Bulls’ Attempt to Add to Friday’s Gains Trumped…..
Early gains for U.S. equities evaporated and the major indexes finished lower following an afternoon Bloomberg report that Apple plans to slow hiring and curb spending in some units next year. The downturn came as global recession concerns linger as monetary policies tighten. Earnings season continued to shift into a higher gear, with Dow member Goldman Sachs topping forecasts, while Bank of America posted mixed results. In other equity news, Dow component Boeing Company announced that Delta Air Lines ordered 100 jets from the company. The economic calendar kicked off with a read on homebuilder sentiment falling much more than expected to a 2-year low, while global preliminary July manufacturing and services sector reports are slated for later in the week, along with monetary policy decisions out of Japan and the Eurozone. Treasuries were lower, lifting yields, but the yield curve inversion remains. The U.S. dollar was lower, pulling back noticeably from 20-year highs, while crude oil prices rallied, and gold traded modestly higher. Europe was higher and Asia finished in the green, with markets in Japan closed for a holiday, as the global markets showed some resiliency in the face of elevated recession concerns.
The Dow Jones Industrial Average fell 216 points (0.7%) to 31,073, the S&P 500 Index decreased 32 points (0.8%) to 3,831, and the Nasdaq Composite lost 92 points (0.8%) to 11,360. In moderate volume, 4.0 billion shares of NYSE-listed stocks were traded, and 4.9 billion shares changed hands on the Nasdaq. WTI crude oil jumped $5.01 to $102.60 per barrel. Elsewhere, the gold spot price nudged $1.50 higher to $1,705.10 per ounce, and the Dollar Index lost 0.6% to 107.44.
Homebuilder sentiment falls to kick off the economic week…..
The National Association of Home Builders (NAHB) Housing Market Index (HMI) showed homebuilder sentiment in July fell to 55—the lowest since May 2020—from June’s unrevised 67 level, in and well below the Bloomberg estimate of a dip to 65. The NAHB said, “Affordability is the greatest challenge facing the housing market.” Also, the report said, “production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home.”
Treasuries were lower. The inversion of the 2-year and 10-year notes remains intact, with the markets grappling with an aggressive Fed to fight high inflation and what the ultimate impact will be on the economy. The yields on the 2-year and the 10-year Treasury notes, along with the 30-year bond, rose 4 basis points (bps) to 3.17%, 2.97% and 3.14%, respectively.
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