U.S. stocks finished mixed as hopes of a near-term rate cut were tempered as some Fed members indicated that a September cut is not a certainty. The Fed began its key gathering in Jackson Hole, Wyoming, which will culminate with tomorrow’s speech from Fed Chief Jerome Powell, adding an additional layer of caution.
In economic news, jobless claims fell and the Leading Index rebounded by the most in nearly a year, though Markit’s manufacturing report showed the first contraction since 2009.
Treasury yields rose and the U.S dollar nudged lower, while crude oil prices and gold also lost ground.
The Dow Jones Industrial Average rose 50 points (0.2%) to 26,252
The S&P 500 Index decreased 2 points (0.1%) to 2,923
The Nasdaq Composite declined 29 points (0.4%) to 7,991
In light volume, 683 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq
WTI crude oil fell $0.45 to $55.68 per barrel and wholesale gasoline was $0.01 higher at $1.69 per gallon
The Bloomberg gold spot price declined $4.08 to $1,498.57 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% lower at 98.17
Jobless claims decline, manufacturing activity contracts, Leading Indicators jump
Weekly initial jobless claims fell by 12,000 to 209,000, versus the Bloomberg estimate of 216,000, with the prior week’s figure being revised higher by 1,000 to 221,000. The four-week moving average ticked higher by 500 to 214,500, while continuing claims dropped by 54,000 to 1,674,000, south of estimates of 1,707,000.
The Conference Board’s Index of Leading Economic Indicators (LEI) for July rose 0.5% month-over-month —the largest increase in nearly a year—versus projections of a 0.3% gain and compared to June’s favorably-revised 0.1% decline. Positive contributions from the jobless claims, building permits, stock prices, credit and consumer expectations components of the index, more than offsetting declines for ISM new orders and average workweek.
The preliminary Markit U.S. Manufacturing PMI Index showed the first contraction in almost 10 years in August, decreasing to 49.9 from July’s unrevised 50.4 figure, and versus expectations of a slight increase to 50.5. The preliminary Markit U.S. Services PMI Index showed growth fell more than expected but remained slightly in expansion territory for the key U.S. sector this month, decreasing to 50.9 from July’s 53.0 figure, and versus forecasts of a dip to 52.8. A reading of 50 for both indexes is the demarcation point between expansion and contraction.
Treasuries were lower in choppy trading, as the yield on the 2-year note increased 4 basis points to 1.61%, the yield on the 10-year note was up 3 bps at 1.61%, and the 30-year bond rate rose 5 bps to 2.10%.
Global growth concerns have ramped-up, trade tensions between the U.S. and China have escalated, and geopolitical uneasiness has intensified, while a host of global central banks have moved to more dovish stances to foster deeper dives into negative rates globally—notably in Europe.
The start of the Fed’s annual gathering in Jackson Hole, Wyoming garnered attention today, amid heightened expectations of further rate cuts this year and will culminate with tomorrow’s key speech from Chairman Jerome Powell on the heels of yesterday’s minutes that confirmed Committee members felt the rate cut following the meeting was a “recalibration”, as opposed to the start of an easing cycle.
Europe mostly lower, Asia mixed on data, yields and central bank stimulus uncertainty
European equities finished mostly lower, as the markets digested some mixed Eurozone economic data, while also grappling with festering U.S.-China trade uncertainty and the region’s ongoing political turmoil. Tomorrow’s key speech in Jackson Hole, Wyoming, by U.S. Fed Chief Jerome Powell was also eyed, along with the stabilization in bond yields after some volatility late yesterday in the U.S. as the markets reacted to the release of the minutes from the Fed’s July meeting that resulted in a rate cut but suggested it was a “recalibration”, as opposed to the start of an easing cycle.
The euro was lower versus the U.S. dollar and the British pound gained ground, while bond yields in the region moved mostly higher.
Stocks in Asia finished mixed, with the markets regaining some upward momentum yesterday but appearing cautious ahead of tomorrow’s key speech from Fed Chairman Jerome Powell and as economic data in Japan painted a mixed picture.
Stocks in Japan ticked higher, with the yen gaining some ground in late-day action, while the country’s manufacturing and services PMI indexes showed the former continued to contract but the latter’s growth accelerated for this month. Mainland Chinese equities also nudged higher, while those traded in Hong Kong fell. Australian securities rose, but markets in South Korea and India fell.