Wall Street Close: Bullish consolidation extends on US data, mixed earnings
|- US equities posted the least daily gains in three.
- US Jobless Claims spike, jump in Existing Home Sales and dull reaction to ECB mainly portrayed market moves.
- Optimism over US stimulus, ease of discussing debt limits and mixed results offered extra catalysts to watch.
- Preliminary PMIs for July will be important for the day, next week’s Fed meeting is the key.
US shares manage to post third daily rise, slimmer day-by-day though, on Thursday. The performance could be linked to a surprise jump in US Jobless Claims and higher housing figures jostling with the mixed updates from the earnings counter. Additionally directing the market’s performance were receding fears of an immediate debt limit hike and hopes over US President Joe Biden’s infrastructure spending plan, not to forget the ingrained covid woes.
Amid these plays, Dow Jones Industrial Average (DJI) barely saved traders from a negative closing with 25 points of a rise, or 0.07%, to 34,823 whereas S&P 500 added 0.20% or 8 points to 4,367. Further, Nasdaq gains 0.36%, benefiting from easy Treasury yields and tech optimism, to end Thursday around 14,684.
US Initial Jobless Claims rose past 350K forecast and an upwardly revised prior of 368K to 419K for the week ended on July 16. The same propelled the 4-week average to 385.25K versus 384.5K (revised from 382.5) previous readout. Further, US Existing Home Sales Change reversed the previous -1.2% figures with +1.4% MoM in June.
On a different page, Democrats are too optimistic and are ready to work over the weekend to get their leader’s plan passed even if US Senators pushed back the infrastructure spending vote to Monday. Furthermore, US Congressional Budget Office (CBO) statement, per Bloomberg, suggesting a time for the policymakers until November 2021 to battle the debt limit that will expire on July 31 also favored the mood. Additionally, the European Central Bank (ECB) matched wide market expectations of keeping the monetary policy unchanged with dovish forward guidance, suitable to the new inflation targeting method.
Alternatively, Texas instruments’ conservative guidance and Intel Corporation’s cautious optimism over the industry, despite marking upbeat results, daunted TXN and INTC figures. On the contrary, Domino’s, CSX and Biogen Inc. were the gainers backed by the earnings.
Elsewhere, the latest escalation in the covid-led death toll adds to the market’s woes and challenges the unlock measures in the Northern hemisphere.
It’s worth mentioning that the market’s cautious sentiment ahead of next week Federal Open Market Committee (FOMC) and the month-end consolidation also play their role to determine immediate trading sentiment.
That said, the preliminary numbers of July’s Purchasing Managers’ Index (PMI) will be crucial for Friday as investors will observe the virus resurgence impact.
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