Markets Keep Positive Momentum Alive…..
U.S. equities finished higher, with the S&P 500 and Nasdaq posting a fourth-straight session of gains, as the markets continued to show some resiliency in the face of global recession concerns amid tightening monetary policies globally. However, choppiness remained ahead of next week’s ramp up in earnings season, and tomorrow’s key June nonfarm payroll report. Ahead of the data, jobless claims continued to move higher, and the trade deficit narrowed by a smaller amount than expected. On the equity front, GameStop announced a 4-for-1 stock split, and Dow member Merck & Co is reportedly in talks to acquire Seagen in a deal that could be worth $40.0 billion or more. Treasuries lost ground, lifting yields, and the U.S. dollar was little changed after a recent rally to multi-decade highs. Gold was modestly higher and crude oil prices rebounded from a recent tumble to finish back above $100 per barrel. Europe finished with widespread gains with the markets digesting the resignation of U.K. Prime Minister Boris Johnson, while markets in Asia were also broadly higher on the heels of a positive reaction to earnings results from Samsung.
The Dow Jones Industrial Average rose 347 points (1.1%) to 31,385, the S&P 500 Index gained 58 points (1.5%) to 3,903, and the Nasdaq Composite rallied 259 points (2.3%) to 11,621. In moderate volume, 4.0 billion shares of NYSE-listed stocks were traded, and 4.6 billion shares changed hands on the Nasdaq. WTI crude oil jumped $4.20 to $102.73 per barrel. Elsewhere, the gold spot price was up $3.30 to $1,739.80 per ounce, and the Dollar Index was nearly unchanged at 107.07.
Jobless claims accelerate, trade deficit narrows…..
Weekly initial jobless claims came in at a level of 235,000 for the week ended July 2, above the Bloomberg estimate calling for a moderation to 230,000, from the prior week’s unrevised 231,000 level. The four-week moving average ticked higher by 750 to 232,500, and continuing claims for the week ended June 25 rose by 51,000 to 1,375,000, versus estimates of 1,328,000. The four-week moving average of continuing claims increased by 16,500 to 1,335,000.
The trade balance showed that the May deficit shrunk by a smaller amount than expected, decreasing to $85.5 billion, from April’s downwardly-revised deficit of $86.7 billion, and compared to forecasts of a decrease to $84.7 billion. Exports rose 1.2% month-over-month (m/m), and imports gained 0.6% m/m.
Treasuries were lower with yields choppy, with the 2-year and 10-year rates inverting. Bond yields have rebounded from a recent drop as of late even as the markets grapple with the Fed’s aggressive actions. The yields on the 2-year and 10-year Treasury notes were up 9 basis points (bps) to 3.04% and 3.00%, respectively, and the 30-year bond rate rose 8 bps to 3.20%.
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