communications suffered as the Street scrutinized its growth of larger customers and its guidance, and Designer Brands was lower after the footwear retailer formerly known as DSW warned about supply-chain impacts which appeared to overshadow its upbeat quarterly results. Treasuries were mostly lower, with yields ticking higher, and the U.S. dollar was little changed, while gold gained ground and crude oil prices fell. Europe finished in the red following the inflation report, while markets in Asia were higher despite a deceleration in Chinese activity reports.

The Dow Jones Industrial Average declined 39 points (0.1%) to 35,361, the S&P 500 Index shed 6 points (0.1%) to 4,523, and the Nasdaq Composite decreased 7 points to 15,259. In heavy volume, 1.2 billion shares were traded on the NYSE and 4.1 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.71 lower to $68.50 per barrel. Elsewhere, the gold spot price gained $5.10 to $1,817.30 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was unchanged at 92.67.

The Conference Board’s Consumer Confidence Index decreased to 113.8 in August from July’s downwardly-revised 125.1 level, and versus the Bloomberg estimate calling for a decline to 123.0. The index fell to the lowest level since February 2021 as both the Present Situation Index portion of the survey and the Expectations Index of business conditions for the next six months fell solidly. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—decreased to 42.8 from the 44.1 level posted in July. 12-month inflation expectations moved higher.

The Conference Board added that, “Concerns about the Delta variant—and, to a lesser degree, rising gas and food prices—resulted in a less favorable view of current economic conditions and short-term growth prospects. Spending intentions for homes, autos, and major appliances all cooled somewhat; however, the percentage of consumers intending to take a vacation in the next six months continued to climb. While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead.”

The Chicago PMI fell more than expected but remained comfortably at a level depicting expansion (a reading above 50). The index decreased to 66.8 in August from July’s 73.4 reading, versus estimates calling for a decrease to 68.0. The larger-than-expected deceleration came as growth in new orders and production both slowed, and the contraction in employment remained, but expansion in order backlogs accelerated. Inflation pressures remained elevated as prices paid rose at a faster pace.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 19.1% y/y gain in home prices in June, versus estimates of an 18.6% increase. Compared to the prior month, home prices were up 1.8% on a seasonally adjusted basis, matching forecasts.

Treasuries were lower, as the yield on the 2-year note was little changed at 0.21%, while the yields on the 10-year note and the 30-year bond rose 3 basis points to 1.31% and 1.93%, respectively.

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