U.S. equities finished lower in choppy trading amid continued uneasiness toward emerging markets and the omnipresent trade uncertainty.
Treasury yields and gold declined, while the U.S. dollar and crude oil prices were higher.
The Dow Jones Industrial Average fell 138 points (0.5%) to 25,987
The S&P 500 Index declined 13 points (0.4%) to 2,901
The Nasdaq Composite lost 21 points (0.3%) to 8,088
In moderate volume, 615 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq
WTI crude oil jumped $1.74 to $70.25 per barrel and wholesale gasoline was up $0.01 at $2.01 per gallon
The Bloomberg gold spot price lost $6.14 to $1,200.46 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.2% higher at 94.75
Personal income and spending nudge higher, jobless claims rise slightly more than expected
Personal income rose 0.3% month-over-month in July, versus the Bloomberg forecast to match June’s unrevised 0.4% gain. Personal spending gained 0.4%, in line with estimates to match June’s unrevised increase. The July savings rate as a percentage of disposable income was 6.7%.
Weekly initial jobless claims rose by 3,000 to 213,000, versus estimates calling for 212,000, with the prior week’s figure unrevised at 210,000. The four-week moving average dipped by 1,500 to 212,250, while continuing claims fell by 20,000 to 1,708,000, south of estimates of 1,725,000.
Treasuries were higher, as the yields on the 2-year and 10-year notes decreased 2 basis points to 2.65% and 2.86%, respectively, while the 30-year bond rate dipped 1 bp to 3.01%.
The U.S. dollar is rebounding somewhat from a recent soft patch that was exacerbated by yesterday’s jump in the British pound on renewed hopes of a positive Brexit deal. However, the U.S. stock markets have rallied back to record high territory, courtesy of the solid earnings and economic foundation and expectations that the Fed will remain gradual in its rate hike campaign. The markets continue to grapple with global trade uncertainty, with NAFTA negotiations appearing to be progressing as Mexico and the U.S. reached a bilateral deal earlier this week and Canada now at the table, while a deal between China and the U.S. remains a major source of uncertainty.
Tomorrow’s economic calendar will round out with the Chicago Purchasing Managers Index, anticipated to decline to 63.0 for this month from the 65.5 posted in July, as well as the final University of Michigan Consumer Sentiment Index, with economists expecting the measure to be revised to 95.5 from the 11-month low of 95.3 preliminarily reported, but below July’s final read of 97.9.
Europe and Asia lower on trade and emerging market focus
European equities finished lower, even as the euro dropped versus the U.S. dollar. Festering trade uncertainty, despite some signs of progress regarding NAFTA negotiations, appeared to foster a slight retreat in the U.S. from record highs, as China and U.S. relations remains a key source of uncertainty.
Plus, the flare-up in Argentinian crisis concerns exacerbated uneasiness toward emerging markets that were already wobbly in the wake of the Turkish turmoil. The British pound moved lower, paring some of yesterday’s spike that came as the European Union’s (EU) chief Brexit negotiator said the EU was prepared to offer Britain an unprecedented partnership.
There are some reasons to think that the probability of a repeat of a past crisis has eased, while the changes we have seen should help reduce the vulnerability of the global system to shocks like those of the past. However, risk has not been entirely eliminated from the system. Bond yields in the region were mixed as data showed German consumer price inflation rose in line with expectations, though reads on Eurozone economic and business sentiment came in a bit shy of estimates.
Stocks in Asia finished mostly lower despite the extended rally yesterday in the U.S. to record highs on signs that a NAFTA deal could be in the offing, though a deal between the U.S. and China continued to be in question. Also, the markets may have treaded cautiously ahead of tomorrow’s key manufacturing and services sectors data.
Stocks in mainland China and Hong Kong fell sharply, and those traded in Australia finished flat, as a disappointing read on the nation’s building approvals and lingering political uncertainty was countered by a major merger announcement in the telecom sector.
Markets in both India and South Korea dipped, with the emerging markets remaining choppy amid continued turmoil in Turkey and Argentina.