Market Insights 9/10/2019

U.S. equities finished mixed, as the increased optimism surrounding upcoming U.S.-China trade talks ran up against festering global growth concerns to put investors in a cautious mood. .

Treasury yields were higher, and the U.S. dollar gained modest ground, while crude oil prices were mixed in choppy trading and gold continued to pare a recent rally.

….The Markets…

The Dow Jones Industrial Average rose 74 points (0.3%) to 26,909

The S&P 500 Index was nearly a point higher at 2,979

The Nasdaq Composite declined 3 points to 8,084

In moderately-heavy volume, 938 million shares were traded on the NYSE and 2.3 billion shares changed hands on the Nasdaq

WTI crude oil moved $0.45 lower to $57.40 per barrel and wholesale gasoline was up $0.01 at $1.58 per gallon

The Bloomberg gold spot price declined $10.49 to $1,488.64 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 98.39

Small business optimism slips more than expected, job openings dip

The National Federation of Independent Business (NFIB) Small Business Optimism Index for August dipped to 103.1 from July’s unrevised 104.7 level, and versus the Bloomberg expectation of a decrease to 103.5. NFIB President and Chief Executive Officer (CEO), Juanita Duggan noted, “In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country,” adding that “small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.”

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), a measure of unmet demand for labor, dipped to 7.22 million jobs available to be filled in July from June’s adjusted 7.25 million figure, below forecasts of 7.33 million. The hiring rate ticked higher to 3.9% from June’s 3.8% pace, and the separation rate rose to 3.8% from 3.6%.

Treasuries were lower, as the yields on the 2-year and 10-year notes jumped 10 basis points (bps) to 1.67% and 1.72%, respectively, while the 30-year bond rate was 11 basis points (bps) higher at 2.20%.

Stocks were mixed for a second day on the heels of a recent rally that took the markets to within striking distance from record high territory. Gold declined, while bond yields continued to move higher and the U.S. dollar gained modest ground. Trade concerns remain contained as we wait for resumed U.S.-China talks early next month, while geopolitical uneasiness also remains relatively subdued, but global economic data remains soft.

Europe and Asia mixed as markets eye data and trade

European equities finished mixed, with U.S.-China trade fears remaining subdued ahead of next month’s planned resumption of talks, and bond yields in the region continuing to grind higher to likely help the banking sector, though some key rates remain in negative territory.

Markets appeared to tread with some caution ahead of Thursday’s monetary policy meeting from the European Central Bank, while digesting some mixed global economic data. The continued drop in China’s wholesale price inflation garnered some attention and seemed to foster growth concerns, while industrial/manufacturing production figures came in softer than expected. U.K. Brexit uncertainty remained elevated after Prime Minister Boris Johnson pledged to not request an extension ahead of the October 31st deadline, which came amid a series of parliamentary defeats that dampened no-deal Brexit worries. The euro dipped versus the U.S. dollar and the British pound gained modest ground.

Stocks in Asia finished mixed, mirroring the action in the U.S. yesterday, with the markets focusing on the expected resumption of trade talks between the U.S. and China early next month, in which optimism of has underpinned equities as of late. Some mixed Chinese inflation data for August is fostering some economic concerns as the nation’s consumer price inflation was a bit hotter than expected, but wholesale price inflation continued to fall.

Stocks in mainland China dipped, with downside pressure likely being limited by expectations of further stimulus measures in the wake of Friday’s announcement from the People’s Bank of China to reduce the amount of cash banks need to hold in reserve, while those traded in Hong Kong finished little changed. Japanese equities rose, aided by some softness in the yen, and South Korean securities also advanced, while Australian securities declined. Markets in India were closed for a holiday.