Markets Mixed in Bumpy Trading Session…..
U.S. equities finished mixed as the global markets remained choppy amid uncertainty regarding how aggressive monetary policy tightening will remain and what the ultimate impact will be. Q4 earnings season continues to wrap up, with Lowe’s Companies posting mixed results and guidance, while Kohl’s Corporation missed and issued disappointing guidance, and Dollar Tree bested the Street’s forecasts. In economic news, the ISM Manufacturing Index and S&P Global’s Manufacturing PMI both remained in contraction territory, mortgage applications fell for a third-straight week, and construction spending surprisingly declined. Treasury yields rose, and the U.S. dollar was lower, while crude oil and gold prices advanced. Asia finished mostly higher, and markets in Europe were mostly lower, as some favorable economic data out of China was met with some disappointing European reports.
The Dow Jones Industrial Average inched 5 points higher to 32,662, while the S&P 500 Index lost 19 points (0.5%) to 3,951, and the Nasdaq Composite was down 76 points (0.7%) to 11,379. In moderate volume, 4.2 billion shares of NYSE-listed stocks were traded, and 4.9 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.64 to $77.69 per barrel. Elsewhere, the gold spot price rose $7.50 to $1,844.20 per ounce, and the Dollar Index lost 0.4% to 104.46.
Manufacturing activity continues to contract, mortgage applications fall for third-straight week…..
The February Institute for Supply Management (ISM) Manufacturing Index showed that manufacturing activity remained in contraction territory (a reading below 50). The index improved to 47.7 from January’s unrevised level of 47.4—the lowest reading since May 2020—and versus estimates calling for an increase to 48.0. The manufacturing sector contracted for a fourth-straight month even as new orders improved solidly but continued to contract, production dipped further into contraction, and employment fell back into contraction. Additionally, inventories were little changed and were modestly above the key 50 mark, and supplier delivery times shrunk slightly. Inflation pressures jumped back into expansion territory.
The ISM said, “New order rates remain sluggish due to buyer and supplier disagreements regarding price levels and delivery lead times; the index increase suggests progress in February. Panelists’ companies continue to attempt to maintain head-count levels through the projected slow first half of the year in preparation for a stronger performance in the second half.”
The S&P Global U.S. Manufacturing PMI Index for February was revised further into contraction territory (a reading below 50). The index was adjusted to 47.3 from the preliminary read of 47.8, where it was expected to remain, and compared to January’s 46.9 figure.
The MBA Mortgage Application Index dropped 5.7% last week, following the prior week’s 13.3% fall. The index was down for a third-straight week as a 5.5% decline in the Refinance Index was accompanied by a 5.6% decrease for the Purchase Index. The downturn came as the average 30-year mortgage rate rose 9 basis points (bps) to 6.62% and is up 256 bps versus a year ago.
Construction spending unexpectedly dipped 0.1% month-over-month (m/m) in January, versus projections of a 0.2% gain, and compared to December’s negatively revised 0.7% decline. Residential spending went down 0.6% m/m, more than offsetting a 0.3% increase in non-residential spending.
Treasury rates rose, as the yield on the 2-year note gained 9 bps to 4.89%, the yield on the 10-year note increased 8 bps to 4.00%, and the 30-year bond rate advanced 4 bps to 3.97%.
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