US Stock Market Overview – Stock Rally on Possible Stimulus Deal; Payrolls Were Stronger than ExpectedChicago PMI beat expectations
US stocks moved higher on Wednesday following commentary from Treasury Secretary Steve Mnuchin that a deal with Democrats could come soon. Most sectors in the S&P 500 index were higher, led by Healthcare, the energy sector bucked the trend. US private payrolls came out stronger than expected according to ADP and Macroeconomic Advisors. The US pending home sales were stronger than expected continuing a streak of strong housing data. Second-quarter US GDP was revised slightly higher but a contraction of 31.4% was the worst in history.
Private Payrolls Rose More than Expected
US corporations added more jobs than expected in September due in good part to a surge in manufacturing. ADP reported that private-sector jobs increased by 749,000, more than the 600,000 expected. This comes ahead of Friday’s government employment report which is expected to show an increase of approximately 800,000 jobs, while the unemployment rate is expected to fall to 8.2%. Most of the gains were in the manufacturing space. ADP found that manufacturing added 130,000 jobs.
GDP Was Revised Higher buy Still Shocking
US growth dropped sharply in Q2 according to the Commerce Department. US GDP dropped 31.4% in Q2, only slightly changed from the 31.7% drop estimated one month ago. Estimates are that the Q3 will see a substantial rebound as the US economy reopened.
Mortgage Applications Drop
Despite another interest rate drop, demand for refinancing and purchasing mortgages fell last week, with volume for mortgage applications down 4.8% from the previous week, according to the Mortgage Bankers Association. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 decreased to 3.05% from 3.10% last week.
Pending Home Sales Surge
The National Association of Realtors’ Pending Home Sales Index surged 8.8% last month to an all-time high of 132.8. Expectations were for a rise of 3.1%. The reading is the fourth-straight climb for the index. All four major US regions in the US saw gains.
Chicago PMI Rise More than Expected
The Chicago Purchasing Manager’s Index, rose to 62.4 in September from 51.2 in August, which is in expansion territory. Expectations for the mid-west manufacturing index was for a rise to 53. Through Q3, business sentiment recovered sharply to 55.2, the strongest reading since Q1 2019.