U.S. stocks finished lower, as the continued uncertainty surrounding a U.S.-China “phase one” trade deal lingered to hamper sentiment.
Treasury yields were lower and the U.S. dollar was higher, with mortgage applications declining and the minutes from the Fed’s October monetary policy meeting that delivered a third rate cut of the year solidifying the Fed’s move to pause future rate actions.
Gold was little changed and crude oil prices were higher after yesterday’s tumble.
The Dow Jones Industrial Average lost 113 points (0.4%) to 27,821
The S&P 500 Index declined 12 points (0.4%) to 3,108
The Nasdaq Composite fell 44 points (0.5%) to 8,527
In heavy volume, 1.0 billion shares were traded on the NYSE and 2.5 billion shares changed hands on the Nasdaq
WTI crude oil rose $1.66 to $57.01 per barrel and wholesale gasoline gained $0.06 to $1.66 per gallon
The Bloomberg gold spot price inched $0.18 lower to $1,472.28 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% higher to 97.91
Mortgage applications decline, Fed meeting minutes solidify pause
The MBA Mortgage Application Index declined 2.2% last week, following the prior week’s 9.6% jump. The decrease came as a 7.7% drop in the Refinance Index more than offset a 6.7% gain for the Purchase Index. The average 30-year mortgage rate fell 4 basis points to 3.99%.
In afternoon action, the Federal Reserve released the minutes from its October monetary policy meeting, after which the Central Bank announced a third rate cut of the year but signaled a pause and raised the bar for inflation in regard to when it would consider deploying a rate hike campaign. At the meeting, Committee Members saw the rate cut as adequate “to support the outlook of moderate growth, a strong labor market, and inflation near the Committee’s symmetric 2 percent objective,” and that the stance of the policy “likely would remain” steady “as long as incoming information about the economy did not result in a material reassessment of the economic outlook.”
Treasuries were higher, as the yield on the 2-year note declined 2 bps to 1.58%, while the yields on the 10-year note and 30-year bond dropped 6 bps to 1.73% and 2.20%, respectively.
Tomorrow, the economic calendar will hold weekly initial jobless claims, expected to have declined by 7,000 to 218,000, as well as the Index of Leading Economic Indicators (LEI), with economists projecting a 0.2% month-over-month fall for October, followed by existing home sales, forecasted to have rebounded to a 2.0% m/m gain at an annual rate of 5.49 million units during October from September’s 2.2% fall to an annual pace of 5.38 million units.
Europe mixed amid flared-up trade concerns
European equities were mixed, as the recent increase in optimism surrounding a U.S.-China “phase one” trade deal that has boosted the global stock markets and fostered a slew of record highs in the U.S. was tempered somewhat.
The resurfaced trade uncertainty came courtesy of U.S. President Donald Trump’s threat of increased tariffs on Chinese goods if a deal is not reached, and was further complicated by the U.S. Senate passing a bill supporting protesters in Hong Kong. The euro and British pound traded lower versus the U.S. dollar, while bond yields in the region were mixed.
The U.K. FTSE 100 Index dropped 0.8%, Germany’s DAX Index was down 0.5%, France’s CAC-40 Index declined 0.3%, and Spain’s IBEX 35 Index decreased 0.4%, while Switzerland’s Swiss Market Index was up 0.2% and Italy’s FTSE MIB Index gained 0.1%.
Stocks in Asia finished mostly to the downside with optimism of a U.S.-China “phase one” trade deal, which has boosted the global markets and led to a string of record highs in the U.S., continuing to fade. Also, the prospect for a trade deal was further complicated by the U.S. Senate passing legislation supporting Hong Kong protester’s as unrest has escalated as of late.
China’s Shanghai Composite Index and the Hong Kong Hang Seng Index both declined 0.8%. The markets appeared to shrug off further Chinese stimulus measures after the country lowered its 1-year loan prime rate for November. Japan’s Nikkei 225 Index traded 0.6% lower, with the yen gaining some ground, and following a report that showed the nation’s exports in October fell more than expected. South Korea’s Kospi Index fell 1.3% and Australia’s S&P/ASX 200 Index dropped 1.4%, with the banking sector seeing some pressure. However, a solid advance in telecommunications stocks lifted India’s S&P BSE Sensex 30 Index 0.5% higher.