Markets Finish Lower Ahead of Trump’s Speech
U.S. equities finished lower, as investors await tonight’s highly-anticipated Congressional speech by President Donald Trump. Political uncertainty took center stage, with a more than 15-year high in Consumer Confidence and stronger-than-expected regional manufacturing activity taking a back seat.
Treasuries were mixed, gold and crude oil prices were modestly lower, while the U.S. dollar was flat.
The Dow Jones Industrial Average (DJIA) fell 25 points (0.1%) to 20,812,
The S&P 500 Index declined 6 points (0.3%) to 2,363, and
The Nasdaq Composite decreased 36 points (0.6%) to 5,825.
In heavy volume, 1.2 billion shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq.
WTI crude oil inched $0.04 lower to $54.01 per barrel and wholesale gasoline lost $0.01 to $1.73 per gallon. Elsewhere,
The Bloomberg gold spot price declined $3.20 to $1,249.53 per ounce, and
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was little changed at 101.15.
For the month, the Dow Jones Industrial Average was higher by 4.77%, the S & P 500 advanced 3.87% and the NASDAQ gained 4.29%
First revision to Q4 GDP unchanged, while Consumer Confidence hits multi-year high
The second look (of three) at Q4 Gross Domestic Product, the broadest measure of economic output, showed a quarter-over-quarter annualized rate of growth of 1.9%, unrevised from the first release. The Bloomberg forecast called for an adjusted 2.1% pace of expansion. 3Q GDP grew by an unrevised 3.5% rate. Personal consumption came in at a 3.0% gain for Q4, up from the preliminary estimate of a 2.5% increase, and compared to the expectations of a 2.6% increase. Personal consumption grew by an unrevised 3.0% in Q3. The unchanged revision came as the upward adjustment to personal consumption was met with a downward revision to business investment.
On inflation, the GDP Price Index was revised to a 2.0% gain, versus forecasts of an unrevised 2.1% increase, while the core PCE Index, which excludes food and energy, was adjusted to a 1.2% rise, compared to expectations of an unrevised 1.3% gain.
The Consumer Confidence Index rose to 114.8 in February—the highest level since July 2001—from the downwardly revised 111.6 level in January, and compared to estimates of 111.0. Sentiment toward the present situation and expectations of business conditions for the next six months both improved. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—dipped to 5.9 from the 6.0 posted in January.
The Chicago Purchasing Managers Index moved further into a level depicting expansion (above 50), after rising to 57.4 in February—the highest level since January 2015—from 50.3 in January, and versus expectations of a gain to 53.5.
The advance goods trade deficit rose to $69.2 billion in January, from the downwardly revised $64.4 billion in December, and compared to expectations of it to widen to $66.0 billion.
The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 5.6% gain in home prices y/y in December, versus expectations of a 5.4% increase. Month-over-month (m/m), home prices were up 0.9% on a seasonally adjusted basis for December, above forecasts calling for a 0.7% gain.
The Richmond Fed Manufacturing Activity Index unexpectedly moved further into expansion territory (a reading above zero), rising to 17 for February from the 12 posted in January, and versus expectations of a 10 reading.
Treasuries finished mixed, as the yield on the 2-year note was 2 basis points (bps) higher at 1.22%, the yield on the 10-year note was flat at 2.36%, while the 30-year bond declined 2 basis points to 2.97%.
Along with the host of data today, the markets continue to focus on cooled off post-election rallies in the U.S. dollar and Treasury yields, along with all-time high stock markets. Political risk in the U.S. and Europe has tempered conviction. As such, the global markets are likely anticipating tonight’s speech in front of Congress by President Donald Trump, looking for details regarding his tax and regulatory reforms, along with infrastructure spending plans that have teamed up with recent solid economic data to fuel the rallies in the stock and bond markets and the greenback since the November election.
Europe higher, Asia mixed as markets eye Presidential speech in U.S.
European equities nudged higher, despite festering global political uncertainty ahead of looming key elections in France and tonight’s Congressional speech from U.S. President Donald Trump. French Q4 GDP growth came in at a 1.2% y/y pace, topping forecasts of 1.1%, while shares of Meggitt PLC. jumped after the U.K. defense and energy engineer’s earnings report topped expectations. Spanish stocks were noticeable gainers, bolstered by travel-related issues and solid gains in the financial sector. The euro ticked higher and the British pound declined versus the U.S. dollar, while bond yields in the region finished mixed.
Stocks in Asia finished mixed with the global markets cautiously awaiting tonight’s Congressional speech from U.S. President Trump, amid the backdrop of heightened political uncertainty on both sides of the Atlantic. Moreover, a plethora of data was released today, ahead of this week’s global reads on manufacturing and services sector activity. Japanese equities ticked higher, giving up early gains late in the session as the yen reversed losses. Japan reported an unexpected drop in industrial production for January, though its retail sales rose more than expected m/m for last month. Chinese stocks diverged to cap off this month’s rally, with those traded in Hong Kong falling, while mainland Chinese equities advanced, with the nation set to report its manufacturing and services PMIs tonight. Strength in oil & gas issues was met with weakness in other sectors to lead a decline in Australia’s markets, while South Korean securities rose, but Indian listing declined ahead of its 4Q GDP report. After the closing bell, India’s 4Q GDP growth decelerated to a 7.0% y/y pace, from 7.4% expansion in 3Q, and compared to expectations of a 6.1% gain.
Manufacturing PMI reads from across the globe will dominate tomorrow’s international economic calendar, while other reports slated for release include South Korea’s trade balance, and CPI from Germany.