Markets churn on the first day of the month

Dow finished down 46 after staying fairly close to breakeven for much of the session, advancers ahead of decliners 5-4 & NAZ slid back 21.  The MLP index was steady in the 211s & the REIT index retreated 3+ to the 436s.  Junk bond funds continued in demand & Treasuries rose in price.  Oil sank 4+ to the 93s & gold added 5 to 1787 (more on both below).

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Economic activity in the manufacturing sector grew in Jul. with the overall achieving  ta 26th month of growth.  The report was from the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee:  "The July Manufacturing PMI^® registered 52.8%, down 0.2 percentage point from the reading of 53% in Jun.  This figure indicates expansion in the overall economy for the 26th month in a row after a contraction in Apr & May 2020, the lowest Manufacturing PMI figure since Jun 2020, when it registered 52.4%.  The New Orders Index registered 48 percent, 1.2 percentage points lower than the 49.2 percent recorded in Jun & the Production Index reading of 53.5 percent is a 1.4-percentage point decrease compared to Jun's figure of 54.9%.  The Prices Index registered 60%, down 18.5 percentage points compared to the Jun figure of 78.5%; the index's lowest reading since Aug 2020 (59.5%).  The Backlog of Orders Index registered 51.3%, 1.9 percentage points below the Jun reading of 53.2%.  The Employment Index contracted for a 3rd straight month at 49.9%, 2.6 percentage points higher than the 47.3% recorded in Jun.  The US manufacturing sector continues expanding — though slightly less so in Jul — as new order rates continue to contract, supplier deliveries improve & prices soften to acceptable levels.

Manufacturing PMI® at 52.8%; July 2022 Manufacturing

Inflation has been causing economic hardship for workers across all income levels.  As of Jun, 61% of Americans — roughly 157M adults — lived paycheck to paycheck, according to a new LendingClub report.  That's up from 58% who reported living paycheck to paycheck in May.  A year ago, the number of adults who felt stretched too thin was 55%.  Even top earners have been struggling to make ends meet, the report found.  Of those earning $200K or more, 36% reported living paycheck to paycheck, a jump from the previous month.  Another recent survey, from consulting firm Willis Towers Watson, estimated 36% of those earning $100K or more said they were living paycheck to paycheck.  Although average hourly earnings are up 5.1% from a year ago, prices have been rising even faster, especially for groceries and —until quite recently — gasoline, so paychecks can’t stretch as far.  The Consumer Price Index, which measures the average change in prices for consumer goods & services, jumped a higher-than-expected 9.1% in Jun, the fastest pace since 1981.

61% of Americans are now living paycheck to paycheck after inflation spike

Ford (F) is adding a new off-road-ready package to its Maverick pickup in a bid to extend the sales success of its hot-selling small truck.  The new Maverick Tremor package includes a beefed-up, higher-riding suspension & a new all-wheel-drive system system powered by Ford's 2-liter EcoBoost turbo 4-cylinder engine.  The package gives Maverick buyers access to an option that has proven popular on Ford's larger pickups, said Todd Eckert, manager of Ford's pickup marketing.  “Ranger, F-150 and Super Duty customers have embraced” the Tremor off-road packages that Ford has offered on those larger trucks, Eckert said.  With the new Tremor package for Maverick, Ford aimed to bring similar off-road capabilities to the small truck while retaining its easy-to-park size & affordable price.  The Tremor package will cost about $3000 & buyers will be able to order it starting in Sep.  The stock rose 64¢.
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Ford is adding an off-road package to its hot-selling Maverick compact pickup

Gold settled higher, continuing to rally after cementing their best weekly performance since Mar.  Gold futures for Dec gained $5 to settle at $1787 per ounce, with the yellow metal booking a 4th straight day in a row of gains, its longest streak since May 24.  Strategists warned that the latest rally has been driven by the perception that the Federal Reserve is planning to slow the pace of rate hikes.  The rally could reverse if investors abandon the view that the Fed already may be looking to curtail the pace of rate hikes in response to a slowing US economy.  A large portion of the recent bounce, which gold has also been a beneficiary of, has been predicated on future Fed rate hikes being smaller with fewer of them required.  But if this proves false dawn then a fresh slide of gold can be expected,

Gold, silver end higher Monday, extending rally after best week since March

Oil futures ended sharply lower after clinching their 2nd straight monthly loss in Jul as recession fears weigh on commodity prices.  West Texas Intermediate crude for Sep fell $4.73 (4.8%) to close at $93.89 a barrel.  Oct Brent crude, the global benchmark, declined $3.94 (3.8%) to settle at $100.03 a barrel.  Chinese manufacturing activity unexpectedly contracted in Jul, as Beijing's COVID-19 restrictions & weak demand undercut hopes for a more robust economic revival.  The official manufacturing purchasing managers index pulled back to 49.0 in Jul from 50.2 in Jun, China's National Bureau of Statistics said.  The result left the index below the 50 level that separates expansion from contraction & short of the forecast of 50.3.  The Institute for Supply Management reported that its closely followed manufacturing gauge dipped to 52.8% in Jul from a reading of 53% a month earlier.  Economists had expected the index to come in at 52.1%.  While any number above 50% signifies growth, the latest reading was the weakest since Jun 2020.  Oil traders were focused on the upcoming meeting of OPEC+, set for Wed.  Disappointing economic data out of China & other Asian economies also weighed on oil prices by undercutting hopes for a rebound.  The Markit-Caixin purchasing managers index, a monthly indicator of business conditions in China's manufacturing sector, came in weaker than expected  — coming in at 50.4, compared with the 51.5 estimate.

Oil ends sharply lower as traders fear slowdown will weigh on demand

Recent data is showing the economy is slowing.  At the same time, high inflation persists while Treasury yields are off sharply from mid Jun.  The Fed will have its hands full raising rates without causing damage to the economy.

Dow Jones Industrials