Global stocks were broadly higher again on Tuesday, although the gains in the U.S. were about half as strong as Monday’s.
Both the Dow and the S&P 500 gained a half percentage point, compared to Monday’s 1% or so gains, while NASDAQ finished with a 0.4% increase. The gains were broad but the volume light, the Wall Street Journal reporting that volume was 4.8 billion shares, the third-slowest full trading day of the year. Regardless, up volume topped down volume by about a 70-30 ratio, while nine of the 10 S&P sectors ended higher, led by a 1.2% jump in utilities. Telecom (-0.3%) was the only losing sector. Among the Dow stocks, where 21 of the 30 stocks finished higher, Home Depot jumped 5.5% after reporting better than expected second-quarter results.
Asian and European stocks were broadly higher as well, continuing on Monday’s gains. Japan’s Nikkei 225 rose 0.8%, its seventh straight advance; it’s gained 4.5% since it began the winning streak on August 11. Hong Kong’s Hang Seng index rose two-thirds of a percent while the Shanghai composite rose a quarter of a percent. India’s Sensex gained 0.1%, its sixth straight increase, hitting another record high. In Europe, Germany’s DAX led the advance, rising a full 1%, while the French CAC 40 rose 0.6% and Spain’s IBEX 35 gained half that. Italian stocks were unchanged. European sovereign bond prices were higher, lowering the yield on the 10-year German bund one basis point to an even 1.00%, while yields on comparable Italian and Spanish bonds fell four and three bps, respectively.
U.S. Treasury bond prices were higher early in the morning following release of the July consumer price index but then retreated, raising yields slightly. The yield on the 10-year note fell as low as 2.36% in the morning, where it was down three basis points from Monday’s close, but then moved higher as the price fell, ending the day at 2.40%. The CPI showed inflation rising a modest 0.1%, the slowest pace in five months and down from 0.3% in June. The year-on-year increase was an even 2%, down slightly from the prior month. In the commodities pits, oil prices continued to skid. WTI crude futures dropped nearly 2% to $94.65, their lowest level since January.
Housing starts rose much higher than expected in July, rising nearly 16% to an annualized rate of 1.09 million, the best rate in eight months. That easily beat the previous month’s level of 945,000, which was revised sharply higher from the original report of 893,000 units, and the Street forecast of 963,000. While much of the increase was due to a 29% jump in multifamily starts, which tend to skew wildly from month to month, the more stable – and bigger – single-family component rose 8.3% after falling 4.4% in June. Building permits, a leading indicator, were also up strongly, rising 8.1% to a 1.05 million annualized level.
Reports/dates/facts/links worth paying attention to over the next week:
- August 20: Minutes of the Federal Reserve’s July 30 monetary policy meeting are released.
- August 21: Weekly unemployment claims; existing home sales (July); leading indicators (July); Philadelphia Fed survey (August).
- August 22: Federal Reserve Chairman Janet Yellen speaks on labor markets at K.C. Fed’s annual Jackson Hole symposium; ECB President Mario Draghi is also slated to speak.
Copyright © 2014 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.