[Chart courtesy of MarketWatch.com]
U.S. equity indexes showed a little resiliency and closed higher, recouping some of the losses from two-straight sessions in negative territory, as investors shrugged off disappointing housing data and escalating tensions in Syria. Crude oil prices continued to rally amid political tensions, boosting energy stocks, and the U.S. dollar gained ground.
Meanwhile, Treasuries were lower despite a surprising decline in pending home sales and a decrease in mortgage applications. Trading volume was thin and came after a drop in the S&P 500 index on Tuesday to its lowest in two months. The index settled higher by 0.3% to follow yesterday’s 1.6% slide. Although the benchmark index advanced, it was unable to retake its 100-day moving average.
Eight of ten sectors finished in positive territory with energy leading the way. The sector displayed significant strength, climbing 1.8%, after outperforming during yesterday’s session. Thanks to today’s jump, energy is the only sector trading in positive territory this month.
On a related note, crude oil rose 0.4% to $109.40 per barrel, and has gained almost 12.0% so far this quarter. Oil prices bear watching over the coming days as the continued strength has the potential to pose as a headwind to economic growth.
Overall, today’s rebound was not very robust. Yesterday, six sectors lost more than 1.0%, and today, none of those six advanced more than 0.4%. Outside of energy, only health care and discretionary shares finished ahead of the S&P. The health care space advanced 0.4% as biotechnology rallied.
Elsewhere, discretionary gained 0.4% as retailers displayed strength. Retail ETF finished higher by 0.6%. Countercyclical sectors ended in mixed fashion as utilities (+0.3%) settled in-line while consumer staples (-0.7%) and telecom services (-0.5%) lagged.
The domestic economic docket for today included the weekly MBA Mortgage Index which remained in a downtrend with today’s 2.5% fall marking the fourteenth decline out of the past sixteen readings including last week’s 4.6% slide. Meanwhile, pending home sales fell 1.3% in July, more than the consensus of a 1.0% drop. As the result, home builders lagged from broader market as the iShares Dow Jones US Home Construction ETF slipped 0.5%.
Geopolitical tensions caused losses for most of Europe and Asia. Equity markets finished mostly lower with mounting uneasiness regarding a potential US-led military intervention in Syria hamstringing appetites for stocks in the region.
Our Trend Tracking Indexes (TTIs) barely moved from yesterday’s close with the Domestic TTI ending at +1.14% while the International TTI settled at +3.21%.