Markets struggle as investors weigh US-China talks and economic data

Dow dropped 59 (off session lows), decliners over advancers 4-3 & NAZ gained 86 to a new record.   The MLP index fell 1+ to the 127s & the REIT index was fractionally lower to the 356s.   Junk bond funds fluctuated & Treasuries were sold.  Oil remained above 43 & gold pulled back 5 to 1934 (more on both below).

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Sales of newly built homes soared across the nation in Jul, as pent-up demand from the shutdown spring market, urban flight & a new desire for more work-at-home space fueled the growth.  As measured by signed contracts, new home sales jumped 13.9% compared with Jun & were a remarkable 36.3% higher annually, according to the US Census.   This reading was also revised high & was the strongest one-month pace since 2006.  This is the 3rd consecutive month of sizable sales gains, after sales dropped dramatically in Mar & Apr, due to the onset of the coronavirus pandemic.  Strong demand sucked up the inventory of newly built homes for sale, which fell to a 4-month supply from a 4.7-month supply in Jun.  Low supply & strong demand made it easier for builders to raise prices.  The median price of a newly built home sold in Jul was $330K, an increase of 7.2% compared with Jul 2019.   Buyers are taking advantage of low mortgage rates, which give them additional purchasing power but also tend to juice home prices.  The average rate on the 30-year fixed set two record lows in Jul, when these sales contracts were signed.

Sales of newly built homes surge 36% in July

The US death toll from the coronavirus illness COVID-19 climbed above 177K today, as experts continued to question claims made about the use of convalescent plasma as a treatment for hospitalized COVID-19 patients & a leading gov official conceded he misspoke at a Sun press briefing.  Food & Drug Administration Commissioner Stephen Hahn acknowledged Mon that his comment that a study had shown plasma achieving a 35% improvement in survival was inaccurate.  Hahn made the comment, accompanied by Pres Trump, while announcing an emergency-use authorization for convalescent plasma.  ”What that means is — and if the data continue to pan out — 100 people who are sick with COVID-19, 35 would have been saved because of the administration of plasma,”  Hahn said at the White House news conference, where Trump described plasma as a “breakthrough.”  Scientists & experts, including the World Health Organization, said that was not correct & noted further clinical research was needed.  The FDA commissioner may have confused absolute risk & relative risk.  “I have been criticized for remarks I made Sunday night about the benefits of convalescent plasma. The criticism is entirely justified,” Hahn wrote.  “What I should have said better is that the data show a relative risk reduction not an absolute risk reduction.”

U.S. coronavirus death toll tops 177,000 as FDA head acknowledges he misspoke on convalescent plasma

Best Buy (BBY) shares fell after the company reported a fiscal Q2 earnings & revenue beat, but took a cautious tone for the future.  EPS was $1.65, up from  89¢ last year.  Adjusted EPS of $1.71 blew past the consensus for $1.04.  Revenue of $9.9B was up from $9.5B last year & also ahead of the consensus fot $9.7B.  Online sales grew 242% for the period.  Enterprise comparable sales rose 5.8% with domestic same-store sales were up 5.0%.  The forecast  was for comparable sales growth of 2.3% with domestic comparable sales forecast to grow 2.9%.  Intl comparable sales grew 15.1%, well ahead of the consensus for 8.8% growth.  Tablets & appliances were some of the big sellers for the qtr, with large appliance & home theater merchandise sales growing as stores opened, according to CEO Corrie Bary.  For the first 3 weeks of Q3, sales are up about 20%, she said.  The company declared a div of 55¢.  However the company did not give financial guidance due to uncertainty from the coronavirus pandemic.  "Overall, as we plan for the back half of the year, we continue to weigh many factors including potential future government stimulus actions, the current shift in personal consumption expenditures from areas like travel and dining out, the possible depth and duration of the pandemic, the risk of higher unemployment over time, and the availability of inventory to match customer demand," said CFO Matt Bilunas.  Experts & other retailers have talked about the slow start to the back-to-school season & the impact that the ongoing pandemic will have on the shopping calendar heading into holiday shopping.  The stock: dropped 4.67 (4%).
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Best Buy reports earnings beat and declares dividend but shares fall after cautious look ahead

Gold prices ended lower for a 2nd straight session as a sign of easing tensions between the US & China helped dull haven demand for the precious metal.  Traders also awaited the latest update on Federal Reserve policy from Chair Jerome Powell Thurs at the annual Jackson Hole central banker conference.  Top US & Chinese officials were said to reaffirm their commitment to an initial phase of a Sino-American trade deal, helping to calm some concerns that tensions between the 2 sides were intensifying.  Dec gold fell $16 (0.8%) to settle at $1923 an ounce, after the metal fell 0.4% in the previous session.  The latest settlement was the lowest for a most-active contract in a month.  Bullion has mostly been under selling pressure, finishing lower in 3 of the past 4 sessions, including today, as equities take cues from optimism on vaccines & treatments for the COVID-19 pandemic.  Uncertainty about the economic impact of the pandemic & the outsize policy measures to combat it have been at the heart of gold's rally since Mar.  However, the rally for precious metals has cooled somewhat since minutes from the FOMC's meeting in late Jul signaled that the policy-setting group was unwilling to use unconventional methods to keep rates benchmark interest rates lower, which was viewed as a short-term negative for gold.   Data today showing a fall in Aug US consumer confidence to 84.8 failed to provide support for haven gold, as US new home sales rose for a 3rd month in a row in Jul, up 14%.

Gold ends lower for a second day as China-U.S. trade tensions ease

Oil & gasoline futures settled at their highest since early Mar, as storms forced the shutdown of more than 80% of offshore crude-oil production in the Gulf of Mexico & prompted refinery cuts.  Tropical Storm Marco made landfall yesterday & was downgraded to a post-tropical cyclone yesterday.  Attention is focused on Laura, which was upgraded to a hurricane this AM & is expected to make landfall on the Gulf Coast later this week.  West Texas Intermediate crude for Oct rose 73¢ (1.7%) to settle at $43.35 a barrel.  Oct Brent crude, the global benchmark, also gained 73¢ (1.6%) to $45.86 a barrel.  Front-month prices for both benchmarks settled at their highest since Mar 5.  The Interior Dept's Bureau of Safety & Environmental Enforcement, citing operator reports, estimated that 84.3% of offshore oil production in the Gulf of Mexico (1.6M barrels of oil a day) had been shut in, along with nearly 61% of natural-gas production.

U.S. oil and gasoline futures tally highest finish since March as storms force output cuts in U.S. Gulf Coast

Demand for new home construction is strong & also for cars.  However car production is below recent record levels.  The fight to get control of the virus is moving forward in small steps.  NY data shows what the flattened curve looks like.  Daily deaths have been in single digits for a couple of months.  However restrictions on the economy are coming slowly.  Everybody is nervous, so bold moves are not being made.

Dow Jones Industrials