Dow rose 43 (below opening highs), advancers over decliners 5-4 & NAZ gained 12. The MLP index added 2+ to the 204s & the REIT index was up 1 to 347 following recent buying. Junk bond funds fluctuated & Treasuries found only modest buying. Oil went over 70 again & gold was down 2 to 1893.
AMJ (Alerian MLP index tracking fund)
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US consumer prices increased in May at the fastest annual rate in nearly 13 years as the economic omeback from COVID-19 lockdowns continues to build momentum. The
Labor Dept reported that the consumer price index in May
rose 5% year over year, hotter than the 4.7% increase that was
anticipated & was above last month's 4.2% print. Prices jumped 0.6% month over month, quicker than the 0.4% increase that was expected. The annual data has a "base effects" skew due to the decline in prices that occurred at the start of the pandemic. Used car & truck prices surged 7.3%, accounting for about 1/3
of the index's gain. Food prices, meanwhile, rose 0.4% matching Apr's
increase. Energy prices were unchanged from Apr as a decline in
gasoline prices was offset by an increase in natural gas & electricity
costs. Core CPI, which excludes food & energy, in May rose
3.8% annually, the most since 1992. Core prices increased 0.7%
month over month, outpacing the 0.4% increase that was expected. The
index rose 0.9% in Apr. Upward pressure on prices has appeared
in wide swaths of the economy as businesses struggle to find materials
due to supply chain bottlenecks that occurred as a result of the
pandemic. Some businesses are also struggling to fill jobs because
supplemental unemployment benefits have encouraged workers to stay
home. The hot inflation reading comes with the Federal Reserve next week
set to hold its Jun policy meeting. Investors will be paying close
attention to the central bank's comments on when it may start tapering
its asset purchase program & begin raising rates. Federal Reserve Chair Jerome Powell has said he expects upward pressure on prices to be temporary.
Consumer prices surge at fastest rate since 2008
The number of Americans filing for first-time jobless claims has fallen for its 6th straight week to a new pandemic low, according to the Labor Dept. The data shows that 376K people filed for first-time benefits last week, a decrease of 9K compared to the 385K people who filed the week prior. This marks the lowest level since Mar 14, 2020, when initial jobless claims were 256K. Before the pandemic brought economic activity to a near-standstill in Mar 2020, weekly applications were regularly coming in below 220K. Meanwhile, 3.5M Americans were receiving traditional state unemployment benefits, a decrease of 258K from 3.8M the week before. This marks the lowest level since Mar 2020, when continuing jobless claims were over 3M. The latest Labor Dept figures come just days after the agency reported that job openings hit a record 9.3M in Apr. Layoffs dropped to 1.4M, the lowest in records dating back to 2000, while 4M quit their jobs in Apr, another record & a sign that they are confident enough in their prospects to try something new. The US economy added 559K new jobs in May, missing estimates of 650K & the unemployment rate dropped from 6.1% to 5.8% in Apr, the lowest since businesses shut their doors in Mar 2020. The US is still short 7.6M jobs from where it stood in Feb 2020. But employers are posting vacancies faster than would-be applicants can fill them. Many Americans are contending with health & childcare issues related to COVID-19 & with career uncertainty after the coronavirus recession wiped out many jobs for good. Some are taking their time looking for work because expanded federal jobless benefits pay more than their old jobs.
Jobless claims drop to new pandemic low
The back-to-school season is usually a time of new beginnings, but consumers are more eager than usual for a fresh start after the pandemic. That emotion will fuel spending, according to a new forecast. Back-to-school sales in the US are expected to grow 6.7% from 2019 & 5.5% from last year's Covid days, according to a forecast by Mastercard SpendingPulse. The company uses nonautomotive spending patterns online & in stores to make retail projections for the period that spans from mid-Jul to early Sep. The sales season is typically a major driver for retailers as families buy school supplies, clothes & college dorm decor. This year, however, it will also serve as a barometer for consumer confidence as Covid cases wane in the US & many people return to routines like full days in a classroom, meetings at the office & a busier roster of activities. “There is added significance largely because we are in a very rapidly changing consumer environment and reopening economy,” said Steve Sadove, senior advisor for Mastercard. For retailers, the 2021 back-to-school season comes at a critical moment. Some face challenging year-over-year comparisons because of unusually high sales of groceries & other essentials for time spent at home during the pandemic. Other hard-hit retailers are trying to make up for lost time as merchandise like shoes, dresses & denim catch shoppers' attention again. Apparel in particular will likely have a steep year-over-year jump as consumers fill up their closets. Apparel sales are expected to rise about 78% compared with the back-to-school season in 2020 & 11% from the 2019 season. Sadove said people want to look fresh & fashionable as they get ready to reunite with co-workers or classmates, attend weddings and go out more. “There’s a pent-up demand for newness, for change,” he said. One of the beneficiaries of that will be department stores with a 25% year-over-year increase, as consumers return to malls & browse in stores again. For many consumers, online shopping will remain a habit. E-commerce sales are expected to decline by nearly 7% year over year but will be 53% higher than the back-to-school season in 2019.
Back-to-school sales to rise 5.5% as shoppers seek fresh start, Mastercard says
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