Monthly Archives: March 2017

Market Insights 3/31/2017

Stocks Close Lower to Round-Out Week

U.S. stocks finished the regular trading session lower, but were nicely higher for the week and posted a strong quarterly advance.

In economic news, a rise in personal income for February matched expectations, while personal spending missed estimates and consumer sentiment was revised to a lower-than-expected level.

Treasury yields dipped after rebounding yesterday and the U.S. dollar was nearly unchanged. Crude oil prices extended a recent recovery and gold managed minor gains.

The Markets…

The Dow Jones Industrial Average lost 65 points (0.3%) to 20,663

The S&P 500 Index shed 5 points (0.2%) to 2,363

The Nasdaq Composite was 3 points lower at 5,912

In moderately-heavy volume, 983 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.25 higher to $50.60 per barrel and wholesale gasoline gained $0.02 to $1.70 per gallon

The Bloomberg gold spot price rose $4.91 to $1,247.55 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 100.47

Markets were higher for the week, as the DJIA increased 0.3%, the S&P 500 Index advanced 0.8%, and the Nasdaq Composite rallied 1.4%

Personal income and spending mixed, consumer sentiment unexpectedly revised lower

Personal income was up 0.4% month-over-month in February, matching the Bloomberg forecast, and compared to January’s upwardly revised 0.5% gain. Personal spending ticked 0.1% higher last month, below expectations and January’s unrevised 0.2% gain. The February savings rate as a percentage of disposable income was 5.6%. The PCE Deflator was up 0.1%, matching expectations. Compared to last year, the deflator was 2.1% higher, in line with estimates. Excluding food and energy, the PCE Core Index was up 0.2% m/m, matching expectations, and the index was 1.8% higher y/y, above estimates of a 1.7% gain. January’s y/y figure was revised higher to a 1.8% increase.

The final March University of Michigan Consumer Sentiment Index was revised to 96.9 from the preliminary level of 97.6, where it was expected to remain. However, the index was up slightly compared to February’s level of 96.3. Compared to last month, the expectations component was unchanged, while the current conditions component moved higher. The 1-year inflation outlook declined to 2.5% from February’s 2.7% rate, and the 5-10 year inflation projection dipped to 2.4% from 2.5%.

The Chicago Purchasing Managers Index unexpectedly moved further into a level depicting expansion (above 50), after rising to 57.7 in March—the highest level since January 2015—from 57.4 in February, and versus expectations of a decline to 56.9.

Treasuries were higher, with the yields on the 2-year note and the 30-year bond declining 3 basis points to 1.26% and 3.02%, respectively, while the yield on the 10-year note declined 3 bps to 2.40%.
Bond yields rebounded yesterday, helping the stock markets gain ground as financials led the way, while the U.S. dollar extended a recent recovery.

Europe mixed, Asia mostly lower

European equities finished mixed, with basic materials and oil & gas issues pulling back from recent recoveries, exacerbated by a government shakeup in resource-heavy South Africa and the pause in the run in crude oil prices as of late. The global markets reacted to a plethora of economic data, while political uncertainty on both sides of the Atlantic continued to stymie conviction, amid U.S. President Donald Trump’s comments and expected actions on trade, while Brexit negotiations begin and a key French Presidential election looms.

Eurozone consumer price inflation came in below forecasts for this month, German retail sales rose much more than expected and U.K. 4Q GDP growth was unrevised. The euro and British pound moved higher versus the U.S. dollar, while bond yields in the region traded mixed. The Stoxx Europe 600 Index rose solidly this week, adding to a rally for 1Q and posting the best March performance since 2010, per Bloomberg.

The U.K. FTSE 100 Index fell 0.6% and Switzerland’s Swiss Market Index dropped 0.5%, while France’s CAC-40 Index gained 0.7%, Germany’s DAX Index advanced 0.5%, and Spain’s IBEX 35 Index and Italy’s FTSE MIB Index rose 0.6%.

Stocks in Asia finished mostly lower as the global markets digested comments from U.S. President Trump regarding upcoming trade negotiations with China and expected executive orders aimed at combating the trade deficit and tariff enforcement. Moreover, traders digested a plethora of economic data in the region, while posturing for the end of the quarter. Japan reported an increase in inflation and stronger-than-expected industrial production for February, though household spending fell more than anticipated. China’s government reads on manufacturing and services sector growth for March both showed acceleration.

Japanese equities declined despite an extension of weakness in the yen, while mainland Chinese shares rose, but those traded in Hong Kong finished lower. South Korean stocks traded to the downside, while a pullback in oil & gas issues from a recent run weighed on Australian securities. Indian listings dipped, snapping a string of gains.

Stocks post solid weekly gain to close out quarterly rally

Stocks closed out a solid quarterly advance with a respectable rebound from recent pressure, showing some resiliency in the face of festering political uncertainty, which was exacerbated by last week’s failed healthcare reform bill. Energy issues led the way as crude oil prices snapped back from a recent tumble on the heels of some bullish inventory data and speculation of an extension of OPEC’s production cut agreement, per Bloomberg. Stocks were also bolstered by an unexpected jump in Consumer Confidence to the highest level since December 2000 and a stronger-than-expected final read on Q4, as well as comments out of Washington suggesting the healthcare hiccup would likely not derail efforts on tax reform and infrastructure spending. Financials also contributed to the week’s gain as the drop in Treasury yields showed some signs of stabilizing. The U.S. dollar rebounded on the economic data and some hawkish commentary from a Fed official.

The stage is set for next week’s heavy dose of data, to see if economic optimism can continue to counter political uncertainty. The ISM and Markit will deliver their March reads on manufacturing and key services sector activity and the Fed will release the minutes from its meeting that yielded a rate hike earlier this month, while the trade balance, monthly auto sales and factory orders are likely to garner attention. However, the headlining event will close out the week, courtesy of Friday’s March non-farm payroll report.

The modest downward pressure on stocks recently appears to be working off some overly optimistic sentiment. We view this as a healthy pause in an ongoing bull market. U.S. political realities and the failure of healthcare reform contributed to the recent pullback in stocks but investors shouldn’t get discouraged. Economic data has hooked up—notably business confidence, which has led to a pickup in capital spending. The official Brexit process has begun, and although a recession doesn’t appear imminent, risks have risen and volatility will likely rise.

Market Insights 3/30/2017

Stocks Close Higher with Financials Leading Gains

U.S. equities finished the trading session higher with financial shares leading gains as Treasury yields gained ground.

In economic news, Q4 GDP growth was revised to the upside and weekly jobless claims dipped, but were higher than expected. Crude oil prices extended a rebound, the U.S. dollar managed a solid advance and gold was lower.

The Markets…

The Dow Jones Industrial Average (DJIA) increased 69 points (0.3%) to 20,728

The S&P 500 Index increased 7 points (0.3%) to 2,368

The Nasdaq Composite was 17 points (0.3%) higher at 5,914

In moderate volume, 761 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.84 to $50.35 per barrel and wholesale gasoline gained $0.01 to $1.68 per gallon

The Bloomberg gold spot price moved $8.73 lower to $1,244.72 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.5% to 100.50

Final read on Q4 GDP revised higher, jobless claims dip

On inflation, the GDP Price Index was adjusted to a 2.1% gain, versus forecasts of an unrevised 2.0% increase, while the core PCE Index, which excludes food and energy, was adjusted to a 1.3% rise, compared to expectations of an unrevised 1.2% gain.

The final look (of three) at 4Q Gross Domestic Product, the broadest measure of economic output, showed a quarter-over-quarter annualized rate of growth of 2.1%, adjusted up from the 1.9% expansion posted in the second and first reports. This compared to the Bloomberg forecast of a revised 2.0% pace of growth. Q3 GDP expanded by an unrevised 3.5% rate. Personal consumption came in at a 3.5% gain for Q4, up from the preliminary estimate of 3.0%, where it was expected to remain. Personal consumption grew by an unrevised 3.0% in Q3.

Weekly initial jobless claims declined by 3,000 to 258,000 last week, above forecasts of 247,000, with the prior week’s figure being unrevised at 261,000. The four-week moving average rose by 7,750 to 254,250, while continuing claims jumped by 65,000 to 2,052,000, north of estimates of 2,031,000.

Treasuries finished lower, with the yield on the 2-year note ticking 1 basis point higher to 1.28%, the yield on the 10-year note rising 4 bps to 2.42%, and the 30-year bond rate gaining 5 bps to 3.03%. Bond yields have come under pressure as of late, while the U.S. dollar has shown some signs of recovery and the stock markets have been choppy following a string of losses. The markets continue to grapple with U.S. and European political uncertainty, solid economic data, and the Fed’s March rate hike, which included an outlook that appeared to calm concerns of a faster pace of rate increases this year than had been expected.

Tomorrow, the U.S. economic calendar will finish off the week with releases expected to include personal income and spending, with economists predicting a 0.4% m/m increase in income and a 0.2% rise in spending in February, matching the respective advances seen the month prior, as well as the Chicago Purchasing Managers Index, forecasted to tick lower to 56.9 in March from the 57.4 registered in February, though a level above 50 indicates expansion in activity. Rounding out the day will be the final March University of Michigan Consumer Sentiment Index, expected to remain at the preliminary level of 97.6, but above February’s final read of 96.3.

Europe mostly higher, Asia mixed

European equities finished mostly higher, with oil & gas issues continuing to recover along with crude oil prices. Cooler-than-expected German inflation data and recent dovish commentary from European Central Bank (ECB) officials weighed on the euro and suggested the central bank will hold off on cutting back on its accommodative monetary policy in the near term. Moreover, political uncertainty continued to hamstring conviction following the U.K.’s triggering of formal Brexit negotiations yesterday and a recent push for a new Scottish independence referendum, while next month’s key French Presidential election looms.

The British pound rebounded versus the U.S. dollar to likely hamper the U.K. markets, while bond yields in the region finished mixed.

Stocks in Asia finished mixed with festering political uncertainty in the U.S. and Europe continuing to drain conviction as the quarter nears a close, though the recovery in oil prices helped provide some support. Japanese equities fell despite the yen retreating somewhat from a recent rally, with utilities falling solidly to weigh on the markets. Stocks trading in mainland China and Hong Kong dropped with resurfacing liquidity concerns pressuring the markets.

Japan and China have seen some choppiness in the wake of the Fed’s March rate hike and outlook for future increases. Australian securities gained ground amid the extended recovery in oil & gas issues, while South Korean shares dipped. Indian stocks increased to post a three-session winning streak.

Market Insights 3/29/2017

Stocks Diverge as Financials Lag

U.S. stocks finished the regular trading session mixed as crude oil extended a rebound and as the U.K. formally began the process to exit the European Union.

Financial shares lagged with Treasury yields remaining under pressure despite some hawkish Fed commentary which is bullish for financials.

Gold and the U.S. dollar ticked higher.

The Markets…

The Dow Jones Industrial Average declined 42 points (0.2%) to 20,659

The S&P 500 Index increased 3 points (0.1%) to 2,361

The Nasdaq Composite was 22 points (0.4%) higher at 5,898

In moderate volume, 728 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil gained $1.14 higher to $49.51 per barrel and wholesale gasoline gained $0.03 to $1.67 per gallon

The Bloomberg gold spot price ticked $0.63 higher to $1,252.45 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.2% to 99.93

Mortgage applications dip

The MBA Mortgage Application Index declined 0.8% last week, following the previous week’s 2.7% drop. The decrease came as a 2.9% fall in the Refinance Index more than offset a 1.2% gain for the Purchase Index. The average 30-year mortgage rate fell 13 basis points to 4.33%.

Pending home sales jumped 5.5% month-over-month in February, versus the Bloomberg projection of a 2.5% gain, and following the unrevised 2.8% drop registered in January. Compared to last year, sales were 2.4% lower. Pending home sales reflect contract signings and are used as a gauge of the pipeline of existing home sales, which fell more than expected in February from the fastest pace since 2007.

Treasuries were higher, with the yield on the 2-year note declining 3 bps to 1.27% and the yields on the 10-year note and the 30-year bond decreasing 4 bps to 2.38% and 2.99%, respectively. Treasury yields continued to pullback, though the U.S. dollar recovered slightly from its recent slide. The markets are grappling with calmed concerns about a faster-than-expected pace of Fed rate hikes this year and flared-up political uncertainty in the wake of last week’s failed U.S. healthcare reform bill, which has contributed to the pullback in the stock markets.

Tomorrow, the U.S. economic calendar will deliver the third and final read for Q4 GDP, with economists expecting the headline figure to be revised higher to a 2.0% quarter-over-quarter annualized rate of expansion from the 1.9% posted in the second report, but down from the Q4 final read of 3.5%. Also, weekly initial jobless claims will be reported and are expected to have decreased by 14,000 to a level of 247,000.

Europe shows some resiliency, Asia mixed

European equities finished mostly higher, with oil & gas issues leading the way as crude oil prices added to yesterday’s recovery, bolstered by some bullish U.S. oil inventory data. Most markets shrugged off the expected triggering of article 50 by the U.K. to begin formal negotiations to leave the European Union (EU), known as Brexit.

The British pound saw some pressure to help U.K. stocks, but was well off the worst levels of the day. The beginning of the Brexit clock, which could take multiple years to complete the exit process, comes as a key French Presidential election looms and the Scottish First Minister Sturgeon is proposing a new independence referendum that has been rejected by the British government. The euro lost ground on the U.S. dollar and bond yields in the region finished lower.

Stocks in Asia finished mixed, with global political uncertainty continuing to hamstring conviction, though sentiment found some support after yesterday’s rebound in U.S. stocks that snapped a string of losses. The advance in the U.S. came courtesy of an unexpected jump in Consumer Confidence and comments out of Washington that suggested last week’s failed healthcare reform efforts will likely not derail President Donald Trump’s plans for tax reform and infrastructure spending.

Japanese equities ticked higher, with the yen retreating after a recent rally but gains were likely limited by a softer-than-expected read on the nation’s retail sales for last month. Crude oil’s rebound that led a recovery in the commodity sector helped lift Australian securities. Stocks trading in South Korea, India and Hong Kong rose, while mainland Chinese shares declined with the property sector seeing some pressure as some local governments rolled out more measures to cool the real estate sector, per Bloomberg.

Tomorrow’s international economic docket will be relatively light, offering new home sales from Australia, CPI from Germany and consumer confidence from the Eurozone.

Market Insights 3/28/2017

Stocks Post Confident Gains

U.S. stocks seized solid gains, shaking-off recent sluggishness amid a rebound in crude oil prices and a surprising jump to a multi-year high for Consumer Confidence.

Treasury yields and the U.S. dollar also managed sizable gains, with comments out of Washington suggesting last week’s failed health-care reform bill likely won’t derail efforts for tax reform and infrastructure spending.

The Markets…

The Dow Jones Industrial Average advanced 151 points (0.7%) to 20,702

The S&P 500 Index increased 17 points (0.7%) to 2,359

The Nasdaq Composite was 35 points (0.6%) higher at 5,875

In moderate volume, 824 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.64 to $48.37 per barrel and wholesale gasoline gained $0.01 to $1.64 per gallon

The Bloomberg gold spot price decreased $4.20 to $1,250.66 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—advanced 0.5% to 99.71

Consumer Confidence jumps to highest since 2000

The Consumer Confidence Index unexpectedly surged to 125.6 in March—the highest level since December 2000—from the upwardly revised 116.1 level in February, and compared to the Bloomberg estimate of a dip to 114.0. Sentiment toward the present situation and expectations of business conditions for the next six months both solidly improved. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—jumped to 12.2 from the 7.0 level posted in February.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 5.7% gain in home prices y/y in January, versus expectations of a 5.6% increase. Month-over-month (m/m), home prices were up 0.9% on a seasonally adjusted basis for January, topping forecasts calling for a 0.7% gain.

The Richmond Fed Manufacturing Activity Index surprisingly moved further into expansion territory (a reading above zero), jumping to 22 for March—the highest since April 2010—from the 17 posted in February, and versus expectations of a 15 reading.

Treasuries finished lower, with the yield on the 2-year note gaining 3 basis points (bps) to 1.30%, and the yields on the 10-year note and the 30-year bond ticking 4 bps higher to 2.41% and 3.02%, respectively.

Treasury yields and the U.S. dollar remain in focus and have pulled back as of late, along with the stock markets, courtesy of the Fed’s statement and outlook after its March rate increase that appeared to ease concerns regarding a larger-than-expected acceleration in Fed interest rate hikes this year. Also, risk aversion has ramped up amid flared-up concerns regarding the implications of last week’s failed healthcare bill on President Donald Trump’s ability to get his business-friendly agenda through Congress.

Tomorrow, the U.S. economic calendar will slow from today’s pace with major releases to include pending home sales, expected to have increased 2.5% m/m in February, and the weekly MBA mortgage applications report.

Europe and Asia higher as global markets stabilize

European equities finished higher following some upbeat U.S. economic data, with the global markets appearing to calm down after a ramp up in U.S. political uncertainty, while oil & gas and basic materials issues rebounded. However, European political concerns remained as next month’s key French election looms, and the U.K. is expected to trigger article 50 tomorrow to formally begin negotiations to leave the European Union.

The economic front was relatively quiet, though the lone major report showed Italian industrial orders fell more than expected in January.

The euro and British pound declined versus the U.S. dollar, while bond yields in the region were mostly lower. Shares of Wolseley PLC. (WOSYY $6) rallied after the plumbing and heating products company posted favorable first-half results.

The U.K. FTSE 100 Index was up 0.7%, France’s CAC-40 Index advanced 0.6%, Germany’s DAX Index rallied 1.3%, Spain’s IBEX 35 Index gained 0.8%, and Italy’s FTSE MIB Index rose 1.0%, while Switzerland’s Swiss Market Index was flat.

Stocks in Asia finished mostly higher, with the U.S. markets showing some intra-day resiliency yesterday in the face of heightened political uneasiness after last week’s failed healthcare reform attempt. The U.S. dollar and crude oil prices, which have come under pressure also stabilized to help sentiment. Politics in the U.S. and Europe, along with a Fed rate hike and slightly more dovish outlook earlier this month have driven some of the moves in the global currency and bond markets.

Japanese equities rose, with the yen retreating somewhat from a recent rally, while recoveries in resource-related issues helped lift Australian securities higher. Stocks trading in Hong Kong advanced on strength in casino operators, while optimism toward the financial sector boosted Indian listings and South Korean issues advanced following a stronger-than-expected Q4 GDP report, though mainland Chinese equities declined as the markets continue to grapple with the aforementioned impact of the Fed actions on mainland Chinese markets.

Market Insights 3/27/2017

Stocks Recover Most Early Losses in Mixed Finish

U.S. stocks pared early losses and finished the regular trading session mixed with health-care shares leading the advance and financial listings lagging.

Treasury yields and the U.S. dollar declined, crude oil prices were mixed and gold traded higher. In light economic news, some regional manufacturing activity slowed, but remained in expansion territory.

The Markets…

The Dow Jones Industrial Average lost 45 points (0.2%) to 20,551

The S&P 500 Index shed 2 points (0.1%) to 2,342

The Nasdaq Composite was 12 points (0.2%) higher at 5,840

In moderate volume, 826 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.24 lower to $47.73 per barrel and wholesale gasoline gained $0.01 to $1.63 per gallon

The Bloomberg gold spot price increased $11.29 to $1,254.86 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.4% to 99.19

Regional manufacturing growth slows, with economic calendar set to heat up

The Dallas Fed Manufacturing Activity Index slowed more than expected but remained solidly at a level depicting expansion (a reading above zero), dropping to 16.9 in March, from 24.5 in February—the highest level since April 2006—and compared to the expected decline to 22.0.

Treasuries were higher, with the yield on the 2-year note nearly unchanged at 1.25%, the yield on the 10-year note dropping 4 basis points (bps) to 2.37%, and the 30-year bond rate decreasing 3 bps to 2.98%.

Treasury yields and the U.S. dollar have been under pressure as of late, and stocks pulled back from all-time highs, despite continued solid economic data, with the markets grappling with festering political uncertainty on both sides of the pond, exacerbated by last week’s failed healthcare reform in the U.S. The greenback and bond yields have seen pressure despite this month’s Fed rate hike, which included an apparent dovish tone and outlook for future rate increases that calmed concerns of accelerated hikes.

The U.S. economic calendar will be relatively busy for the remainder of the week. A report that will likely garner a fair amount of attention is Thursday’s release of the third and final read on Q4 GDP. However, investors should remember that GDP growth is backward-looking and the stock market is forward looking; which is why leading economic indicators are more valuable “forecasting” tools for the stock market. We believe that economic growth is generally accelerating, but politics, both here and abroad, are keeping policy uncertainty high and should contribute to bouts of volatility.

Europe and Asia lower as politics continued to stymie sentiment

European equities finished lower, with basic materials leading to the downside as the pullback in the global markets persisted. Political uneasiness continued to fester, bolstered by last week’s failed U.S. healthcare reform measures, which appeared to foster concerns about the implications for President Trump to get his business-friendly agenda through Congress. Next month’s key French election looms, U.K. Brexit concerns lingered as the nation is expected to trigger article 50 this week to formally begin negotiations to leave the European Union, and German regional elections showed positive results for Chancellor Angela Merkel.

The political front overshadowed a positive read on German business sentiment, which improved to the highest level since July 2011. The euro and British pound rallied as the U.S. dollar continued a slide, while bond yields in the region finished lower.

Stocks in Asia finished mostly lower, with global political uncertainty lingering and volatility accelerating, exacerbated by last week’s failed healthcare reform efforts in the U.S. Also, the markets may have been looking to some key Chinese economic data later in the week. The yen rallied to weigh on Japanese equities, while stocks trading in South Korea and India declined. Mainland Chinese shares and those trading in Hong Kong both dipped and Australian securities were also lower.

Tomorrow, the international economic calendar will be light, offering a consumer confidence read from Australia and industrial orders from Italy.

U.S. Market Weekly Summary – Week Ending 03/24/2017

S&P 500 Slips 1.4% on Week, Led by Financial Sector; Only Utilities, Real Estate Escape Weekly Drop

The Standard & Poor’s 500 index shed 1.4% this week, with the financial sector leading a decline that only utilities and real-estate stocks escaped.

The market benchmark ended the week at 2,343.98, down from 2,378.25 last Friday. The financial sector posted the biggest percentage decline, down 3.8%, followed by a 1.9% drop in telecommunications stocks and a 1.8% slip in industrials.

The decline in financials came as doubts increased about the Trump administration’s ability to follow through on campaign promises, especially amid a difficult debate in the House of Representatives over health-care policy.

Friday afternoon, the House postponed a vote on the Republican health-care bill as it appeared to lack enough support to pass.

The financial sector has led the way higher in the rally since President Donald Trump’s Nov. 8 election, so it got hit hardest this week as the ‘Trump Trade’ began to unravel. Among the financial sector’s decliners, Bank of America (BAC) tumbled 7.0% this week, Wells Fargo (WFC) dropped 4.8%, J.P. Morgan Chase (JPM) shed 3.7% and Citigroup (C) lost 3.8%.

The telecommunications sector’s decliners included AT&T (T), which fell 2.2% this week, and Centurylink (CTL), which dropped 3.8%.

In the utilities sector, which was the best-performing sector of the week with a 1.3% increase, American Water Works (AWK) added 1.2% this week as the water and wastewater utility company highlighted a study linking its infrastructure to economic benefit and job creation. Dominion Resources (D) climbed 1.5% after the energy producer and transporter unveiled two large-scale, solar-energy projects in South Carolina.

Market Insights 3/24/2017

Stocks Lag Over Healthcare Bill Future

U.S. equities lost momentum late in the day as investors awaited the tally of today’s result of the healthcare vote, only to be left in the dark after President Trump asked Speaker Ryan to pull the bill in the wake of a lack of “yes” votes.

In economic news, preliminary durable goods orders were mixed for February and Markit’s Manufacturing PMI Index fell short of estimates, but remained in expansion territory.

Treasuries, gold and crude oil prices were all higher, while the U.S. dollar dipped.

The Markets…

The Dow Jones Industrial Average fell 60 points (0.3%) to 20,597

The S&P 500 Index shed 2 points (0.1%) to 2,344

The Nasdaq Composite was 11 points (0.2%) higher at 5,829

In moderate volume, 791 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.27 higher to $47.97 per barrel and wholesale gasoline gained $0.02 to $1.62 per gallon

The Bloomberg gold spot price rose $3.20 to $1,248.40 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.2% to 99.58

Markets were lower for the week, as the DJIA lost 1.5%, the S&P 500 Index decreased 1.4%, and the Nasdaq Composite was 1.2% lower

Mixed read on durable goods orders

February preliminary durable goods orders rose 1.7% month-over-month, compared to the Bloomberg estimate of a 1.4% rise and January’s upwardly revised 2.3% increase. Ex-transportation, orders were 0.4% higher m/m, compared to forecasts of a 0.6% gain and versus January’s upwardly revised 0.2% increase. Orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, decreased 0.1%, versus projections of a 0.5% increase, and following the favorably revised 0.3% decline in the month prior.

The preliminary Markit U.S. Manufacturing PMI Index came in at 53.4 for March, down from February’s final read of 54.2, and compared to estimates calling for an improved level of 54.8. A reading above 50 denotes expansion.

Treasuries were higher, as the yield on the 2-year note was unchanged at 1.26%, the yield on the 10-year declined 2 basis points (bps) to 2.40% and the 30-year bond rate decreased 3 bps to 3.01%.

Europe lower following delayed health-care vote, Asia mostly higher

European equities finished trading mostly lower on Friday with financials and energy issues leading the decline. Traders seemed to be exercising a cautious and uncertain tone following the delayed health-care vote in the U.S. The declines in the region developed despite some upbeat manufacturing data as Germany and France both posted better-than-expected manufacturing PMI reads, though France also announced its Q4 GDP grew at a 1.1% annualized pace which was just shy of the 1.2% forecast.

U.K. consumers have coped fairly well since the Brexit referendum; however, they may face a real-income squeeze in 2017 as recent reports reveal the lowest level of household saving in the country since the 2008 crisis. The British pound declined versus the U.S. dollar after a U.K. policy maker attempted to downplay the chances of an interest rate increase. After 60 years of integration, a rising tide of nationalism threatens to pull Europe’s union apart in the years ahead and there are five possible scenarios defined by the European Commission to address the question of what Europe may look like in 2025.

Stocks in Asia finished mostly higher following the delayed health-care vote in the U.S. and as the yen weakened, giving markets in Japan a boost, while comments from Bank of Japan (BoJ) Governor Kuroda may have also lent a hand. In referring to the central bank’s current government bond buying program, Kuroda said that he does not think it will face difficulties in the near future and that the BoJ will not raise its target level of the long-term interest rates just because of such rises in other countries. The Japanese central bank wants to overshoot its 2% inflation target in a bid to get people accustomed to the idea of rising prices again. This could keep changes by the BOJ at bay for some time.

Stocks in China and Hong Kong were higher, despite recent concern over central bank policy, as additional Fed rate hikes in 2017 may put increasing strain on China and revive worries about growth, currency and capital flows as tough trade negotiations near. Australian securities advanced, with banks contributing solidly to the gains, while listings in India also gained ground, but those traded in in South Korea declined.

Stocks unable to erase losses for the week

U.S. stocks finished the trading week noticeably lower, though most of the downward action took place during Tuesday’s session. The economic calendar was slow to start and without much data to drive direction, equities pulled back from recent all-time highs that were reached earlier this month. The delayed health-care vote also seemed to subdue sentiment, but didn’t exacerbate the weekly decline. When economic data began to dole out, traders were treated to some mixed housing reports as existing home sales and mortgage applications declined, but new home sales increased and topped expectations. Additional reads showed weekly jobless claims unexpectedly rose and some regional manufacturing activity moved further into expansion territory.

In earnings news for the week, Nike Inc. (NKE $56), Cintas Corp. (CTAS $126), and Lennar Corp. (LEN $51) bested top line projections, though NKE announced a contraction in gross margins, while FedEx Corp. (FDX $188) and General Mills Inc. (GIS $59) missed forecasts.

Data expected next week

Next week, the U.S. economic calendar will again start slowly, with Monday’s sole release expected to be the Dallas Fed Manufacturing Index, but the docket will be relatively busy for the remaining four days. A report that will likely garner a fair amount of attention is Thursday’s release of the third and final read on Q4 GDP. However, when viewing the results it reminds us that investors should remember that GDP growth is backward-looking and the stock market is forward looking; which is why leading economic indicators are more valuable “forecasting” tools for the stock market.

Additional reports of note for next week include the advance goods trade balance, wholesale inventories, the Richmond Fed Manufacturing Index, pending home sales, personal income and spending, and the final University of Michigan Consumer Confidence Index.

The international calendar will bring some data worth noting: Japan—retail sales, jobless rate, CPI, industrial production, construction orders, housing starts and vehicle production. China—current account balance, manufacturing PMI and non-manufacturing PMI. Eurozone—consumer confidence and CPI, along with German Ifo business climate survey, Import Price Index, CPI and retail sales. U.K.—consumer credit, GDP, total business investment and GfK consumer confidence.

Market Insights 3/23/2017

Stocks Deflate on News of Healthcare Vote Delay

After being modestly higher for most of the day amid cautious optimism over this evening’s vote on a widely-watched healthcare bill, U.S. equities lost steam late to finish near the flatline after reports surfaced that the vote would not happen today amid continued political wrangling.

News on the economic front was mostly positive, with new home sales surprising to the upside in February, and as some regional manufacturing activity moved further into expansion territory, while weekly jobless claims unexpectedly increased.

Treasuries were little changed and gold was lower, while the U.S. dollar ticked higher and crude oil prices lost ground.

The Markets…

The Dow Jones Industrial Average (DJIA) lost 5 points to 20,657

The S&P 500 Index shed 3 points (0.1%) to 2,346

The Nasdaq Composite declined 4 points (0.1%) to 5,818

In moderate volume, 805 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil fell $0.34 to $447.70 per barrel and wholesale gasoline lost a penny to $1.59 per gallon

The Bloomberg gold spot price declined $3.04 to $1,245.80 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 99.74

New home sales surprise to the upside, jobless claims unexpectedly increase

New home sales rose 6.1% month-over-month in February to an annual rate of 592,000, above the Bloomberg forecast of 564,000 units, and compared to the upwardly revised 558,000 unit pace in January. The median home price was down 4.9% y/y at $296,200. New home inventory dipped to 5.4 months of supply at the current sales pace. Sales declined m/m in the Northeast, but rose sharply in the Midwest, and also increased in the West and South. New home sales are based on contract signings instead of closings.

Weekly initial jobless claims increased by 15,000 to 258,000 last week, above forecasts of 240,000, with the prior week’s figure being upwardly revised to 243,000. The four-week moving average rose to 240,000 from 239,000, while continuing claims dropped by 39,000 to 2,000,000, south of estimates of 2,040,000.

The Kansas City Fed Manufacturing Activity Index for March rose to 20, from February’s 14 reading, where it was forecasted to remain, with a level north of zero depicting expansion.

Federal Reserve Chair Janet Yellen delivered opening remarks this morning at a conference in Washington D.C. Though some market participants likely listened for indications on the trajectory of the U.S. economy and the pace of future rate hikes, the Fed Chair did not comment on monetary policy.

Treasuries were nearly unchanged, as the yield on the 2-year note lost 1 basis point (bp) to 1.24%, while the yields on the 10-year note and the 30-year bond were flat at 2.41% and 3.02%, respectively.

The week’s economic calendar will culminate tomorrow with a look at the manufacturing sector, as preliminary durable goods orders will be released, forecasted to show a 1.3% m/m increase for the headline rate during February, a 0.6% rise excluding transportation, while orders for nondefense excluding aircraft, considered a proxy for business spending, is estimated to have ticked 0.2% higher m/m. Finally, the preliminary Markit Manufacturing PMI Index will be reported, with economists expecting an uptick to a level of 54.8 for March from the 54.2 posted in the month prior, with a reading above 50 indicating expansion in activity.

Europe and Asis mostly higher ahead of U.S. health care vote

European equity markets finished the trading day higher, as traders await today’s vote on the proposed replacement for the Affordable Care Act in the U.S. House of Representatives, with market participants looking toward the outcome as a gauge of the Trump Administration’s ability to implement its pro-growth policies.

The European Central Bank (ECB) gave banks in the euro-area approximately $252 billion, the largest net amount yet, in its Targeted Longer-Term Refinancing Operations program, as ECB President Mario Draghi signaled that time is running out for banks to get their house in order with the end of the central bank’s current quantitative easing program in mind, which according to a Bloomberg survey is now expected to be around mid-2018.

In Germany, the country’s lower house of parliament is in the early stages of introducing new laws with respect to insolvency proceedings after a recent Tax Restructuring Decree was overturned, while in other tax news, the country reported a rise in February tax revenue, which benefit from stable economic development, with income and sales tax revenue both increasing per the Deputy Finance Minister. Meanwhile, in the U.K., some upbeat retail sales data did little to dispel the notion of concern about the outlook of consumers in Britain if the current rise in inflation, which is expected to reach 3 percent later this year, continues.

Stocks in Asia rebounded some from yesterday’s selloff and closed mostly higher with financial and industrial shares leading gains. Japanese equities advanced, shrugging off three days of declines, with the yen slightly weaker, as the current health-care bill discussions in the U.S. may be increasing the demand for safe-haven assets. The yen had risen in the previous seven-straight sessions. Mainland Chinese securities increased slightly, and those traded in Hong Kong were mostly flat amid reports that the country’s financial regulators may need to take further steps to reign in leverage that continues to mount after the bond market in the world’s second largest economy experienced one of its worst months since December 2010. Some smaller banks in the country were said to have missed debt payments amid a surge in inter-bank rates, which spurred emergency liquidity injections from the central bank.

Stocks in Australia gained ground, led higher by strength in mining and energy stocks, with a rebound in crude oil prices also indirectly lending support, while markets in South Korea and India also advanced.

Tomorrow, manufacturing PMI reads from across the globe will dominate the international economic calendar, while other reports on tap include consumer sentiment from South Korea, trade data from Australia, the Leading Index from Japan, GDP from France, and PPI from Spain.

Market Insights 3/22/2017

Markets Mixed, Dow Extends Losing Streak

U.S. stocks finished mixed, with the Dow adding to its worst day of the calendar year yesterday, amid a mixed bag of news, and after a developing story involving an attack near the U.K. Parliament.

Treasuries were higher following economic news that offered some disappointing housing data, while crude oil prices added to yesterday’s pullback and the U.S. dollar was also lower, while gold saw a modest gain.

The Markets…

The Dow Jones Industrial Average declined 7 points to 20,661

The S&P 500 Index rose 4 points (0.2%) to 2,344

The Nasdaq Composite gained 28 points (0.5%) to 5,822

In moderate volume, 899 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.20 lower to $48.04 per barrel and wholesale gasoline lost a penny to $1.60 per gallon

The Bloomberg gold spot price gained $3.05 to $1,247.86 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% lower at 99.69

Existing-home sales and weekly mortgage applications fall shy of estimates

Existing-home sales in February declined 3.7% month-over-month to a 5.48 million annual rate, compared to the Bloomberg forecast of a 5.55 million pace. February’s figure was unrevised at a 5.69 million annual rate, which is the highest since February 2007. Sales of single-family homes fell 3.0% m/m and purchases of condominium and co-op units dropped 9.2%. The median existing-home price was up 7.7% y/y at $228,400. Housing supply came in at a 3.8-month pace at the current sales rate, and the inventory of homes for sale is down 6.4% y/y. Sales in the South were higher m/m, and were lower in the Northeast, Midwest and West.

National Association of Realtors (NAR) Chief Economist Lawrence Yun said, “The speed of transactions is very fast and we know that there’s an inventory shortage. Buying interest remains very solid and strong but we have a bottleneck. We don’t have enough inventory to satisfy that buying interest.”

The MBA Mortgage Application Index fell 2.7% last week, following the previous week’s 3.1% gain. The decrease came as a 3.3% decline for the Refinance Index was met with a 2.1% decrease for the Purchase Index. The average 30-year mortgage rate was unchanged from the previous week’s 4.46%.

Treasuries finished higher, as the yields on the 2-year and 10-year notes, as well as the 30-year bond decreased 2 bps to 1.24%, 2.40% and 3.02%, respectively.

Tomorrow’s economic calendar will give investors some additional housing data in the form of new home sales, with economists anticipating a 1.8% m/m increase during February to a rate of 565,000 units, while weekly initial jobless claims are also slated for release, forecasted to have ticked lower to a level of 240,000 from the prior week’s 241,000.

Europe and Asia lower following sharp U.S. declines

European equities finished mostly lower following the sharp declines in the U.S. yesterday with traders cautiously weighing whether the Trump Administration can deliver on its pro-growth policies. Financials and commodity issues led the laggards, a rally in government bonds continued and base metals tumbled, with iron ore approaching bear market territory. Meanwhile, the European Commission drafted some rules to aid in strengthening national antitrust agencies, saying that competition authorities in the European Union should gain more resources, powers and independence. In the U.K., rising prices may be posing a risk to domestic demand as the Bank of England has predicted a slowdown in retail sales and Britain reported its fastest pace of consumer inflation in over three years yesterday.

This month marks the 60th anniversary of the Treaty of Rome, from which the 28-nation European Union (EU) and the euro currency traces its origin. Also this month, the United Kingdom is preparing to formally begin its exit from the EU—the only full member to ever do so in those 60 years—among a rising tide of nationalist political movements threatening the survival of Europe’s union in the years ahead. The euro and British pound are losing ground versus the U.S. dollar and bond yields in the region are mostly declining.

Stocks in Asia finished sharply lower on the heels of yesterday’s declines in the U.S. and as some international investors are beginning to speculate whether President Trump’s growth promises will transpire from proposals to policy. Japanese equities dropped markedly, as the yen moved higher for a seventh day, hitting a four-month high versus the U.S. dollar and despite some trade data that showed exports grew more than expected on a y/y basis. From Nov. 7 to Dec. 31, the yen fell nearly 12% against the U.S. dollar. Japanese stocks rose in turn. This has a lot to do with Japanese companies’ heavy reliance on exports.

Mainland Chinese shares and those traded in Hong Kong fell to join the regional selloff, while interbank borrowing rates have climbed across the board in the world’s second largest economy which has amounted to non-bank institutions paying a record premium for short-term funds relative to larger Chinese banks according to Bloomberg. Meanwhile, stocks in Australia fell, led by declines in mining issues, while markets in South Korea and India also lost ground.

Market Insights 3/21/2017

Stocks Fall

U.S. stocks traded solidly lower as the economic calendar was again void of a major release. News was also on the lighter side and financials led the decline, possibly finding pressure from dipping Treasury yields.

The U.S. dollar was lower following a jump in U.K. consumer prices and eased political nervousness in France. Crude oil prices were lower and gold was higher.

The Markets…

The Dow Jones Industrial Average dropped 238 points (1.1%) to 20,668

The S&P 500 Index fell 29 points (1.2%) to 2,344

The Nasdaq Composite tumbled 108 points (1.8%) to 5,794

In heavy volume, 1.0 billion shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq

WTI crude oil traded $0.67 lower to $48.24 per barrel and wholesale gasoline was unchanged at $1.61 per gallon

The Bloomberg gold spot price gained $10.05 to $1,244.29 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.7% lower at 99.70

Economic calendar continues to be quiet

Treasuries were higher, with the economic calendar again void of any major reports today, as the yield on the 2-year note declined 3 basis points to 1.26%, and the yields on the 10-year note and the 30-year bond were down 4 bps at 2.42% and 3.04%, respectively.

This week’s economic calendar won’t get going until tomorrow, with housing data taking center stage in the form of existing home sales, with economists forecasting a 3.3% month-over-month increase to a rate of 5.56 million units, while MBA Mortgage Applications will also be released. Later in the week, new home sales will be reported, along with preliminary looks at manufacturing demand and activity via durable goods orders and Markit’s Manufacturing PMI Index.

The stock markets pared back after reaching all-time highs in early March. The U.S. dollar has fallen in choppy trading as of late, and Treasury yields continue to trade in a narrow range following a recent rally, as investors weigh upbeat economic data, eased concerns over the pace of any future Fed rate hikes, political wrangling over proposed healthcare regulation, along with continued political uncertainty abroad.

Political infighting, Presidential tweets, North Korean missile launches, oil falling below $50, European political uncertainty, higher bond yields, and the Fed raising rates: none of those forces have knocked stocks off their recent uptrend. Volatility remains remarkably low but that doesn’t mean it won’t pick up—investors should be prepared for bouts of volatility, and pullbacks along the way. The U.S. economy continues to expand; although there are signs that first quarter growth could be on the weak side, largely due to continued seasonal issues.

We believe that economic growth is generally accelerating, a thought bolstered by the Fed’s confidence to raise rates again. Politics, both here and abroad, are keeping policy uncertainty high and should also contribute to bouts of volatility.

Europe lower on economic data, Asia mixed amid another subdued session

European equities finished lower despite eased political worries, after some surprising economic data in the U.K stoked rate hike concerns.

The euro gained ground against the U.S. dollar after last night’s Presidential debate in France among the top five contenders soothed concerns of a populist win in the upcoming election. Polls in the region widely judged that centrist Macron came out on top, calming fears of a possible victory for anti-European Union (EU) candidate Le Pen, which many think could lead a campaign to separate from the EU.

News on the economic front centered on the U.K., with the nation reporting its fastest pace of consumer inflation in over three years, citing the pound’s depreciation against the U.S. dollar following the country’s vote to leave the EU. Prices in February jumped 2.3% from 1.8% the month prior, the first time consumer prices have eclipsed the Bank of England’s 2.0% target since November 2013, prompting analysts to posit the notion of a possible rate hike in May. Meanwhile, producer prices in the county were roughly in line with forecasts, and retail sales were higher than expected.

Stocks in Asia finished mixed in a second day of lackluster action and news, even as additional geopolitical concerns surfaced amid reports that the Trump Administration is priming new sanctions against North Korea. Despite some weakness in the yen, Japanese equities fell, returning to action following yesterday’s holiday, as financials lagged.

Mainland Chinese shares declined, while those in Hong Kong gained ground, after the People’s Bank of China (PBoC) injected 30 billion yuan into the markets, coinciding with a decline in money market rates. Mainland media outlets stated that the PBoC will continue selective policy tightening, while Reuters reported that Beijing is seeking guidance on how to counter any trade penalties imposed against it by the U.S. Australian securities were little changed in the wake of the release of the minutes from the Reserve Bank of Australia’s March monetary policy meeting, which noted concerns over household debt and wage growth.

Tomorrow, the international economic calendar will include trade data, the All Industry Activity Index and department store sales from Japan, the Leading Index from Australia and the current account for Italy and the Eurozone.