Dow went up 37, advancers over decliners about 2-1 & NAZ climbed 735. The MLP index continued with a fractional advance in the 239s & the REIT index added 1+ to the 369s. Junk bond funds hardly budged & Treasuries had modest buying which reduced yields slightly following yesterday's drop in yields. Oil rose a little higher above 80 & gold gained 6 to 1971 (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US economic growth was revised lower to a still-solid pace in the 2nd qtr, but momentum appears to have picked up early in the 3rd qtr as a tight labor market underpins consumer spending. Gross domestic product (GDP) increased at a 2.1% annualized rate last qtr, the gov said in its 2nd estimate of GDP for the Apr-Jun period. That was revised down from the 2.4% pace reported last month. The forecast called expected GDP for the 2nd qtr would be unrevised. The revision reflected downgrades to inventory investment as well as business spending on equipment & intellectual property products. The economy grew at a 2.0% pace in the first qtr & continues to push ahead despite 525 basis points worth of interest rate hikes from the Federal Reserve since Mar 2022. It is expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%. The economy's resilience raises the risk of borrowing costs remaining higher for a while, but slowing inflation is fueling optimism that the central bank is probably done hiking rates & could engineer a “soft landing.” Most economists have walked back their forecasts for a recession this year. Though the labor market is slowing, with job openings dropping to the lowest level in nearly 2½ years in Jul, employers are largely hanging on to their workers after difficulties hiring during the pandemic. That is keeping wage growth elevated, helping to drive consumer spending. Retail sales increased strongly in Jul, while single-family homebuilding was robust. Economists have boosted their 3rd-qtr growth estimates to as high as a 5.9% rate, though this likely overstates the health of the economy.
U.S. second-quarter GDP growth revised lower
Signed contracts to buy previously owned homes in the US unexpectedly rose in Jul, even as buyers continued to confront a spike in mortgage rates. The National Association of Realtors said that its pending home sales index climbed 0.9% over the course of Jul. The forecasts called for a decline of 0.6%. "The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers," said Lawrence Yun, NAR chief economist. Pending sales remain down 14% from the same time last year. However, the stronger-than-expected report suggests the housing market is slowly recovering from the deep freeze that it entered as a result of the Federal Reserve's interest-rate hike campaign. "Jobs are being added and, thereby, enlarging the pool of prospective home buyers," Yun added. "However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many." Still, the market remains bogged down by the astronomic rise in mortgage rates over the past year, as well as a worsening inventory shortage. The problem is unlikely to be resolved anytime soon. With mortgage rates hovering near the highest level in 2 decades, sellers who locked in a low rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers. The number of available homes on the market at the end of Jul was down by more than 9% from the same time last year & down a stunning 46% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com. Adding to the trouble is that builders have been slow to get new construction on the market. New listings are being added at the slowest pace on record because many houses are still under construction.
Pending home sales rise at the fastest pace since January
Brown–Forman (BF.B) fell short of expectations for its first qtr
of fiscal 2024, plagued by lagging whiskey sales, supply challenges & a
significant inventory rebuild. Net sales for whiskey products
decreased by 1%, led by the brands Woodford Reserve & Gentleman Jack. Sales for Jack Daniel's Tennessee Whiskey were flat, the company said,
due to lower distributor inventories across the US. “As
anticipated, our first quarter growth was impacted by the difficult
shipment comparison from fiscal 2023, when we rebuilt inventory impacted
by prior glass supply challenges,” said Lawson Whiting, CEO of the
wines & spirits company. Net sales in the US market decreased 8% amid volume declines. Meanwhile the company saw growth in its ready-to-drink (RTD) & tequila categories. The company reported overall quarterly revenue up 3% year over year & maintained its full-year outlook. EOS for the period was 48¢,
down 7% from the prior-year period, when the company reported 52¢. Marketing & operating costs soared during the qtr, outpacing revenue growth & weighing on profits. Reported
advertising expense grew 19%, driven by the launch of its Jack Daniel's
& Coca-Cola RTD item, increased investment in Jack Daniel’s
Tennessee Whiskey & acquisitions. The stock fell 2.75.
If you would like to learn more about BF.B, click on this link:
club.ino.com/trend/analysis/stock/BF.B_aid=CD3289&a_bid=6aeoso5b6f7
Jack Daniel’s maker Brown-Forman reports lagging whiskey sales, narrower profit
Gold futures climbed for a 3rd session in a row, settling at their highest since early Aug. The Federal Reserve is expected to keep a data-driven approach when it takes its next decisions on interest rates, & inflation & labor data will be the most relevant data points to keep track of for the central bank. Monthly US jobs data will be released Fri. In the meantime, gold has been holding its ground above $1900, a signal of strength for the precious metal, especially in the challenging context of a more hawkish Fed last week at the Jackson Hole summit. Dec gold rose $7 (0.4%) to settle at $1973 an ounce, the highest finish for a most-active contract since Aug 4.
Gold futures climb for a third straight session
US crude futures finish higher for a 5th consecutive session, ending up 0.6% at $81.63 a barrel following an EIA report that showed yet another massive weekly drawdown of US crude-oil inventories. The declines have been so exceedingly large in recent weeks, a 17M-barrel decline in late Jul was the largest on record going back 40 years, that traders say some investors are becoming reluctant to trade off the numbers & might explain why prices only ended moderately higher today. Investors are also concerned about pushing prices too high ahead of important US data Fri on jobs, manufacturing & more. Brent crude also ends higher, at close to $86.
Oil Prices Rise for 5th Straight Day on Tighter Supplies
News has not been creating much excitement for investors even though Dow has regained some of the big decline in early Aug (see below). With just 1 trading left, Dow is down 670 in Aug.Dow Jones Industrials
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