Dow declined 208 (above early lows), decliners over advancers better than 2-1 & NAZ fell 24. The MLP index was off 3+ to the 196s & the REIT index gained 3+ to the 452s. Junk bond fluctuated & Treasuries rose sharply in price. Oil remained down 1+ to the mid 73s & gold dropped 14 to 1797 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
A group of Dem & Rep House members endorsed the bipartisan infrastructure framework crafted by senators & the White House, but potentially complicated its path to passage along the way. The 58-member Problem Solvers Caucus said in a statement that it “strongly supports” the Senate proposal. If the group's 29 GOP members vote for the plan, House Dems have room to lose support from skeptical progressives & still pass the roughly $1.2T infrastructure framework. However, the group signaled it could try to trip up House Speaker Nancy Pelosi's strategy to pass the bipartisan plan in concert with a separate Dem proposal to invest in child care, education & efforts to fight climate change. In its statement, the Problem Solvers Caucus called for “an expeditious, stand-alone vote in the House” on the bipartisan framework. Pelosi has indicated she will not take up either the compromise infrastructure bill or Dems' plan until the Senate passes both of them. The risky strategy came about as Dem leaders try to ensure their centrist & liberal members back both proposals. Pres Biden's support for tying the bills together threatened the bipartisan deal until he backtracked, assuaging the GOP senators who backed the infrastructure plan. The 29 Dem members of the Problem Solvers Caucus did not explicitly threaten to withhold support from either plan if the House does not vote on them separately. However, the group's statement underscores the challenges Dem leaders face in trying to get both the bipartisan plan & their broader priorities thru Congress in the coming weeks.
House group backs bipartisan infrastructure framework, calls for stand-alone vote
US services industry activity grew at a moderate pace in Jun, likely restrained by labor & raw material shortages, resulting in unfinished work continuing to pile up. The Institute for Supply Management said its non-manufacturing activity index fell to 60.1 last month from 64.0 in May, which was the highest reading in history. A reading above 50 indicates growth in the services sector, which accounts for more than 2/3 of US economic activity. The forecast called for the index easing to 63.5. The economy has been hit by shortages of labor & raw materials as it reopens after more than a year of disruptions caused by the COVID-19 pandemic. More than 150M people are fully immunized against the coronavirus, resulting in the lifting of pandemic-related restrictions on businesses & mask mandates, helping demand to revert back to services from goods. The survey's measure of backlog orders increased to a reading of 65.8 from 61.1 in May. New orders remained healthy & there is ample scope for hefty gains in the months ahead, with inventories contracting in Jun. Inventory sentiment among customers remained poor. Business inventories were depleted in Q1 amid pent-up demand. With supply constraints showing no sign of letting up, businesses continued to pay more for inputs. The survey's measure of prices paid by services industries dipped to a still-high 79.5 from 80.6 in May, which was the highest reading since 2005. The continued elevation supports some views that higher inflation to prove to be more persistent than currently envisioned by the Federal Reserve.
U.S. service sector activity cools in June; employment measure contracts
Oil futures turned sharply lower after the Us benchmark hit a 6-year high, reflecting uncertainty over the outlook for global crude production after talks between the Organization of the Petroleum Exporting Countries & its allies collapsed a day earlier, failing to deliver a further boost to crude output. West Texas Intermediate crude for Aug was down $1.87 (2.5%) at $73.29 a barrel. The US benchmark traded at a session high of $76.98, its loftiest level since 2014. The global benchmark, Sep Brent crude was off $2.66 (3.5%) at $74.50 a barrel, after hitting $77.84 for its highest level since 2018. The OPEC+ group in Apr 2020 agreed to cut production by 10M barrels a day. It has subsequently brought a portion of that output back on the market as demand has recovered from the COVID-19 pandemic. But a proposal to further ease curbs, allowing production to rise by another 2M barrels a day by the end of the year ran into a snag after the UAE insisted it should be allowed to raise the baseline used to determine its output level.
Oil ends lower after hitting 6-year high as OPEC standoff stokes uncertainty over output
Gold futures finished higher for a 4th straight day, helping the precious metal settle at its highest in about 3 weeks as Treasury yields dipped to their lowest levels in weeks & as reports indicated that bullion purchases among central banks was gathering steam. Aug gold traded up $10.90 (0.6%) to settle at $1794 an ounce, touching an intraday peak at $1815. The 4th straight gain for gold was its longest since a 6-session streak ended May 20. The climb was sufficient to propel the precious metal toward a golden cross, which occurs when the 50-day moving average crosses above the 200-DMA, widely viewed as a dividing line between longer-term uptrends & downtrends. The 50-day moving average for gold stood at $1832 an ounce, with the 200-day at $1832. Meanwhile, about one in five global central banks intend to increase their gold reserves over the next year. Prices for precious metals were on the rise recently as the price of the $ has softened a recent rise & as yields for Treasuries have been in retreat.
Golden cross forms in gold’s chart as tumble in Treasury yields sends precious metal to 3-week high
After the holiday weekend, this was not a good day for stocks. Troubles in the oil market bled into the stock market although buyers returned in the PM to trim losses. And the ever changing infrastructure bill keeps stumbling as it tries to move forward.
Dow Jones Industrials
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