Markets edge higher on mixed economic data

Dow went up 86, advancers over decliners about 2-1 & NAZ added 26.  The MLP index was steady in the 287s & the REIT index rose 2+ to the 275s.  Junk bond funds inched higher & Treasuries saw a little buying which reduced yields (more below).  Oil rose about 1 to the 81s & gold jumped 25 to 2338.

Dow Jones Industrials 

Walgreens (WBA) announced plans to close a "significant" number of underperforming stores across the US due to ongoing challenges with profitability & declining margins.  The store closures are part of the company's multi-year footprint optimization program.  While WBA didn't specify how many of its more than 8700 stores will be affected, CEO Tim Wentworth said that a "meaningful percent" of the underperforming locations would shutter.  "We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins," Wentworth added.  Sales at stores open for at least a year slipped 2.3% compared with the year-ago qtr, which WBA blamed on a challenging retail environment.  The company also noted that its retail margin was negatively affected by increased promotional activity & higher shrink levels, which is the loss of inventory from things such as theft.  The company now expects fiscal 2024 full-year adjusted EPS of $2.80 - $2.95, down from its previous estimate of $3.20 - $3.35 a share.  This change reflects the challenging pharmacy industry trends & a worse-than-expected consumer environment, according to the company.  The stock tumbled 3.90 (25%).

Walgreens to close 'significant' number of underperforming stores, cuts profit forecast

Sales of new vehicles in the US are expected to be down this month compared to Jun 2023 due to the outage at software provider CDK Global that has affected dealerships across the country, according to a new report.  A joint forecast by JD Power & GlobalData said total new-vehicle sales in Jun are expected to land between 1.337M - 1.274M units, a 2.6% - 7.2% decrease from the same month a year ago.  Analysts pointed to the outages, which have caused some dealerships to return to conducting business using manual paperwork & others to even temporarily shut down operations, were a driving factor behind the projected decline.  "Because of the disruption to dealer software systems, June sales will not be reflective of actual consumer demand for new vehicles," said Thomas King, pres of the data & analytics division at JD Power.  "Instead, a significant number of sales that would have occurred in June are now likely to occur in July."  "However," King added, "it should be noted that a significant range of sales outcomes are possible due to the uncertainty about exactly when system outages will be resolved and what countermeasures dealers put in place to transact sales through the close."  CDK, which provides software to more than 15K retailer dealer locations across North America, reported being hit by 2 cyberincidents last week.  Many of the company's customers have been unable to fully operate since the firm took its systems offline on Jun 19..

US auto sales projected to slump in June due to disruption from CDK outage

Treasury yields were little changed as investors looked to economic data for hints about the outlook for the economy & monetary policy.  The yield on the 10-year Treasury was down by 1 basis point at 4.302% & the 2-year Treasury yield also dipped 1 basis point at 4.731%.  Yields & prices have an inverted relationship & 1 basis point equals 0.01%.  As uncertainty over the path ahead for interest rates & when they may be cut persists, investors looked to economic data for clues about what could be ahead for the economy & how this could affect monetary policy.  A flurry of economic data was just released.  Initial jobless claims edged lower, the Labor Dept reported.  Demand for long-lasting big-ticket items was better than expected.  While first-qtr economic growth rose a bit, according to the Commerce Dept's final GDP revision, inflation for the period also ticked up to 3.1% from 3% prior period.  New orders for “durable goods,” or long-lasting items such as aircraft, appliances & computers, unexpectedly increased 0.1% in May.  This figure came below the downwardly revised 0.2% increase in April but better than the estimate for a 1% decline, according to the Census Bureau.  Fed officials have frequently said that their decision-making regarding interest rates will depend on inflation & whether data shows that it is easing sustainably toward the central bank’s 2% target.

Treasury yields are little changed as investors look to key data

Real gross domestic product (GDP) increased at an annual rate of 1.4% in the first qtr of 2024, above the 3rd estimate of 1.3%.  Investors are weighing a new batch of economic data ahead of the PCE inflation data.  Trading could be choppy today.