Dow was up 113, but decliners over advancers 3-1 & NAZ was off 24. The MLP index gained 2+ to the 233s & the REIT index stayed in the 384s. Junk bond funds drifted lower & Treasuries saw selling after a brief rally recently. Oil retreated 1+ to the 75s & gold was about even at 1963 (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)
"Mortgage rates increased to their highest level since November 2022, the last time rates broke seven percent," Freddie Mac’s Chief Economist Sam Khater said. "Incoming data suggest that inflation is softening, falling to its lowest annual rate in more than 2 years. "However, increases in housing costs, which account for a large share of inflation, remain stubbornly high, mainly due to low inventory relative to demand," Khater continued. The median US home-sale price increased 1.5% from last year during the latest 4 weeks, according to data by Redfin, the first increase in nearly 5 months. Lower inventory is another challenge that potential homebuyers are facing, Redfin said. "Prices are rising despite relatively low demand because there are so few homes for sale," Redfin said. "New listings are down 27% year over year, the biggest drop since the start of the pandemic, and the total number of homes on the market is down 14%, the biggest drop since March 2022. That’s mostly because potential sellers are locked in by low rates; nearly all homeowners have a rate below 6%." Inflation increased by 3% year-over-year in Jun, based on the Consumer Price Index released by the Bureau of Labor Statistics. That was a drop from its Jun 2022 high of 9.1%. In addition, inflation decreased from its annual inflation rate of 4% in May. "This month’s inflation report is likely to bring mortgage rates down a bit from their recent highs," Redfin Economic Research Lead Chen Zhao said. "It shows that the Fed’s interest-rate hikes are working and ups the chance they’ll only hike rates one more time this year." "Because elevated mortgage rates are responsible for both of today’s major home buying challenges — high monthly housing payments and low inventory — any decline is welcome news for buyers," Zhao added. Still, Federal Reserve Chair Jerome Powell said the central bank would consider 2 more interest rate hikes. One economist advised against it. "One couldn't ask for a better report on consumer price inflation," Moody's Analytics Chief Economist Mark Zandi said. "Inflation is definitively throttling back, and while today's report overstates the case, there is a strong case that inflation is headed in the right direction. The Fed should rethink the need for more rate hikes."
Mortgage rates increase, despite inflation cooling: Freddie Mac
Wells
Fargo (WFC) beat estimates on the top & bottom lines for Q2, & said its net interest income would be stronger
than expected for 2023. Total net income was $4.9B, up from $3.1B in the same qtr last year. EPS was $1.25 vs $1.16 expected & $20.5B in revenue vs $20.1B expected. Higher
interest rates helped fuel the increase. Net interest income rose 29%
year over year to $13.2B. Consumer & small business banking saw
earnings of nearly $6.6B, up 19% from $5.5B last year. WFC hiked its full-year guidance for net interest income, saying it
expected the metric to rise 14% in 2023 instead of the previous
projection for 10%. However, net interest income was down slightly
from Q1. The bank also reported
qtr-over-qtr declines of 2% for commercial & consumer
deposits. The stock rose 14¢.
If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC_aid=CD3289&a_bid=6aeoso5b6f7
Wells Fargo beats estimates for second-quarter results, hikes UnitedHealth Group guidance for net interest income
UnitedHealth Group (UNH), a Dow stock, jumped after the health-care conglomerate reported Q2 revenue & adjusted earnings that topped expectations despite rising medical costs. The results eased investor concerns after it flagged a surge in demand for non-urgent surgeries & outpatient services last month & spooked the market. EPS was $5.82 for the qtr compared with $5.34 for the same period a year ago. Excluding certain
items, adjusted EPS was $6.14. Total revenue was $92.9B for
the qtr, up 16% from the same period a year ago. That excludes $33.6B in “eliminations,” which are payments from the company's
UnitedHealthcare business to its other division, Optum. UNH can’t record those transactions as revenue because it is paying
itself. UnitedHealthcare, which provides insurance coverage &
benefits services to more than 50M people, saw Q2
revenue grow 13% from a year ago to $70.2. The
company’s other platform, Optum, saw revenue increase nearly 25% from a
year ago to $56.3, helped in part by UNH's
roughly $8B acquisition of the health care technology company
Change Healthcare. UNH raised the low end of its full-year adjusted earnings
outlook to $24.70-25.00, from a previous forecast of
$24.50 - $25.00. The stock jumped 32+ (7%).
If you would like to learn more about UNH, click on this link:
club.ino.com/trend/analysis/stock/UNH_aid=CD3289&a_bid=6aeoso5b6f7
UnitedHealth stock jumps after earnings top estimates despite rising medical costs
Gold futures closed slightly
higher rising for a 4th-straight day of gains even as the $ & treasury yields rose. Gold for Aug closed up chump change to settle at $1964 per ounce. The
gain comes even as the $ rises after plunging to a 15-month low as 2 US economic reports showing moderating inflation raised hopes the
Federal Reserve will turn dovish & back away from further rate hikes,
even as inflation remains well above the central bank's 2% target. The
ICE dollar index last seen up 0.15 points to 99.92. Gold continued higher yesterday after the weaker than expected Jun
inflation report was followed by an equally weak PPI report. Treasury yields also rose,
bearish for gold since it offers no interest. The 2-year Treasury note was
last seen paying 4.742%, up 9.3 basis points, while the yield on the
10-year note was up 4.4 basis points to 3.813%.
Gold Closes With a Small Gain as the Dollar Rises off a 15-Month Low and Treasury Yields Move Higher
West Texas Intermediate (WTI) crude oil closed lower following 3 days of gains that pushed prices 5.3% higher on tight supply following Saudi production cuts & a plunging $. WTI crude oil for Aug closed down $1.47 to settle at $75.42 per barrel. Sep Brent crude, the global benchmark, was last seen down $1.39 to $79.97. The drop comes even as tight supplies following Saudi Arabia's 1M barrel per day production cuts for Jul & Aug tightened further as 370K barrels per Libyan supply was interrupted after protest shut down output from a major oilfield. Despite the early weakness, oil prices remain near 10-week highs as traders embrace risk as the $ weakens on hopes the Federal Reserve will back off further interest-rate increases following economic reports showing inflation is slowing at a faster than expected pace, pushing the $ to the lowest in more than a year, while demand from China appears to be on the rise. A weak $ is also supporting oil prices that are priced in the US currency, though it rose off a 15-month lows early today, with the ICE $ index last seen up 0.13 points to 99.9.
WTI Crude Oil Closes Down Despite Tight Supply as the Dollar Rises off 15-Month Lows
The advance in the Dow today was helped by the big gain at UNH (see above). Otherwise today was more of a mixed market. For the week, Dow was up 565. While Dow is pushing higher about 34K, it lacks conviction. Next week big corps will report which will give more clues about the health of the economy.
Dow Jones Industrials
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