Markets stumble with Treasury yields near 16 year highs

Dow dropped 174, decliners over advancers about 5-4 & NAZ rose 8.  The MLP index stayed in the 237s all day & the REIT index recovered 1+ to the 356s.  Junk bond funds fluctuated & Treasuries saw a little buying which reduced yields (although still elevated).  Oil remained weak, but closed above 80, & gold inched up 2 to 1925 (more on both below).

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Amid high inflation and rising interest rates, many Americans are becoming increasingly dependent on credit cards, according to a survey by Quicken.  2 in 5 Americans with credit cards said they were more dependent on their credit cards than ever before.  And 35% said they won't be able to pay off their credit card debt before the end of the year.  In addition, another 35% of respondents said they'd likely max out at least one credit card by the end of 2023.  "This increased reliance on credit cards is likely to lead many even deeper into debt – which is especially troublesome with interest rates well into the double digits," Quicken said in its report.  Credit card interest rates are hovering just above 20%, according to Quicken data.  And managing credit card debt seems to be troublesome across income levels.  Among people with annual incomes above $150K, 34% said the'll have a harder time paying their cards off this year than they did the last.  Meanwhile, 39% of Americans across income levels are living paycheck to paycheck & don't see an end in sight.  "Our research shows an economic divide that is widening among Americans – there is a large group of hard-working people who are still struggling financially," Quicken CEO Eric Dunn said.  "I’m troubled by the compounding problems facing this group – many of them are living paycheck to paycheck and relying on credit cards they may not be able to afford. It’s clear that strong financial planning is more important than ever to help Americans break this cycle and start closing the gap."

Americans depend on credit cards more than ever: survey

Lowe's (LOW) reported mixed results for its fiscal Q2, as consumers tackled springtime projects & helped offset weakening home improvement demand.  The company topped earnings estimates, but fell slightly short of expected sales.  The home improvement retailer stuck by its full-year forecast.  It anticipates total sales of $87-89B for the period.  It projects comparable sales will drop 2-4% this fiscal year.  It expects adjusted EPS will be $13.20 - $13.60.  CEO Marvin Ellison said LOW feels good about the long-term outlook for home improvement because of the older age & low availability housing in the US.  But, he added, the business will have a tougher time in the short term.  “When you look at consumer sentiment, we noted that we’re seeing a pullback in DIY [do-it-yourself] discretionary spend,” Ellison said.  “And that’s really for us the overall theme of how we see the second half of the year.”  EPS for the 3-month period was $4.56 per share, compared with $4.68 in the year-ago period.  Net sales fell from $27.5B a year earlier.  Sales are slowing this year as unusually high demand fueled by the Covid pandemic fades.  The home improvement retailer earlier this year warned investors that slowdown, cutting its full-year forecast in May.  As more Americans stay put, the result should be increased investment in home renovations & projects.  But Ellison said shakier consumer confidence is leading to softer discretionary sales.  “What our customers are telling us is that they feel good about their employment situation,” he said.  “They feel good about the amount of equity in their home and they know that there are projects they’re going to have to get done, but they’re just kind of waiting to see what’s going to happen in the macro environment.”  Comparable sales in Q2 decreased 1.6% in fiscal Q2.  That's still better than the 2.6% decline that analysts expected.  The stock jumped 8.15 (4%).
If you would like to learn more about LOW, click on this link:
club.ino.com/trend/analysis/stock/LOW_aid=CD3289&a_bid=6aeoso5b6f7

Lowe’s sticks by full-year earnings despite weakening sales

Macy's signaled consumers will be pickier & more price-driven in the back ½ of the year, even as the retailer topped quarterly expectations.  The department store operator stood by its conservative full-year guidance.  It expects comparable owned-plus-licensed sales to fall 6.0-7.5% compared with the prior year.  It anticipates adjusted EPS will be $2.70 - $3.20 & sales will be be $22.8-23.2B for the fiscal year.  CEO Jeff Gennette said, “the consumer continues to be under pressure.”  The company has seen rising credit card balances in its own card data.  Plus people are spending on experiences & preparing for the return of student loan payments this fall.  But Gennette said that the company is focused on having the items consumers are still willing to buy, such as fragrances & other beauty products.  “We’re moving into areas of interest,” he said.  “We’re pulling back on categories that aren’t working. So we’re ready for the back half [of the year] to respond to the consumer where and when they shop.”  EPS was 26¢ adjusted vs 13¢ expected & revenue was $5.13B vs. $5.09B expected.  The company swung to a net loss of $22M (8¢ per share) from net income of $275M (99¢ per share) a year earlier.  Net sales fell from $5.6B a year earlier.  Sales at stores declined 8% & digital sales dropped 10% compared with the year-ago period.  Comparable sales on an owned-plus-licensed basis dropped 7.3%, a little worse than the 6.5% decline that was expected.  The stock sank 2.07 (14%).
If you would like to learn more about Macy's, click on this link:
club.ino.com/trend/analysis/stock/M_aid=CD3289&a_bid=6aeoso5b6f7

Macy’s shares slide as retailer says consumers will be cautious the rest of year

Gold futures posted a 3rd consecutive session gain, the longest streak of gains since mid-Jul.  Prices found some support in the wake of a pullback in 10-year Treasury yields from their highest level since 2007 as investors await a speech from Federal Chair Jerome Powell at the Jackson Hole, Wyo, economic policy symposium on Fri for guidance on the next moves for the $ & Treasury yields, which tend to impact gold.  Dec gold edged up $3 to settle at $1926 an ounce.

Gold Futures Settle Higher For A Third Straight Session

Oil futures settled lower for a 2nd session, having fluctuated quite a lot so far this month, only to trade slightly below where it started.  There's always been a risk of US rates remaining higher for longer, while China's recovery has been sluggish for months, as has their response to it.  A significant change in the trend of the data is needed to seriously change the outlook for crude & that hasn't been seen.  West Texas Intermediate (WTI) crude for Sep declined 37¢ (0.5%) to settle at $80.35 a barrel on the contract's expiration day.  Oct WTI crude, which is now the front month, settled at $79.64, down 48¢ (0.6%).

Oil Futures Post Back-To-Back Losses On The Expiration Day For September WTI Futures

Stocks continue to limp along because the bulls have not been able to make a good case for buying.  The last 2 weeks in Aug typically have lighter volume.  Traders will be more active after Labor Day.  However, this time interest rates are quite high & that dark cloud may hang around for some time.

Dow Jones Industrials