Stocks Fail to Rally…..
U.S. stocks stumbled to the finish line to close the day just below the flatline, despite being in the green most of the day. Markets paid close attention to the first day of Fed Chairman Jerome Powell’s two-day Congressional testimony, in which he reiterated further rate hikes to restore price stability. President Biden called on Congress to suspend the federal gas tax to offer some reprieve at the pump. Persistently elevated inflation and the resulting hawkish monetary policy by global central banks have been major factors contributing to recession fears. In economic news, mortgage applications rose for the second straight week despite the recent surge in interest rates. Meanwhile, Winnebago Industries rose after easily topping the Street’s earnings estimates. Treasuries rallied strongly as yields plunged across the curve. The U.S. dollar continued to pull back from recent multi-decade highs. Crude oil prices sold off, and gold was marginally higher. Asia finished broadly lower, and Europe was mostly lower amid the global uneasiness.
The Dow Jones Industrial Average declined 47 points (0.2%) to 30,483, the S&P 500 Index dipped 5 points (0.1%) to 3,760, and the Nasdaq Composite decreased 16 points (0.2%) to 11,053. In moderately heavy volume, 4.9 billion shares of NYSE-listed stocks were traded, and 5.2 billion shares changed hands on the Nasdaq. WTI crude oil fell $3.33 to $106.19 per barrel. Elsewhere, the gold spot price was up $1.00 at $1,839.80 per ounce, and the Dollar Index lost 0.2% to 104.20.
Mortgage applications rise for second week, yields lower as Fed Chair Powell testifies…..
The MBA Mortgage Application Index gained 4.2% last week, following the prior week’s increase of 6.6%. The index rose for a second-straight week as a 3.1% decrease in the Refinance Index was more than offset by a 7.9% rise for the Purchase Index. The rise came even as the average 30-year mortgage rate jumped 33 bps to 5.98%, and is up 280 bps versus a year ago.
Treasuries are rising solidly with yields losing ground as concerns rise regarding a recession amid the backdrop of an aggressive Fed to try to combat persistent inflation. The yield on the 2-year Treasury note was down 16 bps to 3.06%, while the yields on the 10-year note and the 30-year bond decreased 15 bps to 3.15% and 3.24%, respectively.
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