Dow went up 162 helped with buying into the close, advancers over decliners 4-3 & NAZ was 161 higher. The MLP index retreated 2+ to the 199s & the REIT index added up 2+ to the 416s. Junk bonds funds were mixed & Treasuries rose, taking yields lower. Oil dropped 3+ to the 96sndown a good 20% from recent highs & gold rebounded 13 to a depressed 1713 (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)
AT&T (T) shares fell after the company said cash flow was hurt by
customers' later phone payments as it invested in establishing 5G
infrastructure. Customers have been paying their
bills about 2 days later than they did the same time last year. That
impacted cash flow by about $1B for the qtr. “There’s
clearly some dynamics in the economy. We have customers that are
stretching out their payments a little bit,” CEO John Stankey said. “We expect that they’re going to continue to pay their bills,
but they’re taking longer to do it. That’s not atypical in an economic
cycle.” Given those factors, AT&T lowered its full-year free cash flow guidance from the $16B range to the $14B range. For Q2, AT&T reported revenue of $29.6B,
down from $35.7B in the year-ago period. Excluding the impact of
divestitures, operating revenue was up about 2%. The forecast expected revenue of $29.6B. Adjusted EPS was 65¢, which was above the 61¢ expected. As
part of its plan to combat cash flow issues & the inflationary
environment, AT&T said in May that it would begin to raise prices on
older wireless plans. It increased monthly fees by up to $6 a month on single-line plans & up to $12 a month on family plans. Stankey also forecast “a more tepid economic environment moving
forward,” but said the investments the company is making would “build
the franchise for decades to come.” The stock dropped 1.55 (8%).
If you would like to learn more about AT&T, click on this link:
club.ino.com/trend/analysis/stock/T?a_aid=CD3289&a_bid=6ae5b6f7
AT&T shares fall after company says later payments, higher spending are hurting cash flow
The Philadelphia Fed said its gauge of regional business activity dropped to negative 12.3 in Jul from negative 3.3 in the prior month. The forecast expected a 1.6 reading. Any reading below zero indicates deteriorating conditions in the manufacturing sector. This is the 2nd straight month in contraction territory. The barometer on new orders dropped a sharp 12.4 points to negative 24.8 in Jul & the shipments index rose 4 points to 14.8. The prices paid index fell 12 points to 52.2, its lowest reading since Jan. The measure on 6-month business outlook sank 11.8 points to negative 18.6. The future capital expenditures index fell 7 points to 4.4, its lowest reading since 2013. US manufacturing, the star performer of the pandemic, is suddenly struggling. Economists are concerned that layoffs & cutbacks in output are on the horizon. Last week, the similar Empire State survey released by the New York Fed showed manufacturing activity improved, with the business conditions index jumping 12.3 points to 11.1 in Jul. The national ISM manufacturing index fell to 53% in Jun, the lowest reading since Jun 2020. It has been above the 50 breakeven level for 25 straight months. The Jul reading will be released early next month.
Philadelphia Fed's July factory activity index contracts
American Airlines (AAL) posted its first quarterly profit since the Covid pandemic
started without gov aid but joined competitors in scaling back
growth plans after a host of disruptions this year. The carrier forecast a Q3 profit, however, another sign of
strong travel demand, even at high prices. AAL posted a Q2 profit of $476M, up from $19M a year
earlier, though the airline was still benefiting from federal
coronavirus payroll support last year. Q2
revenue of $13.4B was up 12% from before the pandemic, even
though AAL flew 8.5% less than the same period of 2019. “As we look to the rest of the year, we have taken proactive steps to
build additional buffer into our schedule and will continue to limit
capacity to the resources we have and the operating conditions we face,”
CEO Robert Isom said. The airline said it
would fly 8-10% below 2019 levels in Q3 but said
revenue would be up as much as 12% from 3 years earlier as high
fares continue into the summer. The stock fell 1.13 (7%).
If you would like to learn more about AAL, click on this link:
club.ino.com/trend/analysis/stock/AAL?a_aid=CD3289&a_bid=6ae5b6f7
American Airlines forecasts third-quarter profit but scales back growth after flight disruptions
Gold futures finished at their highest price in more than a week buoyed by strength in the €, in the wake of the ECB;s decision to raise interest rates, which capped gains in the $ & a decline in Treasury yields. The precious metal recouped all its losses from yesterday, when prices marked the lowest settlement in more than 15 months. Aug gold rose $13 (0.8%) to settle at $1713 per ounce after touching a low at $1678. The settlement was the highest for a most-active contract since Jul 13. Gold prices climbed as the € strengthened, putting pressure on the $, after the ECB raised interest rates by 50 basis points (½ a percentage point) the first time it has raised rates in 11 years. The yield on 10-year Treasuries was down 9.9 points at 2.938% today. The ICE US Dollar Index was down 0.1% at 106.96. The rise today in gold, an asset historically seen as a safe-haven investment, came amid mixed market sentiment, following what has been a strong week for risk assets like stocks, as Europe weighed the outcome of a historic central bank meeting & the end of the maintenance period on the Nord Stream 1 natural gas pipeline from Russia to Europe.
Gold futures rebound from a more than 15-month low to settle at highest price in over a week
Oil futures fell sharply,
with US prices settling at their lowest in a week. Crude prices
tumbled as energy traders reassessed the short-term demand outlook given the disappointing summer driving season & as the US economy
starts to show further signs it is quickly weakening. Sep West Texas Intermediate crude settled at $96.35 a barrel, down $3.53 (3.5%), the lowest front-month contract finish since Jul
14.
Oil prices settle at their lowest in a week
The last 2 days of trading have only seen limited gains for stocks. The sluggish economy is sinking in & investors are growing cautious. Next Thurs the first estimate for Q2 GDP growth will be released & expectations are calling for a small decline which would signal a recession, even if it's only a minor one at that point. Meanwhile Dow continues trending sideways near 31K. That's not an encouraging case for the bulls.
Dow Jones Industrials
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