U.S. stocks finished in the red and near the lows of the day, as remarks from today’s speech from Federal Reserve Chairman Jerome Powell dampened a widely anticipated rate cut in July.
The economic calendar didn’t help, as Consumer Confidence and new home sales both fell, and another read on regional manufacturing was soft.
Treasury yields were lower and the U.S. dollar ticked higher, while crude oil prices were mixed, and gold added to its rally.
The Dow Jones Industrial Average fell 179 points (0.7%) to 26,548
The S&P 500 Index declined 28 points (1.0%) to 2,917
The Nasdaq Composite tumbled 121 points (1.5%) to 7,885
In moderate volume, 877 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq
WTI crude oil ticked $0.07 lower to $57.83 per barrel and wholesale gasoline gained $0.02 to $1.84 per gallon
The Bloomberg gold spot price traded $2.41 higher to $1,422.14 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.2% to 96.17
Consumer Confidence and new home sales fall, Fed Chief speech eyed
The Consumer Confidence Index dropped to 121.5 in June, from May’s revised 131.3 level, below the Bloomberg estimate of 131.0. This was the lowest level since September 2017 as the Present Situation Index and the Expectations Index of business conditions for the next six months both fell month-over-month. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—decreased to 27.6 from the 33.5 level posted in May.
New home sales fell 7.8% m/m in May to an annual rate of 626,000 units versus forecasts calling for 684,000 units and the upwardly-revised 679,000 unit pace in April. The median home price was down 2.7% y/y to $308,000. New home inventory rose to 6.4 months of supply at the current sales pace from 5.9 in April. Sales dropped sharply m/m in the Northeast and West, but rose in the Midwest and South. New home sales are based on contract signings instead of closings.
The main event for the day was likely the afternoon speech from Federal Reserve Chairman Jerome Powell on the economic outlook and monetary policy. Powell’s remarks came following last week’s monetary policy decision that kept rates unchanged but put a rate cut for this year on the table. However the Chairman noted that while uncertainty surrounding trade and global growth have increased, he and his colleagues are “grappling with whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” indicating a July rate cut, widely expected by investors and economists, is not a done deal.
Treasuries were higher, as the yield on the 2-year note was 1 basis point lower at 1.73%, and yields on the 10-year note and the 30-year bond decreased 3 bps to 1.99% and 2.52%, respectively.
Europe and Asia mostly lower on geopolitical tensions and G-20 focus
European equities were mostly lower in apparent caution ahead of this week’s much-anticipated G-20 summit in Japan at which U.S. President Donald Trump and Chinese President Xi are expected to hold talks. Also, the markets continue to grapple with escalated geopolitical tensions as the U.S. imposed new sanctions on Iran. The euro and British pound dipped versus the U.S. dollar and bond yields in the region were mostly lower.
Stocks in Asia finished mostly to the downside as the global markets continue to grapple with heightened geopolitical concerns as the U.S. announced new sanctions on Iran and appeared to tread with some caution ahead of this week’s G-20 summit that is expected to see the U.S. and China resume trade talks.
Japanese equities declined, as the yen gained ground late in the session, while those traded in South Korea also traded to the downside. Stocks in mainland China and Hong Kong dropped, with the banking sector seeing solid pressure on the exacerbated geopolitical tensions.