Thursday, October 5, 2023

Markets slide ahead of the jobs report tomorrow

Dow dropped 150, decliners over advancers nearly 2-1 & NAZ were off 140.  The MLP index crawled up to the 238s & the REIT index fell 1+ to the 328s.  Junk bond funds drifted lower & Treasuries were flattish (more below).  Oil slid below 84 & gold was off 2 to 1832.

AMJ (Alerian MLP Index tracking fund)


 

 




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As Americans deal with stubborn inflation, they're increasingly turning to credit cards to make ends meet.  Credit card originations rose 0.16% month-to-month in Aug, according to the latest data from VantageScore.  And the average credit card balance jumped 11.1% year-over-year to reach $6082.  "In August, lenders tightened access to credit across most products and consumers continued to remain cautious about adding to their debt levels," Susan Fahy, the exec VP & chief digital officer at VantageScore, said.  "The data shows that over the summer many U.S. consumers began to feel the strain of rising interest rates and dwindling savings, along with an increase in missed payments."  Additionally, credit card delinquencies remained elevated across all categories.  For instance, credit card delinquencies lasting 90 to 119 days increased to 0.24%, nearly doubling from last year.  Credit card debt reached $1.03T in the 2nd qtr of 2023, according to the latest report by the Federal Reserve Bank of New York.  That represented a $45B increase from the qtr prior.  "Compared to other debt categories this qtr, credit card balances saw the most pronounced worsening in performance, following a period of extraordinarily low delinquency rates during the pandemic," the NY Fed said.  Additionally, many Americans are relying on their credit cards more than ever before.  35% of Americans said they won’t be able to pay off their credit card debt before the end of 2023, according to a survey by Quicken.  And 35% of respondents said they’d likely max out at least one credit card before the end of the year.  "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.   Many Americans are struggling to pay off debt as COVID-era savings are expected to be depleted by the end of the 3ird qtr, according to research by the Federal Reserve Bank of San Francisco.

Average credit card balances rise to more than $6,000

Clorox (CLX), a Dividend Aristocrat, revealed how much it anticipates the cyberattack that the company recently experienced will weigh on its Q1 financial performance.  Its latest update about the business impact of the cybersecurity attack came just over 2 weeks after CLX had indicated Sep that it would likely see negative financial impacts stemming from it.  CLX first informed investors about the incident, which involved "unauthorized activity" in its IT systems, back in Aug.  For Q1, it projected a year-over-year drop of 28-23% in net sales.  Preliminary Q1 expectations included its adjusted EPS to be "a loss of $0.40 to $0.00."  It linked that to the cyberattack "more than offset[ting] the benefits of pricing, cost savings & supply chain optimization," as well as it leading to "lower cost absorption in costs of products & operating expenses. Other metrics – gross margin, organic sales & diluted net EPS will see negative effects as well.  The now-contained cyberattack had brought "wide-scale disruption of Clorox’s operations, including order processing delays and significant product outages," it added. The stock sank 10.93 (8%).
If you would like to learn more about CLX, click on this link:
club.ino.com/trend/analysis/stock/CLX _aid=CD3289&a_bid=6aeoso5b6f7

Clorox says cyberattack will impact first-quarter net sales, earnings

The US labor market held strong as Sep came to a close, with weekly jobless claims holding around recent lows, the Labor Dept reported.  Initial filings for unemployment benefits totaled a seasonally adjusted 207K last week, up just 2K from the previous period & below the estimate for 210K.  Continuing claims, which run a week behind, were little changed at 1.664M, below the 1.68M estimate.  The 4-week moving average of claims, which irons out volatility, fell to 208K, a decline of 2K.  Following the report, stock market futures added to losses while Treasury yields moved higher.  The report comes at a critical time for the economy as the Federal Reserve considers the future of monetary policy.  Central bank officials worry that continued tightness in the labor market could exert upward pressure on inflation & necessitate additional interest rate hikes.  Markets have been especially sensitive to moves higher in Treasury yields that could indicate the Fed will keep rates higher.  Traders are pricing in less than a 40% chance of a rate hike before the end of the year, but Fed officials lately have been warning that while the outlook for increases is uncertainty, rates are likely stay elevated.

U.S. jobless claims increase slightly to 207,000 for the week

Stocks are meandering again while investors hope for helpful data on jobs tomorrow.

Dow Jones Industrials

 






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