Stocks Traded Mixed in Anticipation of Wednesday’s Fed Decision…..

U.S. equities finished mixed as the markets awaited a busy week of earnings, economic data, and events. A large swath of S&P 500 members are set to report this week, including Dow member Apple Inc., while the Fed will meet to discuss monetary policy and is expected to raise its target for the fed funds rate by 75 basis points for the second-straight meeting. Treasuries finished lower, lifting yields, and the U.S. dollar continued to trim a recent spike to multi-decade highs. Crude oil prices closed higher, and gold traded to the downside. In light equity news, Newmont Corporation missed the Street’s earnings estimates on lower metals prices, and Weber Inc. issued Q3 guidance that came in below expectations while also announcing the departure of its CEO. The economic calendar kicked the week off showing Dallas manufacturing output fell further into contraction territory. Europe was mixed and Asia finished mostly lower, with the global markets bracing for an eventful week.

The Dow Jones Industrial Average rose 91 points (0.3%) to 31,990, the S&P 500 Index increased 5 points (0.1%) to 3,967, and the Nasdaq Composite decreased 51 points (0.4%) to 11,783. In moderate volume, 3.5 billion shares of NYSE-listed stocks were traded, and 4.2 billion shares changed hands on the Nasdaq. WTI crude oil increased $2.00 to $96.70 per barrel. Elsewhere, the gold spot price advanced $10.80 to $1,716.60 per ounce, and the Dollar Index lost 0.3% to 106.45.

Regional manufacturing report dropped to kick off week headlined by Fed decision…..

Treasuries dipped, and the inversion of the 2-year and 10-year notes remained intact—but has narrowed—with the markets grappling with an aggressive Fed to fight high inflation and what the ultimate impact will be on the economy. The yield on the 2-year Treasury note went up 5 basis points (bps) to 3.04%, the yield on the 10-year note gained 2 bps to 2.80%, and the 30-year bond rate increased 3 bps to 3.03%.

The Dallas Fed Manufacturing Index dropped further into contraction territory (a reading below zero) for July. The index fell to -22.6 from -17.7 in June, compared to the Bloomberg consensus estimate calling for a decrease to -18.5. The index hit the lowest in two-years as new orders and general business activity both contracted at an accelerated pace, while the outlook for companies remained in contraction territory, along with the growth rate of orders.

The regional manufacturing report set the stage for this week that will see some key data and events, headlined by the Federal Open Market Committee’s (FOMC) monetary policy decision on Wednesday. The FOMC is expected to raise its target for the fed funds rate by 75 bps for a second-straight meeting. The decision will not have updated economic projections but will offer the customary press conference from Fed Chairman Jerome Powell, which will likely be highly scrutinized as the markets try to determine how aggressive the Central Bank will remain at its next meeting in September.

Tomorrow’s economic calendar will come in heavy as markets await reports on May’s S&P CoreLogic home prices that are projected to increase 1.5% m/m on a seasonally adjusted basis and 20.6% y/y, and new home sales for June which is expected to decrease to 660,000 from May’s 696,000 reading. Additionally, we will get the Confidence Board’s July consumer confidence release that is predicted to give a reading of 97.2 from the prior month’s 98.7, and this month’s Richmond Fed Manufacturing Index which is projected to drop to a -14 level from June’s -11 reading. A reading of zero is the demarcation point between contraction and expansion for the manufacturing index.

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