Market Brief – Wednesday 7/1/20

Stocks and Treasury yields popped as the markets opened after Pfizer announced positive results from a vaccine test on 24 subjects. Stocks and Treasury yields were soon to reverse direction after Arizona reported a record number of daily cases.

Mortgage applications fell -1.8% last week as purchase applications fell -1.3% and refinance applications fell -2.2%.

Challenger job cuts came in at 170.219k for June, down more than half from May, and slowed to 305.5% from this time last year.

Baffling everyone, the ADP Nonfarm payroll report in May was revised up from -2.76 million jobs lost to +3.065 million jobs gained. Given ADP processes payrolls, their reporting should be extremely accurate. ADP reported +2.369 million jobs were added in June, missing expectations.

The Markit Manufacturing PMI for June came in at 49.8, indicating no change since it crashed in May.

Construction spending fell -2.1% in May and slowed to 0.3% from this time last year as construction spending is on the cusp of contraction.

The ISM Manufacturing PMI showed a very slight expansion in June, but like the Markit report, showed nearly no sign of recovery since May. After falling off a cliff, new orders improved over last month and prices paid rose slightly. Employment worsened as the report indicated manufacturers shed more jobs in June.

The Department of Energy reported crude oil inventories as Crude: -7.195mm (-710k expected), Cushing: -263k (-1.637mm expected), Gasoline: +1.199mm (-1.583mm expected), and Distillates: -593k (-393k expected). Crude oil fell following the report.

Investors were undeterred and eagerly bought the morning dip in stock prices as they sent the tech-heavy Nasdaq-100 to new all-time highs. Treasury yields fell after their morning ramp to close higher on the day.