Dow rose 29, decliners over advancers better than 4-3 & NAZ was off 94. The MLP index declined 2+ to the 185s & the REIT index was a tad lower to 461. Junk bond funds were little changed & Treasuries saw more buying. Oil dropped 1 to the 72s & gold was off 2 to 1822.
AMJ (Alerian MLP index tracking fund)
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The number of Americans filing for first-time unemployment benefits last week fell to its lowest level since the outbreak of the COVID-19 pandemic. The Labor Dept said that 360K Americans filed for first-time jobless benefits last week, a decline of 26K from the prior week's upwardly revised 386K. The reading, which matched the consensus, was the lowest since Mar 14, 2020, when 256K workers filed claims. Continuing claims fell to 3.24M, which was below the 3.31M that was expected. The prior reading was revised up to 3.37M. Economists expect jobless claims to retreat in the weeks ahead as more states end the $300 per week in supplemental unemployment benefits. 22 states ended the benefits by the start of Jul & a handful of others are expected to follow suit before they expire later this year.
Jobless claims fall to pandemic-era low
The economy has continued to strengthen with moderate to robust growth since late May, but ongoing shortages in labor & supplies have persisted, the Federal Reserve found in its Jul Beige Book report. "Supply-side disruptions became more widespread, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods," the report stated, adding that "the outlook for demand improved further, but many contacts expressed uncertainty or pessimism over the easing of supply constraints." The summary on current economic conditions also reported that prices increased at "an above-average pace," with 7 of the Fed's 12 districts reporting strong price growth & the remaining areas seeing moderate gains. With inflation continuing to surge, the Fed reported that while some contacts still believe the ongoing rise in prices is transitory, a majority of the officials surveyed expect input costs & selling prices to climb further in the coming months. On the same day of the Beige Book's release, Federal Reserve Chair Jerome Powell spoke to Congress, acknowledging in his remarks to lawmakers that "Inflation has increased notably and will likely remain elevated in coming months before moderating." Powell also signaled that the Fed is "a ways off" from tapering economic support, sending stocks higher following his comments.
Fed's July Beige Book finds economy strengthened, but shortages more widespread
Morgan Stanley (MS) posted Q2 profit & revenue that exceeded expectations on strength in equities trading & investment banking. While rival banks reported a steep slowdown in fixed-income trading
revenue — as did MS —
the bank's strength has traditionally been in its equities-trading
franchise, the biggest in the world. That business outperformed in Q2, producing $2.8B in revenue, more than $400M over what was expected. It made up for the shortfall in
fixed income, which produced $1.7B in revenue, below the $2B estimate. Thru a series of savvy acquisitions, CEO James Gorman has built up
the bank's wealth management franchise to be one of the largest in the
world. He also helped rehabilitate the firm's trading operations &
maintained its leading merger advisory practice. “The firm
delivered another very strong quarter, with contributions from all of
our businesses,” Gorman said. “With our
transformed business model providing more stable and durable earnings,
we have doubled our dividend and announced a $12 billion buyback as we
move to return our excess capital to shareholders.” The stock rose 73¢.
If you would like to learn more about MS, click on this link:
club.ino.com/trend/analysis/stock/MS?a_aid=CD3289&a_bid=6ae5b6f7
Morgan Stanley tops estimates on strong stock trading and investment banking
The Dow was sold in early trading, but buyers brought it into the black. However NAZ is weak & the advance/decline ratio is negative once again. Buyers are attracted to Treasuries & gold remains in favor. The jobless claims data was favorable with the number approaching the record low figures above 200K in the good old days (early 2020). Nevertheless inflation fears are not going away & the virus continues to keep fighting even with all the vaccine shots that have been given out.
Dow Jones Industrials
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