Markets Mixed in Another Choppy Trading Session…..

U.S. equities finished mixed as the markets sifted through softer-than-expected earnings results from Dow member JPMorgan Chase & Co and Morgan Stanley as Q2 season begins to get moving. Meanwhile, the economic calendar delivered another hot read on inflation, in the form of the Producer Price Index, and jobless claims continued to accelerate. Treasuries were mixed following the inflation data, with the yield curve inversion remaining intact. The U.S. dollar added to its recent rally to multi-decade highs, but crude oil prices lost modest ground and gold traded solidly lower. In other earnings news, Conagra topped earnings forecasts but issued softer-than-expected full-year guidance citing inflationary pressures. Europe saw broad losses, and markets in Asia finished mixed, as the global markets continue to grapple with the implications of high inflation on the global economy.

The Dow Jones Industrial Average lost 143 points (0.5%) to 30,630, the S&P 500 Index decreased 11 points (0.3%) to 3,790, while the Nasdaq Composite gained 4 points to 11,251. In moderate volume, 4.2 billion shares of NYSE-listed stocks were traded, and 4.4 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.52 to $95.78 per barrel. Elsewhere, the gold spot price tumbled $27.40 to $1,708.10 per ounce, and the Dollar Index rallied 0.6% to 108.64.

June producer price inflation remains severely elevated, jobless claims continue to rise…..

The Producer Price Index (PPI) showed prices at the wholesale level in June rose 1.1% month-over-month (m/m), above the Bloomberg consensus estimate of a 0.8% gain, and May’s upwardly-revised 0.9% increase. However, the core rate, which excludes food and energy, rose 0.4% m/m, south of estimates of a 0.5% increase and below the prior month’s upwardly adjusted 0.6% rise. Y/Y, the headline rate was 11.3% higher, above expectations of a 10.7% gain and compared to the prior month’s upwardly adjusted 10.9% rise. The core PPI was up 8.2% y/y last month, matching estimates and below May’s unadjusted 8.3% rise.

Weekly initial jobless claims came in at a level of 244,000 for the week ended July 9, above estimates calling for it to match the prior week’s unrevised 235,000 level. The four-week moving average rose by 3,250 to 235,750, and continuing claims for the week ended July 2 fell by 41,000 to 1,331,000, versus estimates of 1,380,000. The four-week moving average of continuing claims increased by 5,250 to 1,339,500.

Treasuries were mixed following the inflation data. The inversion of the 2-year and 10-year notes continues, with the markets grappling with what the ultimate impact of an aggressive Fed to fight high inflation will be on the economy. The yield on the 2-year Treasury note was down 1 basis point (bp) to 3.12%, while the yield on the 10-year note rose 5 bps to 2.96%, and the 30-year bond rate increased 4 bps to 3.11%.

©2022 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.