With no major headlines or new drivers, U.S. equity markets closed just above the flat line Wednesday. Positive economic and earnings momentum supports sentiment, but inflation concerns fuel some near-term caution.

European stocks were higher, while Asian markets closed mixed. At $68 per barrel, oil prices extended yesterday’s gains and are currently at the highest level in two years.

OPEC and its allies provided an upbeat outloook for demand driven by the economic reopening as vaccinations progress and mobility improves.

The 10-year Treasury yield was slightly lower and the dollar was little changed.

The price of crude oil was up $1.03 or 1.52 percent at $68.75 and the spot price of gold was up $6.4 or 0.34 percent at $1,911.40.  

It was a quiet day on the economic front, with no major releases in the calendar.

Overall mortgage applications fell by 4.0 percent from the prior week, with applications for home purchase falling by 3.1 percent and those for refinancing purposes falling by 4.6 percent.

Limited supply of existing homes, fast-rising prices and slightly higher but still low mortgage rates are some reasons that homebuyers have taken a step back recently.

Despite some signs of softening, we expect demand for housing to still be solid for the remainder of the year.

As more inventory comes to market, the pace of home-price appreciation will likely slow, easing some of the affordability concerns.

Equity markets continue to hover around all-time highs as investors await the jobs report Friday.

The payrolls data is likely to show an improvement in jobs gains as the economy builds momentum on the back of the reopening. Amidst signs of labor shortages, the focus is likely to be on the labor force participation to gauge how quickly workers are returning to the workforce as the expanded unemployment benefits expire and infection fears ease.

With the recovery progressing at a fast pace, expectations are rising for the Fed to start talking about tapering of its bond purchases.

We expect the Fed to announce tapering over the next months and start reducing the pace of asset purchases either near the end of the year, or early next year.

This shift in policy could trigger some volatility, However, it is important to note that monetary policy will continue to be very accommodative, with rates likely remaining near zero for an extended period of time.

Stock report is provided by the Salida office of Edward Jones.

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