Dow advanced 179, advancers over decliners 3-1 & NAZ gained 102. The MLP index crawled up to the 237s & the REIT index added 1+ to 375. Junk bond funds edged higher & Treasuries were purchased following recent selling (more below). Oil climbed above 82, continuing its rally, & gold went up 8 to 1986.
AMJ (Alerian MLP Index tracking fund)
US employers added 187K jobs during the month of Jul, less than the 200K that were expecting & below the 209K created in Jun. The unemployment rate dipped to 3.5% & average hourly earnings rose 4.4% annually. Sectors adding jobs included health care (63K), social services (24K), financial activities (19K) & hospitality (17K). Last month, the unanimous decision by the Federal Reserve to raise interest rates put the key benchmark federal funds rate at 5.25-5.50%, the highest since 2001, further restricting economic activity as the borrowing costs for homes, cars & other items march higher. It marks the 11th rate increase aimed at combating high inflation since policymakers began tightening in Mar 2022. Following the Fed's last meeting, Chair Jerome Powell said policymakers will continue to monitor data points to assess another rate hike this year. "Looking ahead, we will continue to take a data-dependent approach in determining the extent of additional policy firming that may be appropriate," he added. Currently, 81% of market participants expect the Fed to keep rates as is at the next meeting, according to the CME's Fed Watch Tool. The data follows Fitch's downgrade of US credit, which is creating a fresh wall of worry about the economy & financial markets, with the S&P 500 headed for a weekly loss. The ratings agency pointed to America's "erosion of governance," rising deficits, & tightening by the Federal Reserve. It also said it expects the US economy to slip into a mild recession in Q4.
US economy adds fewer than expected jobs in July
Apple (AAPL), a Dow & NAZ stock, posted its 3rd qtr in a row of its net sales going down in its financial results for its Q3 2023. The tech giant, led by CEO Tim Cook,
said its products & services brought in a total of $81.8B in
net sales in Q3, falling 1.4% compared to the $82.9B in the same 3-month period in 2022. The
projection was for $81.7B. Q1 & Q2
results, previously showed
year-over-year declines in overall net sales. For the first qtr, it
was a 5.5% decrease while the 2nd's was 2.5%. For
the 3rd-qtr, iPhones generated net sales of $39.7B,
below estimates of $39.9B. On an annual
basis, they fell 2.4%. Cook noted that the tech giant "saw continued strength in emerging markets thanks to robust sales of iPhone." 2 of its other product-related categories – iPad & Wearables, Home & Accessories
– also did not surpass expectations, with the former generating
$5.8B in net sales & the latter doing $8.3B. Mac's
$6.84B in quarterly net sales, however, did. Diluted EPS for the 3rd qtr, at $1.26, rose 6¢ from the same time frame last year. That, too, was above the $1.19
that was anticipated. The stock fell 6.21.
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Apple posts net sales decrease for third quarter in a row
The 10-year Treasury yield pulled back after briefly hitting a multi-month high today as investors digested key labor market data that showed the economy added fewer-than-expected jobs in Jul. The yield on the 10-year Treasury toughed a high of 4.206%, the highest level since last Nov, before trading more than 6 basis points lower at 4.121%. The 2-year Treasury fell 9 basis points to 4.808%. Yields & prices have an inverted relationship & one basis point equals 0.01%. Nonfarm payrolls expanded by 187K for the month, slightly below the estimate for 200K. Though the headline number was a miss, it actually represented a modest gain from the downwardly revised 185K for Jun. Average hourly earnings, a highly scrutinized figure amid the Fed's inflation fight, rose 0.4% for the month, good for a 4.4% annual pace. Both numbers were higher than the respective estimates for 0.3% & 4.2%. Jul payrolls missed against consensus for the 2nd straight month after beating consensus 15 months in a row. The wage data is stronger than the payroll data, suggesting that demand for labor is still robust, & that the slowing pace of hiring is more due to a lack of supply of labor.
10-year Treasury yield pulls back after hitting fresh November 2022 high
Today's rally suggests to investors that the Fed is under less pressure to raise interest rates. However, the downgrade on US debt by Fitch is bringing on selling of Treasuries. That results in raising rates which are already at highs not seen in years. All is not well in the stock market.Dow Jones Industrials
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