Stocks Show Afternoon Resiliency, But Conviction Remained Muted…..

U.S. stocks overcame early pressure but finished mixed as the bulls and bears appeared to continue to lack much conviction. The major indexes are on pace for weekly gains despite lingering uncertainties regarding the Delta variant, global monetary policy, fiscal stimulus, and persistent supply chain disruptions. However, September seems to be living up to its historically sluggish reputation as the underlying market action of the indexes remained choppy. The economic calendar was highlighted by an unexpected gain in August retail sales, though the prior month’s figures were revised to larger draw-downs than initially reported, while Philadelphia manufacturing output surprisingly jumped. Equity news remained relatively light, but Texas Instruments raised its dividend and Electronic Arts delayed the launch of its Battlefield 2042 game. Treasuries were lower to lift yields, and the U.S. dollar gained ground. Crude oil prices paused after yesterday’s rally and gold fell. Europe rose as the Industrials and Financials sectors led the charge, while Asia finished mixed with the intensified regulatory crackdown in China weighing on Chinese and Hong Kong markets.

The Dow Jones Industrial Average declined 63 points (0.2%) to 34,751 and the S&P 500 Index shed 7 points (0.2%) to 4,474, while the Nasdaq Composite rose 20 points (0.1%) to 15,182. In moderate volume, 929 million shares were traded on the NYSE and 3.6 billion shares changed hands on the Nasdaq. WTI crude oil was unchanged at $72.61 per barrel. Elsewhere, the gold spot price dropped $40.30 to $1,754.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.3% higher to 92.88.

Retail sales unexpectedly rise, jobless claims tick higher, regional manufacturing output jumps…..

Advance retail sales for August rose by 0.7% month-over-month (m/m), versus the Bloomberg consensus forecast of a 0.7% decrease, but July’s figure was adjusted lower to a 1.8% decline. Last month’s sales ex-autos gained 1.8% m/m, compared to expectations of a flat reading while July’s figure was revised downward to a 1.0% decrease. Sales ex-autos and gas were up 2.0% m/m, versus estimates of a flat reading, though July’s figure was adjusted lower to a 1.4% decline. The control group, a figure used to calculate GDP, advanced 2.5% m/m, versus projections of an unchanged reading, but July’s pace was revised lower to a 1.9% drop.

Weekly initial jobless claims came in at a level of 332,000 for the week ended September 11, versus estimates calling for 322,000 and compared to the prior week’s upwardly-revised 312,000 level. The four-week moving average decreased by 4,250 to 335,750, and continuing claims for the week ended September 4 dropped by 187,000 to 2,665,000, south of estimates of 2,740,000. The four-week moving average of continuing claims declined by 50,000 to 2,807,500.

The Philly Fed Manufacturing Business Outlook Index surprisingly moved further into expansion territory (a reading above zero) for September. The index jumped to 30.7 versus estimates of a dip to 19.0 from August’s 19.4 level. General business activity and shipments both saw growth accelerate, while inventories jumped back into expansion territory. New orders and employment both continued to grow, but at slower rates, while prices paid declined but remained comfortably in expansion territory.

Business inventories (chart) rose 0.5% m/m in July, matching forecasts, and June’s figure was upwardly-revised to a 0.9% gain.

Treasuries were lower, with the yield on the 2-year note ticking 1 basis point higher to 0.22%, the yield on the 10-year note rising 4 bps to 1.34%, and the 30-year bond rate gaining 3 bps to 1.88%.

©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.