Stocks Mixed After Early Push Higher…..
U.S. stocks finished mixed after giving up early gains, while the Nasdaq under performed as Treasuries came under pressure to boost yields. Focus was on President Biden’s renomination of Jerome Powell as Fed Chairman, giving the markets some clarity on leadership as the Central Bank begins down the path toward tighter monetary policy. The mixed action began the shortened week, which will see the markets close on Thursday for Thanksgiving and trade in an abbreviated session on Black Friday. The markets remained choppy amid a host of uncertainties, notably COVID-19 spreads in Austria and Germany, along with continued festering supply-chain and inflation issues. The economic week began with an unexpected rise in existing home sales. The equity front was relatively light, though M&A news is in focus as Vonage Holdings agreed to be acquired by Ericsson in a total transaction valued at about $6.2 billion, while Telecom Italia received a near $12.0 billion takeover offer from KKR & Co. The U.S. dollar rallied, crude oil prices advanced, and gold tumbled. Europe finished mixed following the Fed news and amid the M&A activity, Asia also diverged to begin the week.
The Dow Jones Industrial Average rose 17 points (0.1%) to 35,619, while the S&P 500 Index decreased 15 points (0.3%) to 4,683, and the Nasdaq Composite dropped 203 points (1.3%) to 15,855. In moderately-heavy volume, 4.4 billion shares of NYSE-listed stocks were traded, and 5.4 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.81 to $76.75 per barrel. Elsewhere, the gold spot price fell $47.10 to $1,804.50 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.5% to 96.53.
Existing home sales increased 0.8% month-over-month (m/m) in October to an annual rate of 6.34 million units, versus the Bloomberg expectation of 6.20 million units, after September’s unrevised 6.29 million rate. Existing home sales were higher in two of the four major U.S. regions, one region dropped and the fourth held steady. Each region witnessed a sales decline year-over-year (y/y). Sales of single-family homes were up solidly m/m but down y/y, while purchases of condominiums and co-ops were down both m/m and y/y. The median existing home price was up 13.1% from a year ago to $353,900, marking the 116th straight month of y/y gains. Unsold inventory was unchanged at September’s 2.4-months pace at the current sales rate, down from the from the 2.5-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, “Home sales remain resilient, despite low inventory and increasing affordability challenges.” Yun added that inflationary pressures, such as fast-rising rents and increasing consumer prices, may have some prospective buyers seeking the protection of a fixed, consistent mortgage payment.
Treasuries were lower, with the yield on the 2-year note rising 7 basis points (bps) to 0.58%, the yield on the 10-year note gaining 8 bps to 1.62%, and the 30-year bond increasing 6 bps to 1.96%.
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