Markets Mixed in Roller-Coaster of a Day…..
U.S. equities finished mixed and near where they began in a volatile day of trading, as investors weighed a host of data and earnings reports. Meanwhile, headwinds lingered, including aggressive Fed expectations, the ongoing war in Ukraine, lockdowns in China, the recent spike in interest rates, and the surge in the U.S. dollar as of late. Dow members Microsoft and Visa were standout winners after their quarterly results, while Dow component Boeing and Alphabet weighed on the markets after missing expectations. Treasuries finished lower, lifting yields, and the U.S. dollar extended its rally. Crude bounced off early losses to finish higher, while gold traded lower. In economic news, mortgage applications fell for a seventh-straight week, pending home sales added to a disappointing month of housing data, the advance goods trade deficit unexpectedly jumped, and wholesale inventories rose more than expected. Asia finished mixed as Chinese stocks rebounded, and European equities rallied into the close to finish higher, despite the heavy global uncertainty.
The Dow Jones Industrial Average rose 62 points (0.2%) to 33,302, and the S&P 500 Index increased 9 points (0.2%) to 4,184, but the Nasdaq Composite declined 2 points to 12,489. In moderate volume, 4.7 billion shares of NYSE-listed stocks were traded, and 4.6 billion shares changed hands on the Nasdaq. WTI crude oil nudged $0.32 higher to $102.02 per barrel. Elsewhere, the gold spot price traded $17.20 lower to $1,886.90 per ounce, and the Dollar Index was up 0.7% at 103.00.
The MBA Mortgage Application Index declined 8.3% last week, following the prior week’s decrease of 5.0%. The seventh-straight weekly downturn came as a 9.0% drop in the Refinance Index was met with a 7.6% fall for the Purchase Index. The average 30-year mortgage rate extended its climb, rising 17 basis points (bps) to 5.37%, and is up 220 basis points (bps) versus a year ago.
In other housing news, pending home sales fell by 1.2% m/m in March—the fifth-straight monthly drop—versus the Bloomberg consensus estimate of a 1.0% decline, and following February’s upwardly-revised 4.0% drop. Sales tumbled 8.9% y/y, versus forecasts of an 8.1% decrease, on the heels of February’s positively-adjusted 5.2% decline. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.
The advance goods trade balance showed that the March deficit unexpectedly jumped to $125.3 billion, versus the Bloomberg consensus estimate calling for it to contract to $105.0 billion from February’s downwardly-revised shortfall of $106.3 billion.
Preliminary wholesale inventories rose 2.3% month-over-month (m/m) for March, compared to expectations of a 1.5% gain, and versus February’s upwardly-revised 2.6% increase.
Treasuries were lower after a recent rise that has seen rates decline and trim gains that have been seen as of late as the markets continue to be uneasy amid a host of potential headwinds. Chief among them is aggressive monetary policy tightening expectations that have fostered the rise in yields, along with recent inflation data and comments from Fed officials. Fed Chairman Jerome Powell last week said a rate hike of 50 bps was on the table for its May 4 monetary policy decision, which would be the first time it raised rates in excess of 25 bps in over 20 years. Meanwhile Fed officials have suggested that the beginning of its balance sheet reduction program was also set to start soon, with a ramp-up to $95 billion in securities to “mature off” the balance sheet each month.
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