Market Insights 7/22/2019

U.S. equities posted modest gains to begin the week amid a dormant economic calendar as investors look ahead to a week that will be chock full of potential market-moving events including Q2 earnings season as well as Robert Mueller’s testimony on capital hill.

Treasury yields were little changed, the U.S. dollar inched higher, crude oil prices were mixed, and gold nudged lower.

The Markets…

The Dow Jones Industrial Average rose 18 points (0.1%) to 27,172

The S&P 500 Index gained 8 points (0.3%) to 2,985

The Nasdaq Composite increased 58 points (0.7%) to 8,204

In moderate volume, 717 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil added $0.46 to $56.22 per barrel and wholesale gasoline was down $0.01 at $1.83 per gallon

The Bloomberg gold spot price ticked $0.63 lower to $1,424.74 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.1% to 97.28

Treasury yields finish unchanged as busy week begins

Treasuries finished unchanged amid an economic calendar void of any major releases today, as the yields on the 2-year and 10-year notes, along with the 30-year bond, were flat at 1.82%, 2.05% and 2.57%, respectively.

The global markets continue to grapple with lingering expectations that the Fed will announce a rate cut at the end of the month, amid the backdrop of mixed economic data, festering trade uncertainty and a heating up earnings season. As U.S. stock indexes reached new highs we are concerned that the potential good news is already mostly reflected, while the potential bad news is being largely ignored.

Earnings season started with reduced expectations, leading to the possibility of upside surprises. Meanwhile, the Fed seems likely to cut rates, but the impact may be diminished, while recent economic data shows reason for concern. Earnings, especially for financial companies, could differ between the United States and international regions due to diverging global central bank actions.

Europe mixed ahead of ECB decision, Asia lower

European equities were mixed, with the energy sector getting a boost from an advance in crude oil prices as tensions in the Middle East heat up, while the markets looked to tread a bit cautiously ahead of this week’s monetary policy decision from the European Central Bank (ECB). The ECB’s decision will come ahead of the July 31st decision from the Fed in the U.S., at which it is expected to announce a rate cut. The British pound dipped versus the U.S. dollar, with voting for the U.K. Prime Minister set to close later today and a winner expected to be announced tomorrow. The euro was little changed and bond yields in the region were mixed.

Stocks in Asia finished lower, despite reports suggesting U.S.-China trade talks could restart, while the global markets await this week’s monetary policy meeting from the European Central Bank, which will precede the July 31st decision from the Fed in the U.S.

Stocks in Japan declined, with losses likely being limited by some weakness in the yen, as the weekend’s results of the nation’s election were eyed. Japanese Prime Minister Abe’s ruling coalition won a majority in the upper house of Parliament but fell short of gaining a supermajority. Mainland Chinese equities and those traded in Hong dropped, with the opening of the country’s Nasdaq-style equity markets garnering attention.