Dow sank 525, decliners over advancers a very big 8-1 & NAZ nosedived 330. The MLP index lost 5 to the 106s & the REIT index descended 10+ to the 334s. Junk bond funds drifted lower & Treasuries continued weak. Oil finished off a fraction in the 39s & gold dropped 47 to 1860 approaching a 2 month low (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Euro zone business activity has taken a hit in the month of Sep as
countries face a 2nd wave of coronavirus infections, initial data
showed. The flash euro zone PMI (purchasing managers’ index) composite index —
which measures both manufacturing and services — stood at 50.1, just
marginally pushing into expansion territory. A reading below 50
indicates an economic contraction. This latest preliminary number points
to a 3-month low in economic activity for the region. The
services sector is in a particularly dire state, with
activity contracting this month to a 4-month low. Manufacturing in
the euro zone remained in positive territory & hit a 31-month high. “A
two-speed economy is evident, with factories reporting that production
growth was buoyed by rising demand, notably from export markets and the
reopening of retail in many countries, but the larger service sector has
sunk back into decline as face to-face consumer businesses in
particular have been hit by intensifying virus concerns,” Chris
Williamson, chief business economist at IHS Markit, said. The European Centre for Disease Prevention &
Control said that as of yesterday, there had been 2.9M confirmed
infections in the region, with Spain & France now seeing daily cases
rise above the 10K mark. Govs have announced new restrictions
to prevent the spread of the virus & economists have started
considering the economic ramifications of the new measures. Williamson said upcoming data is likely to show a
further slowdown in overall activity, which poses a “big risk of a
double dip” in the euro area.
Euro zone recovery stutters in September as coronavirus infections rise
The US economy is likely to be able to avoid the worst outcomes that were feared in the wake of the coronavirus pandemic, said Randal Quarles, the Fed's vice chair for banking supervision. "A recovery is underway and the world seems to be adjusting in ways that allow us to address public concerns about the virus without sudden stops in economic activity," Quarles said in a speech. Quarles added there are signs of the beginnings of a strong recovery but noted it will take a long time to fully recover from the shock. He said he agreed with Fed Chair Jerome Powell that it will take continued support to sustain a robust recovery.
Fed's Quarles says he is optimistic about outlook for U.S. economy
Nike (NKE), a Dow stock, appears to have recovered from its
pandemic slump, posting a solid quarterly profit driven by soaring online sales of its sneakers & workout apparel. EPS rose to 95¢, up 11% from the
same 2019 qtr. That
was well ahead of expectations for 47¢. In previous qtr NKE reported an
unexpected loss, with its revenue falling 38% after digital sales failed
to make up for losses in physical stores shuttered to combat the spread
of the coronavirus. In the latest qtr, digital sales rose 82%, helping offset declines in its wholesale business & company-owned stores. Revenue in the fiscal Q1 held steady at $10.6B, a
1% decline from the previous year. Sales in China rose 6% while North
America sales fell 2%. The forecast called for revenue of $9.2B. Most
of its stores are now open worldwide but sales continue to be slow
because of lower customer traffic & safety measures related to
COVID-19. Shipping costs & promotions aimed at
reducing inventory continued to eat at margins but order cancellations
fell. NKE has stepped up its direct-to-consumer online strategy amid the
pandemic, leveraging its workout app to drive digital sales. Online
sales now make up at least 30% of its revenue, a goal the company had
set for 2023. The stock rose 10.25 (9%).
If you would like to learn more about NKE, click on this link:
club.ino.com/trend/analysis/stock/NKE?a_aid=CD3289&a_bid=6ae5b6f7
Nike shakes off pandemic blues with surging online sales
General Mills (GIS), the
Cheerios parent, reported fiscal Q1 earnings beat expectations & the company raised its div. GIS rose to $1.03, up from 85¢ last
year. Adjusted EPS of $1 beat the consensus for 87¢. Sales of $4.36B were up from $4.0B last year & ahead
of the forecast for $4.22B. Sales for the North American
retail segment, pet & global segments rose while convenience stores & foodservice fell, owing to increased at-home eating during the
coronavirus pandemic. GIS declared a quarterly div of 51¢, a 4% increase. GIS expects at-home demand to remain
elevated due to COVID-19, but did not give fiscal 2021 guidance due to
the uncertainty of the pandemic. The stock lost 27¢.
If you would like to learn more about GIS, click on this link:
club.ino.com/trend/analysis/stock/GIS?a_aid=CD3289&a_bid=6ae5b6f7
General Mills stock rises after the Cheerios parent reports an earnings beat and raised its dividend
Gold prices fell below $1900 an ounce, a psychologically
important round number, to mark their lowest finish in 2 months as a
strengthening $ continued to undercut appetite for bullion, risking
a further break in a bullish trend line in the precious commodity. Dec gold fell $39 (2.1%) to settle at $1868, deepening
its march to its late-Jul lows after posting losses in the previous 2
sessions. That was the lowest finish for a most-active contract since
Jul 22. Precious-metal prices have been under selling pressure since the start
of the week as rising cases of COVID-19 in Europe & in the US,
helped to fuel an unwind of profitable bets on gold & into $s—a shift that further weighed on gold buying. Chicago Federal Reserve Pres Charles Evans yesterday implied in the a speech that the Fed could lift benchmark interest
rates, which currently stand at 0%-0.25%, sooner
than the market expects. Higher rates may boost the $ & make gold
less competitive against interest-bearing investments. “We could start raising rates before we start averaging 2%, we need to
discuss that,” said Evans. Analysts said that seemed at
odds with what other Fed officials have said following the central
bank's lost policy statement. But Evans today said he felt the
remarks were in line with the Sep policy statement & that market participants should understand that a 2.5% inflation
rate for some period “is likely in the cards” if the central bank is
doing its job right.
Gold prices end at 2-month low as rise in U.S. dollar deflates bullion demand
Oil futures gained as US crude supplies declined for a 2nd week in a row, but US benchmark prices fell short of reclaiming
the $40 mark, with coronavirus-related lockdowns in Europe raising
expectations for weaker energy demand. The Energy Information Administration reported that US crude inventories fell for a 2nd straight week, by 1.6M barrels last. That
was much less than the forecast for a decline of 4M barrels, but the American Petroleum Institute yesterday had reported an increase of 691K barrels. On its first full day as the front-month contract, West Texas Intermediate crude for Nov rose 13¢ to settle at $39.93 a barrel after tapping a high of $40.75. Front-month
prices settled below the $40 mark for a 3rd consecutive session. The global benchmark, Nov Brent climbed 5¢ to $41.77 a barrel. EIA
data also showed crude stocks at the Cushing, Okla., storage
hub unchanged for the week at 54.3Mn barrels, while total domestic
oil production was down by 200K barrels at 10.7M barrels a
day.
Oil futures settle higher, but U.S. prices fall short of reclaiming $40 mark
The stock market had been sloshing around until the PM when the sellers came out with heavy selling. The Dow dropped about 400 in the last 2½ hours. Not pretty for investors. The Dow is down 1700 & NAZ 1100+ in Sep. The biggest news story is the virus which is fighting back harder & that's getting more attention by traders.
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