Stocks Mixed Amid Slew of Earnings, Economic Data…..

U.S. equities finished mixed as investors parsed through a host of data and events, with the S&P 500 back to record high territory. Focus on corporate profits continued, as Q3 earnings season shifted into a higher gear. However, the persistent uncertainties surrounding supply-chain bottlenecks, inflation expectations, the surge in energy prices, and monetary policy direction continued to keep sentiment in check. Fiscal policy also added to the mix, as Congress continues to wrangle over a spending package, while some positive news regarding vaccine boosters was also digested. IBM, AT&T, and Tesla all beat earnings estimates but revenues were below expectations, while Southwest Airlines and American Airlines both reported smaller-than-expected losses following a challenging third quarter for air travel. Treasuries were lower following some recent steepening of the yield curve, and the U.S. dollar moved higher, while gold was little changed in choppy trading, and crude oil prices fell. The economic calendar was robust, as jobless claims came in better than expected, continuing their decline since the height of the pandemic, and the Philly Fed Manufacturing Index decelerated more than expected, while the Leading Economic Index rose for the seventh-straight month but at a slower rate than expected, and existing home sales solidly beat expectations. Europe finished mostly lower, while markets in Asia were mixed.

The Dow Jones Industrial Average lost 6 points to 35,603, while the S&P 500 Index increased 14 points (0.3%) to 4,550, and the Nasdaq Composite gained 94 points (0.6%) to 15,216. In moderate volume, 829 million shares were traded on the NYSE and 4.8 billion shares changed hands on the Nasdaq. WTI crude oil was down $0.92 at $82.50 per barrel. Elsewhere, the gold spot price inched $0.20 lower to $1,784.70 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.2% to 93.78.

Weekly initial jobless claims came in at a level of 290,000 for the week ended October 16, versus estimates of 297,000 and compared to the prior week’s upwardly-revised 296,000 level. The four-week moving average fell by 15,250 to 319,750, and continuing claims for the week ended October 9 dropped by 122,000 to 2,481,000, below estimates of 2,548,000. The four-week moving average of continuing claims fell by 84,750 to 2,655,500.

The Philly Fed Manufacturing Business Outlook Index declined but remained in expansion territory (a reading above zero) for October. The index fell to 23.8 versus estimates of a decline to 25.0 from September’s 30.7 level.

The Conference Board’s Leading Economic Index (LEI) for September rose 0.2% month-over-month (m/m), below estimates calling for a 0.4% gain and August’s downwardly-revised 0.8% increase. The LEI was positive for the seventh-straight month due mostly to positive net contributions from ISM new orders, jobless claims, credit, and interest rate spread, which more than offset a negative contribution from building permits and consumer expectations.

Existing home sales increased 7.0% month-over-month (m/m) in September to an annual rate of 6.29 million units, versus the Bloomberg expectation of 6.10 million units, after August’s unrevised 5.88 million rate. Existing home sales saw a nice gain as each of the four major regions experienced increases on a m/m basis while only one increased on a y/y perspective. Sales of single-family homes were up m/m but down y/y, while purchases of condominiums and co-ops were up both m/m and y/y. The median existing home price was up 13.3% from a year ago to $352,800, marking the 115th straight month of y/y gains as every region recorded price increases. Unsold inventory was at a 2.4-months pace at the current sales rate, a 7.7% decrease m/m, and down from the 2.7-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, “Some improvement in supply during prior months helped nudge up sales in September. Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.” Yun added that we are likely to see more homes on the market as soon as 2022 as mortgage forbearance programs end, and as homebuilders ramp up production.

Treasuries were lower, as the yield on the 2-year note was up 6 basis points (bps) at 0.44%, the yield on the 10-year note rose 4 bps to 1.68%, and the 30-year bond rate ticked 2 bps higher to 2.13%.

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