Stocks Close Lower
U.S. stocks finished lower for the second-straight day amid a plethora of mixed domestic economic data, while volume continued to wane ahead of the holiday weekend.
Crude oil prices gained ground, the U.S. dollar was flat, gold dipped and Treasuries finished mostly to the downside.
The Dow Jones Industrial Average decreased 23 points (0.1%) to 19,919
The S&P 500 Index shed 4 points (0.2%) to 2,261
The Nasdaq Composite lost 24 points (0.4%) to 5,447
In moderate volume, 711 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq
WTI crude oil ticked $0.46 higher to $52.95 per barrel and wholesale gasoline was $0.01 lower at $1.60 per gallon
The Bloomberg gold spot price shed $2.63 to $1,128.98 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 103.07
Final look at Q3 GDP tops forecasts, core durable goods orders exceed expectations
The final look (of three) at Q3 Gross Domestic Product, the broadest measure of economic output, showed a quarter-over-quarter annualized rate of growth of 3.5%, adjusted up from the 3.2% and the 2.9% expansion posted in the second and first reports, respectively. This compared to the Bloomberg forecast of a revised 3.3% pace of growth. Q2 GDP expanded by an unrevised 1.4% rate. Personal consumption came in at a 3.0% gain for Q3, up from the preliminary estimate of 2.8%, where it was expected to remain. Personal consumption grew by an unrevised 4.3% in Q2.
November preliminary durable goods orders fell 4.6% month-over-month, compared to estimates of a 4.8% drop and October’s upwardly revised 4.8% advance. Ex-transportation, orders grew 0.5% m/m, north of forecasts of a 0.2% rise, and versus October’s favorably revised 0.9% increase. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, rose 0.9%, versus projections of a 0.4% increase, and following the unrevised 0.2% increase in the month prior.
Weekly initial jobless claims jumped by 21,000 to 275,000 last week, above forecasts calling for an increase to 257,000, as the prior week figure was unrevised at 254,000. The four-week moving average rose by 6,000 to 263,750, while continuing claims increased 15,000 to 2,036,000, north of the estimated level of 2,010,000.
Personal income was flat m/m in November, versus forecasts of a 0.3% rise, and compared to October’s downwardly revised 0.5% increase. Personal spending increased 0.2% last month, just shy of the expected 0.3% increase and versus October’s upwardly revised 0.4% rise. The November savings rate as a percentage of disposable income was 5.5%. The PCE Deflator was unchanged, compared to expectations of a 0.2% increase. Compared to last year, the deflator was 1.4% higher, south of estimates of a 1.5% gain. Excluding food and energy, the PCE Core Index was flat m/m, versus expectations to match October’s unrevised 0.1% gain, and the index was up 1.6% y/y, below estimates of a 1.7% increase. October’s y/y figure was revised to a 1.8% increase.
The Conference Board’s Index of Leading Economic Indicators (LEI) was flat m/m in November, below projections calling for it to match October’s 0.1% increase. Support came from the components pertaining to the yield curve and jobless claims, while the index was bogged down by building permits, average workweek and ISM new orders.
The Kansas City Fed Manufacturing Activity Index for December jumped to 11 from November’s unrevised 1 reading, with a level north of zero depicting expansion.
Tomorrow, the U.S. economic calendar will culminate for the week with the release of November new home sales, expected to have increased 2.1% m/m and December’s final University of Michigan Consumer Sentiment Index, forecasted to remain at the 98.0 preliminary read, up from November’s final level of 93.8.
Treasuries were mostly lower with the yield on the 2-year note flat at 1.19%, while the yields on the 10-year note and the 30-year bond ticked 2 basis points (bps) higher to 2.55% and 3.13%, respectively.
Please note: Most domestic bond markets will be closing early tomorrow at 2:00 p.m. ET.
Europe and Asia mixed amid continued subdued volume ahead of holidays
European equities finished mixed as technology issues saw weakness, while healthcare stocks moved higher and oil & gas listings also gained ground amid the advance in crude oil prices. Volume continued to wane ahead of the holiday weekend and Italian banking concerns lingered, courtesy of increased speculation that Banca Monte dei Paschi di Siena SpA is nearing a bailout in the wake of the Italian bank’s warning that its recapitalization plan may fail. Also the speculation came as the government is expected to approve a bank bailout decree that will allow it to increase its public borrowing by 20 billion euros. In economic news, Italian industrial orders and retail sales for October both topped forecasts. The euro was higher and the British pound was lower versus the U.S. dollar, while bond yields in the region were mixed.
Stocks in Asia finished mixed as volume continued to downshift ahead of the holiday weekend, with Japanese equities pausing from a recent jump as the yen modestly gave back some of yesterday’s solid gain. Mainland Chinese stocks extended yesterday’s rebound, while those trading in Hong Kong fell as recent pressure returned. Chinese listings have seen pressure as of late amid festering currency/liquidity concerns in the wake of the U.S. dollar’s recent jump, uncertainty following government crackdowns—notably on investments made by insurers—and lingering uneasiness regarding trade relations with the U.S.
Australian securities moved higher with financials showing some strength, while South Korea equities dipped. Indian stocks dropped amid festering earnings and economic concerns and monetary policy uncertainty and global divergence.
The international economic docket for tomorrow will be light, offering consumer confidence from Germany and Q3 GDP from the U.K. and France.