Dow dropped 376, decliners over advancers better than 3-1 & NAZ pulled back 181. The MPL index was off 2+ to the 188s & the REIT index slid back 2+ to the 404s. Junk bond funds were sold & Treasuries continued in heavy demand. Oil fell 3+ to 106 after OPEC+ meeting (see below) & gold declined off 6 to 1820.
AMJ (Alerian MLP index tracking fund)
Inflation held at stubbornly high levels in May, though the monthly increased was slightly less than expected, according to a Commerce Dept gauge closely watched by the Federal Reserve. Core personal consumption expenditures prices rose 4.7% from a year ago, 0.2 percentage point less than the previous month but still around levels last seen in the 1980s. The forecast was looking for a reading around 4.8%. On monthly basis, the measure, which excludes volatile food & energy prices, increased 0.3%, slightly less than the 0.4% estimate. Headline inflation, however, shot higher, rising 0.6% for the month, much faster than the 0.2% gain in Apr. That kept year-over-year inflation at 6.3%, the same as in Apr & down slightly from Mar's 6.6%, which was the highest reading since 1982. In addition, the report reflected pressures on consumer spending, which accounts for nearly 70% of all economic activity in the US. While personal income rose 0.5% in May, ahead of the 0.4% estimate, income after taxes & other charges, or disposable personal income, declined 0.1% on the month & 3.3% from a year ago. Spending adjusted for inflation fell 0.4%, a sharp drop from the 0.3% gain in Apr, though it was up 2.1% on a year-over-year basis. Goods inflation rose 9.6% while services prices were up 4.7%, both up 0.1 percentage point from Apr. The personal saving rate edged higher, rising to 5.4%, up 0.2 percentage point from the previous month.
Fed’s preferred inflation measure rose 4.7% in May, around multi-decade high levels
A group of some of the world's most powerful oil producers agreed to stick to a planned output increase in Aug, defying calls to pump more barrels to cool red-hot crude prices. OPEC+, concluded a meeting via videoconference by deciding to stay the course with its production policy. It means the Middle East-dominated group will increase monthly overall production for the month of Aug to 648K barrels per day. OPEC+ said its next meeting would take place on Aug 3. At the group's last gathering at the start of the month, OPEC+ decided to raise output by 648K barrels per day in both Jul & Aug, bringing forward the end of the historic output cuts implemented during the throes of the coronavirus pandemic. The decision was welcomed by Pres Biden's administration at the time, which has repeatedly pushed for the group to pump more. OPEC+ has been slowly returning the nearly 10M barrels per day it agreed to pull from the market in Apr 2020. In recent months, production has risen between 400K & then 432K barrels per day each month.
OPEC+ sticks with planned oil production hike as supply concerns weigh on energy markets
Walgreens (WBA), a Dividend Aristocrat, said its quarterly sales declined and profits got hit by waning
Covid-19 vaccination demand, heavy investments in its health care
business & an opioid settlement with Florida. The
drugstore chain stood by its full-year forecast, saying it expects
adjusted EPS to grow by the low single-digits. It pointed
to rebounding store traffic & more online traffic. And it said
investing in health care, such as opening doctor offices at stores, will
pay off in the future. With inflation hitting consumers’ wallets,
CEO Roz Brewer said WBA is working with suppliers to make sure it
has lower prices than competitors. She added that WBA has historically
seen stable prescription trends in an economic downturn. “There’s a shift in calculus due to food and fuel inflation, but health and wellness will always be a priority,” she continued. In the qtr, EPS fell to 33¢ from $1.38 a year earlier. The sharp decline
reflected a $683M charge related to its opioid settlement with
the state of Florida, a decline in US pharmacy sales as it lapped a
high volume of Covid-19 vaccinations a year ago & investments in its
expanding health care facilities. The stock fell 1.83 (4%).
If you would like to learn more about WBA, click on this link:
club.ino.com/trend/analysis/stock/WBA?a_aid=CD3289&a_bid=6ae5b6f7
The Dow is down almost 5700 (16%) YTD & the outlook is gloomy. What else is there to say?
Dow Jones Industrials
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