Market Insights 9/16/2019

U.S. equities began the new week on a down note amid heightened geopolitical concerns after a Saudi Arabian oil facility was attacked over the weekend, which in turn sent crude oil prices soaring.

Treasury yields fell, giving back some of a recent jump, and the U.S. dollar was higher, with a read on regional manufacturing activity slowing more than expected but remained in expansion territory, while gold gained ground.

The Markets…

The Dow Jones Industrial Average fell 143 points (0.5%) to 27,077

The S&P 500 Index lost 10 points (0.3%) to 2,998

The Nasdaq Composite declined 23 points (0.3%) to 8,154

In moderately-heavy volume, 909 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil rallied $8.04 $62.90 per barrel and wholesale gasoline jumped $0.20 to $1.75 per gallon

The Bloomberg gold spot price increased $11.19 to $1,499.72 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.4% at 98.61

Regional manufacturing activity slows more than expected to start the week

The Empire Manufacturing Index showed output from the New York region decelerated more than expected but remained in expansion territory (a reading above zero) for September. The index declined to 2.0 from August’s 4.8 level, with the Bloomberg forecast calling for a decline to 4.0.

Treasuries rose after last week’s drop, as the yield on the 2-year note declined 4 basis points to 1.75%, while the yields on the 10-year note and the 30-year bond dropped 6 bps to 1.84% and 2.31%, respectively.

Tomorrow, the economic calendar will begin to heat up, as the Federal Open Market Committee (FOMC) will begin its two-day monetary policy meeting, while the Fed’s industrial production and capacity utilization report is slated for release, forecasted to show production increased 0.2% m/m for August and utilization nudged higher to 77.6%.

Europe lower, Asia mixed on heightened geopolitical tensions, Chinese data and Brexit focus

European equities finished lower, though the energy sector rallied as crude oil prices surge amid heightened geopolitical concerns after an attack on Saudi Arabian oil facilities over the weekend. Global growth worries were also bolstered by some softer-than-expected industrial production, retail sales and fixed asset investment data out of China. Brexit uncertainty continued to fester with Prime Minister Boris Johnson expected to meet face-to-face for the first time with European Commission President Jean-Claude Junker today.

The euro and British pound were down versus the U.S. dollar, with the markets awaiting this week’s monetary policy decisions out of the U.S., the U.K. and Japan. Bond yields were lower and several key interest rates remain in negative territory.

Stocks in Asia finished mixed with oil prices spiking in the wake of the weekend’s attack on Saudi Arabia’s oil facilities, while the markets digested some disappointing Chinese economic data for August and awaited monetary policy decisions out of the U.S., Japan and the U.K.

China’s industrial production rose at the slowest pace in over 17 years, while its retail sales and fixed asset investment were also softer than expected. Stocks in mainland China finished little changed, while those traded in Hong Kong fell. Indian equities declined, but Australian securities ticked higher and South Korean listings advanced. Japanese markets were closed for a holiday.