Dow dropped 236 (after an intra day recovery there was selling in the last hour of trading), advancers over decliners about 5-4 & NAZ was off 29. The MLP index drifted fractionally lower to the 207s & the REIT index fell 1+ to the 418s. Junk bond funds were higher & Treasuries remained in demand. Oil went up 2+ to the 112s & gold jumped 23 to 1819 (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)
Manufacturing activity in the mid-Atlantic region slowed markedly in May, with a
key gauge posting the weakest growth since the early days of the COVID-19 pandemic, according to a survey from the Federal Reserve Bank of Philadelphia. The
bank's benchmark manufacturing index unexpectedly slumped to 2.6 in
May, a stark drop from the 17.6 recorded in Apr & well below the
expectation for a reading of 16. It
marks the worst reading for the gauge – which covers eastern
Pennsylvania, southern New Jersey & Delaware – in 2 years. A reading above zero indicates that manufacturing activity expanded during that month. The gauge measuring inflation & price pressures remained elevated in
May near a historical high, but eased somewhat compared with the
previous month. The employment index also slowed in
May, suggesting that while firms are still onboarding new workers, they
are doing so at a slower pace than in previous months. The
overall business outlook for the next 6 months tumbled to the lowest
level since 2008, at the height of the financial crisis. There
is a growing sense of pessimism over concerns that the
Fed may drag the economy into a recession as it seeks to tame inflation,
which remained elevated at 8.3% in Apr. Economic growth in the US is already slowing. The Bureau of Labor
Statistics reported earlier this month that GDP
unexpectedly shrank in Q1, marking the worst
performance since the spring of 2020, when the economy was still deep in
the throes of the COVID-induced recession.
Philadelphia Fed's manufacturing gauge drops to lowest level in 2 years
Shares of Cisco
(CSCO) fell after the company reported mixed earnings results & projected an unexpected sales decline in the current qtr. CSCO expects Q4 revenue to decline by 1-5.5% year-over-year, while analysts had been looking for revenue growth
of 6%. CEO Chuck Robbins said the guidance range is wider
than usual because of the increasingly complex environment. The
company blamed the disappointing outlook on Covid-19 lockdowns in
China, which have worsened existing supply chain constraints, as well as
rising inflation. CFO Scott Herren also warned that
component shortages would persist over the coming qtrs. Robbins said that it's not clear when supply will return to
normal, even as Shanghai officials have indicated they plan to open up
on Jun 1. He expects there will be severe congestion at Shanghai
ports after they reopen, as companies race to snap up transportation
capacity. “In the near term, we believe that as they begin to
ship, we’re but one company with one product we’re trying to get out of
there,” Robbins added.
“But we do believe there will be a rush to get product out. We saw
their industrial production numbers way down, and their export numbers
way down. Robbins said he believes some of these issues will start to wane by the company’s fiscal first or 2nd qtr. Fiscal Q3 revenue was $12.8B, which was roughly
flat year over year & lower than the estimate of $13.3B. Adjusted EPS was 87¢, compared with the estimate for 86¢. Q3 revenue took
a roughly $200M hit from the war between Russia & Ukraine, &
it added $5M to cost of sales & $62M in
operating expenses in the qtr. The stock dropped 6.64 (14%).
If you would like to learn more about CSCO click on this link:
club.ino.com/trend/analysis/stock/CSCO_aid=CD3289&a_bid=6ae5b6f
Cisco stock falls 13% after company projects unexpected revenue decline
Kohl's (KSS) cut its full-year earnings forecast, joining
some of America's biggest retailers in warning that a 4-decades high
inflation is starting to take a toll on profit margins & consumer
spending power. The company reiterated that it is talks with multiple parties for a potential sale. Evidence of red-hot inflation seeping into the economy sparked a
sell-off in retail stocks. "Sales considerably weakened in April as we encountered
macro headwinds related to lapping last year's stimulus and an
inflationary consumer environment," CEO
Michelle Gass said. The company expects fiscal 2022
adjusted EPS of $6.45-6.85, compared with its
previous forecast of $7.00-7.50. KSS forecast full-year net sales to rise only as much as 1%, compared with its previous forecast of a 2-3% increase. Net sales fell 5.2% to $3.5B in Q1. The forecast had expected $3.7B. On an adjusted basis, EPS fell about 90% to 11¢ in the reported qtr. The stock rose 1.90.
If you would like to learn more about KSS click on this link:
club.ino.com/trend/analysis/stock/KSS_aid=CD3289&a_bid=6ae5b6f
Gold futures closed higher, recording their best daily gain
in about a month, as the yellow metal benefited from risk aversion in
the wake of the worst day for US stocks in nearly 2 years yesterday. Gold futures rose $25 (1.4%) to settle at $1841 an ounce, the best
daily percentage rise for the most-active contract since Apr 12. In US stocks, the Dow was lower again today, a day after it & the S&P 500 index booked their worst days in since Jun 2020, as investors worried
about inflation cutting into margins at big-box retailers & perhaps
beyond. The US ICE dollar index fell 1% today to $102.79, a gauge of the currency
against a basket of 6 major rivals. A stronger $ can be a
negative for commodities priced in the unit, making them more expensive
to users of other currencies.
Gold futures end higher, book best daily gain in a month as inflation weighs on stocks
Oil futures swung to a higher close as a selloff in equity
markets eased investors kept an eye on plans to ease COVID
restrictions in Shanghai. West Texas Intermediate (WTI) crude for Jun rose $2.62 (2.4%) to close at $112.21 a barrel. Jul WTI,
the most actively traded contract, gained $2.89 (2.7%) to finish at $109.89 a barrel. Jul Brent crude advanced $2.93 (2.7%) to settle at $112.04 a barrel. Crude was under pressure in early trade after oil & other energy
futures fell yesterday despite data that showed an unexpected fall in
US crude inventories & a larger-than-expected drop in already tight
gasoline stocks —- a move that likely reflected selling in
response to a rout in the equity market. But crude shook off the early pressure to turn higher, as
losses for US indices moderated in today's session & traders
highlighted a tight supply backdrop. Crude had found support earlier in the week as China began to loosen its lockdown of Shanghai. China's COVID-19 lockdowns have undercut demand from the world's largest oil importer. Shanghai will reopen four of its 20 subway lines
Sun as it slowly eases pandemic restrictions that have kept most
residents in their housing complexes for more than 6 weeks. The city
will also restart 273 bus lines connecting major urban centers,
airports, train stations & hospitals as it resumes cross-district
public transit. The Energy
Information Administration said natural gas in storage rose 89B
cubic feet, or Bcf, last week. The forecast had called for injection into storage of 87 Bcf. Stocks were 358 Bcf less than last year at this time & 310 Bcf below the 5-year average of 2042 Bcf, the EIA said.
Oil ends higher, reversing loss as equity selloff moderates
Dow Jones Industrials
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