S&P, Dow Back Off of Records Highs Despite Upbeat Earnings…..

U.S. equities lost steam in the final minutes of today’s trading session to finish mostly lower after a recent run-up that brought both the S&P 500 and Dow to fresh record highs. Investors again sifted through a heavy earnings slate that showed Alphabet, Advanced Micro Devices, and Dow members Microsoft, Visa, Coca-Cola, and McDonald’s all beat the Street’s forecasts, while fellow Dow component Boeing missed on both the top and bottom line. Companies continued to mention supply chain and inflationary pressures in their reports, which has kept expectations elevated that the Fed may begin tapering asset purchases in Q4. The economic calendar was heavy today, as mortgage applications increased slightly last week amid a rise in the 30-year mortgage rate, and the trade balance widened more than expected. Preliminary wholesale inventories rose slightly more than forecasts, and the durable goods orders report was mixed with the headline rate falling less than anticipated, but business spending grew, and above of expectations. Treasuries were mixed with the curve flattening for a second day, and the U.S. dollar ticked lower, while gold finished higher in choppy trading, and crude oil prices fell to pare a recent run. Europe finished broadly lower as investors digested earnings on both sides of the pond and data in the region, while markets in Asia lost ground amid technology concerns.

The Dow Jones Industrial Average fell 266 points (0.7%) to 35,491, while the S&P 500 Index decreased 23 points (0.5%) to 4,552, while the Nasdaq Composite was flat at 15,236. In moderate volume, 870 million shares were traded on the NYSE and 6.0 billion shares changed hands on the Nasdaq. WTI crude oil was down $1.99 at $82.66 per barrel. Elsewhere, the gold spot price advanced $4.90 to $1,798.30 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—edged 0.1% lower to 93.85.

Business spending rises, trade deficit increases…..

The MBA Mortgage Application Index increased 0.3% last week, following the prior week’s 6.3% drop. The slight increase came as a 1.6% fall in the Refinance Index was met with a 3.5% increase for the Purchase Index. The average 30-year mortgage rate rose 7 basis points (bps) to 3.30%.

The advance goods trade balance showed that the September deficit widened more than expected, coming in at $96.3 billion, versus the Bloomberg estimate calling for it to increase to $88.3 billion from August’s unrevised shortfall of $87.6 billion.

Preliminary wholesale inventories rose 1.1% month-over-month (m/m) for September, compared to expectations of a 1.0% gain, and versus August’s unrevised 1.2% rise.

September preliminary durable goods orders fell 0.4% month-over-month (m/m), versus the Bloomberg estimate of a 1.1% drop and compared to August’s downwardly-revised 1.3% gain from an initial 1.8% rise. Ex-transportation, orders were up 0.4% m/m, in line with forecasts and compared to August’s unadjusted 0.3% rise. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, increased 0.8%, compared to projections of a 0.5% rise, and above the prior month’s downwardly-revised 0.5% increase.

Treasuries were mixed, as the yield on the 2-year note was up 5 basis points (bps) at 0.50%, while the yield on the 10-year note was 8 bps lower to 1.54%, and the 30-year bond rate was down 10 bps at 1.95%.

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