Markets Show Resiliency in Final Hour…..
In another choppy trading session, U.S. equities finished mixed, with the S&P 500 and NASDAQ very near the unchanged mark, after investors appeared to struggle with conviction on the heels of yesterday’s sharp drawdown. Confidence remained hindered amid the rising inflation pressures that have the Fed and other key central banks aggressively tightening monetary policies, causing the flare up in recession concerns. Equity news was mixed, with General Mills topping earnings expectations and raising its dividend, while McCormick & Company noticeably missed forecasts and lowered its profit forecast, and FedEx saw pressure as the Street digested its outlook. In economic news, mortgage applications rose for a third-straight week, and Q1 GDP was unexpectedly revised to a larger contraction than previously estimated. Treasuries moved higher to apply downside pressure on yields and the U.S. dollar was higher, remaining near 20-year highs. Meanwhile, crude oil prices lost ground, and gold is traded modestly to the downside. Europe finished mostly lower despite some relatively favorable German inflation data, while Asia saw widespread losses following the negative tone set in the U.S. yesterday.
The Dow Jones Industrial Average rose 82 points (0.3%) to 31,029, while the S&P 500 Index decreased 3 points (0.1%) to 3,819, and the Nasdaq Composite declined 4 points to 11,178. In moderate volume, 4.1 billion shares of NYSE-listed stocks were traded, and 5.5 billion shares changed hands on the Nasdaq. WTI crude oil fell $1.98 to $109.78 per barrel. Elsewhere, the gold spot price shed $1.40 to $1,819.80 per ounce, and the Dollar Index gained 0.6% to 105.12.
Mortgage applications rise for a third week, Q1 GDP revised negatively
The MBA Mortgage Application Index gained 0.7% last week, following the prior week’s increase of 4.2%. The index rose for a third-straight week as a 1.9% increase in the Refinance Index was accompanied by a 0.1% rise for the Purchase Index. The rise came as the average 30-year mortgage rate declined 14 bps to 5.84%, but is up 264 bps versus a year ago.
The final look (of three) at Q1 Gross Domestic Product the broadest measure of economic output, showed a quarter-over-quarter (q/q) annualized rate of contraction of 1.6%, versus estimates to be unrevised at the 1.5% decline posted in the second release. Q4’s figure was unadjusted at a 6.9% increase. Personal consumption was revised noticeably lower to a 1.8% rise for Q1 from the previous estimate of a 3.1% gain and versus expectations to be unrevised. Q4 consumption was unadjusted at a 2.5% rise.
On inflation, the GDP Price Index was revised higher to an 8.2% gain, versus estimates the be unrevised at an 8.1% increase, and the core PCE Index, which excludes food and energy, was adjusted higher to a 5.2% advance compared to expectations of an unadjusted 5.1% gain.
Treasuries moved higher with yields losing ground as action in the bond markets remains choppy with the Fed aggressively tightening policy amid the backdrop of a slowing economy.
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