Stocks Bounce Off Lows for Second Session…..

Similar to yesterday, U.S. equities rallied at the close to ascend out of negative territory and finish higher on the day. The moves came after the afternoon release of the minutes from the Fed’s June monetary policy meeting, which solidified expectations that last month’s 75-basis point rate hike is likely to be followed by future increases. The looming start of earnings season may also have fostered some caution, with the major banks set to kick off earning season next week. Equity news was light, as Altria was in focus after the FDA suspended its ban on Juul e-cigarette products, and Amazon announced a deal to provide free Grubhub food delivery services for prime members. Treasuries traded lower and yields rose, while the U.S. dollar continued to rally to 20-year highs. Gold was solidly lower and crude oil prices added to yesterday’s drop. Most markets in Europe were able to recover from yesterday’s fall, while Asia finished mostly lower.

The Dow Jones Industrial Average rose 70 points (0.2%) to 31,038, the S&P 500 Index gained 14 points (0.4%) to 3,845, and the Nasdaq Composite advanced 40 points (0.4%) to 11,362. In moderate volume, 4.4 billion shares of NYSE-listed stocks were traded, and 4.8 billion shares changed hands on the Nasdaq. WTI crude oil fell $0.97 to $98.53 per barrel. Elsewhere, the gold spot price was down $24.90 to $1,739.00 per ounce, and the Dollar Index added 0.5% at 107.06.

The June Institute for Supply Management (ISM) Services Index showed expansion in the key services sector slowed by a smaller amount than expected. The index declined to 55.3, from the 55.9 in May, and versus the Bloomberg consensus estimate of a decrease to 54.0. A reading above 50 denotes expansion in activity. An acceleration in business activity helped offset a deceleration in new orders growth and a decline in employment month-over-month (m/m), which moved back into contraction territory. Meanwhile, new export orders fell but continued to grow at a solid pace, inventories also declined but continued to expand, and prices paid decreased from the prior month but remained severely elevated.

The ISM said, “Logistical challenges, a restricted labor pool, material shortages, inflation, the coronavirus pandemic and the war in Ukraine continue to negatively impact the services sector.”

The final June S&P Global Services PMI Index was revised higher to 52.7 from the preliminary 51.6 level, where it was forecasted to remain, but below May’s reading of 53.4. A reading above 50 denotes expansion.

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, showed a decrease to 11.3 million jobs available to be filled in May, from April’s upwardly-revised level of 11.7 million. The estimate called for an 11.0 million figure. The report showed the hiring rate remained at April’s 4.3% level, and separations also held at April’s 3.9% rate. The quit rate dipped to 2.8% from April’s 2.9% pace.

The MBA Mortgage Application Index decreased 5.4% last week, following the prior week’s increase of 0.7%. The index snapped a string of three-straight weekly gains as a 7.7% drop in the Refinance Index was accompanied by a 4.3% fall for the Purchase Index. The decline came even as the average 30-year mortgage rate declined 10 bps to 5.74%, but is up 259 bps versus a year ago.

Treasuries were lower with yields choppy as the markets grapple with the implications of the Fed’s aggressive actions and rising concerns regarding a recession. The yield on the 2-year Treasury note was up 14 bps to 2.95%, the yield on the 10-year note increased 12 bps to 2.93%, and the 30-year bond rate rose 10 bps to 3.13%.

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