Markets Show Some Resiliency, but Uneasiness Remains…..

U.S. equities showed some resiliency to come off the worst levels of the day and finish mixed in a return to action following the long holiday weekend. Global recession concerns continued to weigh on sentiment, with the spread between the 10-year and 2-year Treasury yield inverting again, and the U.S. dollar rallying to 20-year highs to exacerbate the uneasiness. In equity news, Tesla reported softer-than-expected Q2 deliveries, and quarterly sales at Ford also missed forecasts, but Exxon Mobil offered an upbeat earnings forecast for Q2. In light economic news, factory orders came in well above estimates. Crude oil prices plunged, and gold also traded solidly lower. Europe saw widespread losses as the euro and British pound tumbled versus the U.S. dollar, while Asia finished mixed despite some upbeat Chinese economic data.

The Dow Jones Industrial Average lost 129 points (0.4%) to 30,968, while the S&P 500 Index increased 6 points (0.2%) to 3,831, and the Nasdaq Composite advanced 194 points (1.8%) to 11,322. In moderate volume, 5.0 billion shares of NYSE-listed stocks were traded, and 4.9 billion shares changed hands on the Nasdaq. WTI crude oil plunged $8.93 to $99.50 per barrel. Elsewhere, the gold spot price lost $34.90 to $1,766.60 per ounce, and the Dollar Index rallied 1.3% to 106.47.

Factory orders jump, yield curve flattens further

Factory orders increased 1.6% month-over-month (m/m) in May, well above the Bloomberg estimate of a 0.5% rise, with the prior month’s 0.3% gain being revised higher to a 0.7% increase. Durable goods orders—preliminarily reported two weeks ago—were revised favorably to a 0.8% advance for May, and excluding transportation, orders were unadjusted at a 0.7% gain. Finally, nondefense capital goods orders excluding aircraft—considered a proxy for capital spending—was favorably-revised to a 0.6% increase.

Treasuries rose with yields choppy as the markets grapple with the Fed’s aggressive tightening of monetary policy and rising concerns regarding a recession.

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