The U.S. equity markets finished out last week mixed, with early gains for the Dow fading in the final hour of trading, and the S&P 500 and NASDAQ posting only modest gains. Technology and energy stocks were the day’s winners, with crude oil prices stabilizing, but a fall in consumer discretionary issues put a lid on the gains. Treasuries were mostly flat following reads that showed services and manufacturing activity missed expectations, but remained at levels depicting expansion, while the new home sales report for May topped forecasts. Gold was higher and theUS dollar was unchanged.
The Dow Jones Industrial Average (DJIA) declined 1 point to 21,396, the S&P 500 Index moved 4 points (0.2%) higher to 2,438, and the NASDAQ Composite gained 29 points (0.5%) to 6,265. In heavy volume, 2.0 billion shares were traded on the NYSE and 3.8 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.27 to $43.01 per barrel and wholesale gasoline was unchanged at $1.42 per gallon. Elsewhere, the Bloomberg gold spot price increased $5.35 to $1,255.86 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was flat at 97.25. Markets were higher for the week, as the DJIA inched 0.1% higher, the S&P 500 Index rose 0.2%, and the NASDAQ Composite jumped 1.8%.
Global software company BlackBerry (NASDAQ:BBRY) announced Q1 results of $0.02 per share, topping the FactSet consensus estimate of a flat reading, while revenues were short of estimates and dropped 42.5% year-over-year (y/y) to $244 million. Shares of BBRY were sharply lower.
New home sales beat expectations, manufacturing and services data miss slightly
New home sales increased 2.9% month-over-month (m/m) in May to an annual rate of 610,000, above forecasts calling for 590,000 units, and compared to the upwardly revised 593,000 unit pace in April. The median home price jumped 16.8% y/y to a record $345,800. New home inventory remained at 5.3 months of supply at the current sales pace. Sales were down m/m in the Northeast and Midwest regions. Y/Y, sales were higher in the South and West, though lower in Midwest and flat in the Northeast. New home sales are based on contract signings instead of closings.
The preliminary Markit U.S. Manufacturing PMI Index unexpectedly declined to 52.1 for June, below May's final read of 52.7, and compared to estimates calling for an improved level of 53.0. The preliminary Markit U.S. Services PMI Index showed growth for the key U.S. sector this month dipped to 53.0 from May's reading of 53.6, versus forecasts of slight decline to 53.5. Readings above 50 for both reports denotes expansion in activity.
Treasuries were nearly unchanged following the data, as the yields on the 2-year and 10-year notes, along with the 30-year bond, were flat at 1.34%, 2.14% and 2.72%, respectively.
Europe lower on Brexit vote 1-year anniversary, Asia mixed
European equities traded lower with food and beverage companies leading the decline following some reports that showed economic activity eased and as oil prices stabilized, while Brexit discussions continued.
Yesterday, U.K. Prime Minister Theresa May told European Union (EU) leaders that EU citizens in Britain will be able to continue living there after the country leaves the bloc and the Prime Minister will be making this statement to the British Parliament on Monday when details of her proposal will be published by the government. In economic news in the region, flash Markit manufacturing and services PMI reads for the region diverged as a continued surge of manufacturing activity was offset by softer services growth, though job creation for the manufacturing base is near a ten-year high.
The euro and British pound moved higher versus the U.S. dollar and bond yields in the region were mostly to the upside.
Stocks in Asia finished mixed as crude oil prices stabilized after recently entering bear market territory. Japanese equities rose modestly, snapping a string of losses, with the yen little changed versus its U.S. counterpart.
Mainland Chinese stocks advanced after staging a late session rally that ensued amid speculation that government-backed funds were used to steady the market, per Bloomberg. Markets in the Asian nation had come under pressure late yesterday after reports surfaced that the China Banking Regulatory Commission had asked some lenders to review their exposure to Chinese firms involved in relatively recent large acquisitions.
Meanwhile, listings in Hong Kong were nearly unchanged. Indian securities dropped, giving up early gains, which was largely attributed to profit-taking ahead of a long weekend, and Australian stocks gained ground despite being weighed down by financial stocks after a state-based version of the federal bank levy was introduced and as the Australian dollar traded lower versus the U.S. dollar. Finally, South Korean equities were also higher.
Equities squeak by with gains despite low oil
U.S. stocks finished the trading week higher, as the NASDAQ surged to reclaim some of the losses that it had accumulated the week prior, while the Dow and the S&P 500 saw modest weekly advances. A consistent decline in crude oil prices, which stabilized after reaching bear-market territory, weighed on equities throughout the remainder of the week and prices will likely continue to be eyed as market participants debate whether the slide was supply- or demand-driven.
The U.S. economic calendar remained dormant until Wednesday and though the data-points delivered were mostly in line or above expectations they were unable to provide any decisive direction for the broader markets. Healthcare stocks were standout winners this week after receiving a solid boost in the wake of the U.S. Senate introducing its bill aimed at replacing the Affordable Care Act on Thursday.
This week, the US economic calendar will paint details of the broad economic landscape with the release of the third and final read for Q1 GDP. And unlike this week, the domestic docket will hit the Street running with the manufacturing sector likely to be in focus following Monday's release of May durable goods orders before opening the bell.
Other U.S. reports slated for next week include: the Chicago PMI Index, the S&P/Case-Schiller Home Price Index, the Consumer Confidence Index, pending home sales, personal income and spending, the final University of Michigan Consumer Sentiment Index for June, and wholesale inventories.
International reports due out next week include: Australia—new home sales and private sector credit. China—industrial profits, current account and manufacturing and non-manufacturing PMIs. Japan—PPI, Leading Index, retail sales, jobless rate, CPI, industrial production, vehicle production, housing starts and construction orders. U.K.—house prices, consumer credit, mortgage approvals, GDP, Index of Services, business investment and the GfK Consumer Confidence Index. Eurozone—consumer confidence and CPI and German CPI, Ifo business climate survey, retail sales, GfK Consumer Confidence and Index of Services.