Dow declined 76 (well off session highs), decliners over advancers better than 2-1 & NAZ slumped a very big 115. The MLP index sank 6+ to the 274s & the REIT index fell 3+ to the 347s. Junk bond funds were mixed & Treasuries crawled higher in price. Oil dropped to the 68s (more below) & gold was off 5 to 1221 (near 1 year lows).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The Commerce Dept announced that Q2 GDP advanced by 4.1%, & Q1 GDP was revised to 2.2% from 2%. Pres Trump touted his economic success, calling the number “very sustainable” driven by pro-growth policies. The average annual growth rate has been 2.8% over the past 4 qtrs & is now on track for 3.1% growth in 2018, a level that has been met with criticism by some economists. However, the Council of Economic Advisers Chairman Kevin Hassett said recent growth set the stage for a stronger economy in H2. “We are looking at an enormous amount of momentum,” Hassett said.” “So I would guess the next time we write down our forecast for a year that it will go up by a couple of tenths.” He attributed the pres's hard line on trade as a contributor to higher growth. “We’ve looked at… private data on inventories and we see that, for example, the Chinese increased their inventories of soybeans a lot, perhaps in anticipation of some kind of trade dispute,” he added. Trump's implementation of the tax overhaul & deregulation also boosted the number, he said. “There’s a lot of reshoring of activity because the U.S. has become a really attractive tax climate again,” he continued.
White House touts ‘enormous amount of momentum’ for rest of year
Chevron (CVX) reported quarterly profits & revenues that fell short of expectations, but the stock still rose after the oil major announced it would buying back $3B of its stock each year. The plan to return cash to investors is another sign that CVX is moving past a bruising period of low oil prices. Profits have steadily improved as commodity prices rebound & now CVX believes the buyback program is sustainable so long as oil market conditions don't take a dramatic turn for the worse. The company highlighted its improved cash position to underscore its confidence in the buyback program. Cash flow from operations, a key measure of financial health for integrated oil companies, stood at $11.9B in Q2, up 38% from the year-ago period. "Our cash flow continues to improve with higher upstream margins and volumes, combined with disciplined spending," CEO Michael Wirth said. "This enables us to initiate share repurchases, which are expected to be $3 billion per year based on our current outlook." While profit for Q2 more than doubled from a year ago to $3.4B, the company reported EPS of $1.78, short of expectations of $2.09. Revenue also came in light at $42.24B, compared with the forecast for $45.59B. The stock went up 1.07.
Chevron announces $3 billion stock buyback program as quarterly profits disappoint
Shares of Intel (INTC), another Dow stock tumbled on fears of stiffening competition & product delays. Despite that the chipmaker reported strong Q2 earnings & revenue, several analysts expressed concerns about increased competition on next generation microchips, which have plagued the company for months. The analysts noted that INTC could lose its "near monopolistic position in CPUs that allowed for increased ASPs." INTC has been struggling to maintain production timeline goals on its next-generation chips. In its earnings release, INTC revealed the company's 10-nanometer chip production process would arrive in H2-2019, meaning its next generation products would arrive by the holiday season of 2019. INTC has teased the large-scale release of 10-nanometer chips for years, promising they'd deliver better performance with lower power usage than chips built with the company's 14-nanometer technology, which have been shipping since 2014. The stock sank 4.48 (9%).
Intel plunges on product delays and fears it's losing a near 'monopolistic position'
US crude drops 1.3%, settling at $68.69 and posting fourth straight weekly decline
This was another glum day for the stock market & this selling could prove to be serious. Tech stocks have been the darlings of investors this year & NAZ kept setting new records. Now the glamor is losing its appeal & fast. If techs keep being sold, that will bleed over to the rest of the market as it did in the PM. Economic data & sentiment from consumers & execs is doing well even with tense trade issues. That won't last as long if tech shares are out of favor. The Dow continues to lumber along not far from its sideways trading over the last 6 months.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Stocks fell to session lows in the PM, with
some big tech names taking a hit while the energy sector also posted
losses after Exxon Mobil (XOM) & Chevron (CVX) earnings disappointed (both Dow stocks & Dividend Aristocrats). Earlier
stocks were flat with the latest reading on Q2 GDP providing some lift to the markets. The
economy expanded at a robust 4.1% rate in Q2, the
fastest pace in almost 4 years, driven by a pickup in consumer
spending plus a surge in soybean exports ahead of tariffs. The Q1 GDP reading was also revised to 2.2%, up from 2%. Yesterday, Amazon (AMZN) reported
blowout earnings, but the focus was on Twitter (TWTR). The
company's shares were on track for their worst session in 2 years after the company released its quarterly results.
TWTR announced that it experienced a decline in monthly active users
in the latest qtr, while the company expects more declines as it
moves to purge fake accounts. Social media companies have come under scrutiny following Facebook's (FB) Cambridge Analytica data use scandal. About ½ of the companies in the S&P 500 have reported quarterly
numbers & the results are well ahead of expectations. Earnings
at this point are up 22.1% from last year’s quarter, surpassing the
20.5% increase that was expected. Other
economic data released today included a reading on consumer sentiment.
The final reading on July consumer sentiment came in at 97.9 versus the
initial 97.1. Commodities were mixed. Oil
futures' losses accelerated after Baker Hughes announced that US
energy companies added oil rigs for the first time in 3 weeks. The
weekly rig count increased by 3.
US stock losses accelerate as tech, energy sectors drag on market
The Commerce Dept announced that Q2 GDP advanced by 4.1%, & Q1 GDP was revised to 2.2% from 2%. Pres Trump touted his economic success, calling the number “very sustainable” driven by pro-growth policies. The average annual growth rate has been 2.8% over the past 4 qtrs & is now on track for 3.1% growth in 2018, a level that has been met with criticism by some economists. However, the Council of Economic Advisers Chairman Kevin Hassett said recent growth set the stage for a stronger economy in H2. “We are looking at an enormous amount of momentum,” Hassett said.” “So I would guess the next time we write down our forecast for a year that it will go up by a couple of tenths.” He attributed the pres's hard line on trade as a contributor to higher growth. “We’ve looked at… private data on inventories and we see that, for example, the Chinese increased their inventories of soybeans a lot, perhaps in anticipation of some kind of trade dispute,” he added. Trump's implementation of the tax overhaul & deregulation also boosted the number, he said. “There’s a lot of reshoring of activity because the U.S. has become a really attractive tax climate again,” he continued.
White House touts ‘enormous amount of momentum’ for rest of year
Exxon Mobil (XOM) missed expectations on Q2 earnings, although revenue was a slight beat as the
company's production & refinery throughput declined. EPS was 92¢ in Q2 on revenue of $73.5B. Analysts had expected EPS of
$1.27 on revenue of $72.59B. The company's quarterly oil-equivalent production was 3.6M barrels per day, down 7% from last year. The stock was off 2.05.
If you would like to learn more about XOM, click on this link:
Exxon Mobil misses earnings expectations
Chevron (CVX) reported quarterly profits & revenues that fell short of expectations, but the stock still rose after the oil major announced it would buying back $3B of its stock each year. The plan to return cash to investors is another sign that CVX is moving past a bruising period of low oil prices. Profits have steadily improved as commodity prices rebound & now CVX believes the buyback program is sustainable so long as oil market conditions don't take a dramatic turn for the worse. The company highlighted its improved cash position to underscore its confidence in the buyback program. Cash flow from operations, a key measure of financial health for integrated oil companies, stood at $11.9B in Q2, up 38% from the year-ago period. "Our cash flow continues to improve with higher upstream margins and volumes, combined with disciplined spending," CEO Michael Wirth said. "This enables us to initiate share repurchases, which are expected to be $3 billion per year based on our current outlook." While profit for Q2 more than doubled from a year ago to $3.4B, the company reported EPS of $1.78, short of expectations of $2.09. Revenue also came in light at $42.24B, compared with the forecast for $45.59B. The stock went up 1.07.
If you would like to learn more about CVX, click on this link:
club.ino.com/trend/analysis/stock/CVX?a_aid=CD3289&a_bid=6ae5b6f7Chevron announces $3 billion stock buyback program as quarterly profits disappoint
Shares of Intel (INTC), another Dow stock tumbled on fears of stiffening competition & product delays. Despite that the chipmaker reported strong Q2 earnings & revenue, several analysts expressed concerns about increased competition on next generation microchips, which have plagued the company for months. The analysts noted that INTC could lose its "near monopolistic position in CPUs that allowed for increased ASPs." INTC has been struggling to maintain production timeline goals on its next-generation chips. In its earnings release, INTC revealed the company's 10-nanometer chip production process would arrive in H2-2019, meaning its next generation products would arrive by the holiday season of 2019. INTC has teased the large-scale release of 10-nanometer chips for years, promising they'd deliver better performance with lower power usage than chips built with the company's 14-nanometer technology, which have been shipping since 2014. The stock sank 4.48 (9%).
If you would like to learn more about INTC, click on this link:
club.ino.com/trend/analysis/stock/INTC?a_aid=CD3289&a_bid=6ae5b6f7Intel plunges on product delays and fears it's losing a near 'monopolistic position'
Oil prices fell, weighed down by a drop
in the US stock market, but drew support from easing trade tensions & a temporary shutdown by Saudi Arabia of a key crude oil shipping
lane. West Texas Intermediate futures ended down 92¢ (1.3%) at
$68.69, posting a 4th straight week of declines, falling 2.5%. Brent futures was down 18¢ at $74.36 a barrel, but was up 1.8% this week, the first
weekly increase in 4. Russian energy minister Alexander Novak said the market
remained volatile & responded to verbal interventions. He added that
the market had priced in risks related to US sanctions against Iran. He said OPEC & its allies were not discussing
an option to boost production by more than 1M barrels per day. OPEC & other producers
led by Russia agreed last month to ease production curbs. The deal
effectively increases combined output by 1M bpd, with Russia's
share at 200K bpd. Saudi Arabia earlier in the week said it was suspending oil shipments
through the Red Sea's Bab al-Mandeb strait, one of the world's most
important tanker routes, after Yemen's Iran-aligned Houthis attacked 2
ships in the waterway. Any move to block the
strait would virtually halt oil shipments thru Egypt's Suez Canal &
the SUMED crude pipeline linking the Red Sea & Mediterranean. An estimated 4.8M
bpd of crude oil & refined products flowed thru the Bab al-Mandeb
strait in 2016 toward Europe, the US & Asia, according to
the US Energy Information Administration.
US crude drops 1.3%, settling at $68.69 and posting fourth straight weekly decline
This was another glum day for the stock market & this selling could prove to be serious. Tech stocks have been the darlings of investors this year & NAZ kept setting new records. Now the glamor is losing its appeal & fast. If techs keep being sold, that will bleed over to the rest of the market as it did in the PM. Economic data & sentiment from consumers & execs is doing well even with tense trade issues. That won't last as long if tech shares are out of favor. The Dow continues to lumber along not far from its sideways trading over the last 6 months.
Dow Jones Industrials
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