Dow dropped 366, decliners over advancers still at a hefty 6-1 & NAZ pulled back 112. The MLP index fell 1+ to the 229s & the REIT index was off 2+ to the 375s. Junk bond funds remained out of favor & Treasuries continued to see heavy selling, taking yields higher. Oil crawled up to 72 after a weak opening & gold was off 10 to 1917 (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)
The average rate on the popular 30-year fixed mortgage hit 7.22%, according to Mortgage News Daily. That’s the highest point since early Nov. Mortgage rates follow loosely the yield on the 10-year Treasury, which leapt higher following a much stronger-than-expected employment report from ADP. Rates had already begun rising last week, following signals from Federal Reserve Chair Jerome Powell that the central bank may continue raising interest rates following a pause in Jun. After the Jun Fed meeting, Powell said the central bank has “a long way to go” to bring inflation back to the 2% goal. The next interest rate decision is on Jul 26. The 30-year fixed mortgage rate has now risen 31 basis points in just the past week. For a homebuyer taking out a $400K mortgage, the monthly payment of principal & interest rose to $2720 from $2637 in just one week. For sellers, higher mortgage rates have created a golden handcuff effect. The vast majority of homeowners today have mortgages with interest rates below 4% or even below 3%, as rates hit record lows in the first year of the Covid pandemic. They now don't want to move & have to give up that low rate to buy at a higher rate. “Recent data indicated that nearly 82% of home shoppers reported feeling locked-in by their existing low-rate mortgage, while around 1 in 7 homeowners without a selling plan cited their current low rate as their reason for remaining on the sidelines,” Jiayi Xu, an economist at Realtor.com, said. Because of that, there is a currently a critical shortage of homes for sale, with year-to-date new listings now 20% behind last year's pace.
Mortgage rate soars to 7.22% after strong economic data
The US labor market showed fresh signs of resilience, as private hiring surged, layoffs slowed & filings for unemployment benefits stayed relatively low. US companies added almost ½ a M jobs last month, the most in over a year, according to data from ADP Research Institute. A separate report from Challenger, Gray & Christmas showed announced job cuts by US employers fell in Jun to an 8-month low. While the ADP data often differ from the gov's employment report, which is due tomorrow, the figures are still consistent with a broader trend of a labor market that's barely cooling. That was also evident in the latest report on job openings. Vacancies declined in May, unwinding much of an Apr surge & indicating labor demand & supply are coming more into balance. The quits rate, however, rose by the most in 9 months, indicating workers still feel confident in their ability to secure another job. “The labor market isn’t always going to be this strong. Recessions happen,” Nick Bunker, research director at Indeed Hiring Lab, said. “But today’s data and data from the past several months continue to make a soft-landing scenario increasingly likely.” Treasury yields surged & the S&P 500 slumped following the reports, which will likely further solidify the case for the Federal Reserve to raise interest rates at its meeting later in Jul, following last month's tenuous decision to pause after 10 straight increases. The broader question is whether strength in hiring will endure, or if the figures represent a last gasp amid other signs of a cooling economy. Meanwhile, weekly filings for jobless benefits rose by 12K to 248K, according to the Labor Dept. While that was more than forecast, the figure is still below Jun's peak of 265K, which was the highest since 2021. Continuing claims, a proxy for the number of Americans receiving those benefits, fell to the lowest level since Feb. Separate data showed the US service sector expanded in Jun to a level above all forecasts. The Institute for Supply Management’s services employment index showed the strongest growth in 4 months.
US Job Market Shows Fresh Strength With ADP, Jobless Claims Data
Ford's (F) Q2 sales increased 9.9% from a year earlier, spurred by significant sales gains of its F-Series trucks. The automaker reported sales of 532K vehicles in
Apr-Jun, up from subdued results of 484K cars & trucks
that were weighed down by supply chain problems in the year-ago period. Sales
of Ford’s F-Series trucks jumped 34% during Q2 compared
with the prior year, including sales of an all-electric version of the
F-150 that more than doubled to 4466 units. Overall
truck sales, a key driver of the company profits, were up 23% in H1 from the same period in 2022. All-new Super Duty
trucks & higher production of other models helped drive the gain. “Ford achieved both best-selling brand and truck for
six consecutive months this year on the strength of F-Series, vans, our
new Escape, and F-150 Lightning,” said Andrew Frick, Ford VP of sales, distribution & trucks. “Our EV
sales continue to grow. Improved Mustang Mach-E inventory flow began to
hit at the end of Q2 following the retooling of our plant earlier this
year, which helped Mustang Mach-E sales climb 110% in June.” However,
EV sales during the qtr declined 2.8%, to 15K vehicles,
as supplies of the Mach-E were short amid an overhaul of the factory
that makes the EV. Ford revamped that plant to increase production of
the Mach-E during the qtr, part of a larger plan to significantly boost its electric vehicle production & turn a profit on its EV business by the end of 2026. Electric vehicle sales remain small for now: EVs represented just 2.8%
of total sales during Q2, while
traditional internal combustion engines represented roughly 91% of
sales. Hybrids represented 6.5% of sales. The stock fell 37¢.
If you would like to learn more about Ford, click on this link:
club.ino.com/trend/analysis/stock/F_aid=CD3289&a_bid=6aeoso5b6f7
Ford’s U.S. sales jump 9.9% on big gains for its F-Series trucks
Gold futures declined to settle at their lowest since mid-Mar. The gold market's monthly runaround on US jobs data has started early with the blow-out ADP private-sector jobs estimate for Jun. Coupled with the hawkish tone from the latest Federal Reserve meeting notes, the official nonfarm payrolls data could put another test of the $1900 floor in play tomorrow. Gold for Aug fell $11 (0.6%) to settle at $1915 an ounce. Prices based on the most-active contract, prices settled at their lowest since Mar 14
Gold Futures Settle at their Lowest Since March
US oil futures gave up their early losses to settle almost unchanged for the session. Prices found some support following a report from the Energy Information Administration showing a 3rd straight weekly fall in US crude inventories, along with larger-than-expected weekly declines in gasoline & distillate supplies. However, uncertainty surrounding the outlook for the economy & energy demand, continued to limit any gains for oil prices. West Texas Intermediate crude for Aug edged up by a penny to settle at $71.80 a barrel.
U.S. oil futures shake off early loss to finish nearly flat
There was buying in late day trading, but the Dow remained depressed. That recession is still out there, somewhere. But nobody is sure where it is. Continued high interest rates continue to be a worry for nervous investor, which is keeps the Dow under its trend line at or under 34K.
Dow Jones Industrials
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