Market Brief – Monday 7/31/20

Stocks rallied in overnight trading after tech earnings blew out analyst’s expectations sending stocks higher. The overnight rallied quickly faded in early trading as sellers dominated the tape. Treasury yields fell slightly in overnight trading but rose in pre-market trading, only to fall right on the minute of today’s Quantitative Easing purchase.

Personal Consumption Expenditures Price index rose +0.4% in June and +0.8% from this time last year. The Core PCE Price Index rose +0.2% in June and +0.9% from this time last year as the PCE and Core PCE Price indices signal higher prices.

Personal incomes fell -1.1% in June yet personal consumption rose +5.6% in June as consumers continued to spend despite having less income. Real, or inflation-adjusted, personal consumption rose +5.2% in June.

The Chicago Fed PMI stabilized at 51.9 in July, indicating a very slight expansion from last month’s print which tanked to 36.6. The Chicago PMI indicates there is not a significant improvement in the Chicago factory sector.

The University of Michigan’s Consumer Confidence Survey showed consumer sentiment fell slightly, current conditions fell and consumer expectations fell as consumers appear less confident about the economy in July.

After trading in the red at one point, stocks rallied on news Democrats and Republicans would meet on Saturday to work through the next relief bill which sent stocks higher in late trading. Treasury yields started the day lower but found sellers which pushed yields higher, only to close lower after an impressive late-day rally.