Markets pause while investors rotate out of tech stocks

Dow went up 243, decliners over advancers 4-3 & NAZ tumbled 512.  The MLP index added 1 to 297 & the REIT index was up 2+ to the 403s.  Junk bond funds remained mixed & Treasuries had limited buying which lowered yields slightly.  Oil gained 2+ to the high 82s & gold eased back 5 to 2562 (more on both below.

Dow Jones Industrials 

Consumers collectively spent $7.2B online during the first day of Amazon's (AMZN) 2-day shopping bonanza.  That figure is up 11.7% year over year & marked the biggest e-commerce day so far this year, underscoring the significant impact Prime Day has on online retail sales.  Yesterday also marked the biggest mobile shopping day so far this year, accounting for $3.5B in online spending across retailers, according to Adobe data.  Adobe analyzed direct consumer transactions online across over 1T US retailer sites.  While customers were clamoring for things such as electronics, video games & small kitchen appliances, back-to-school shopping saw a massive uptick.  Spending on back-to-school supplies such as backpacks, lunchboxes & stationery jumped 210% yesterday compared with daily sales levels throughout the prior month.  Spending on kids' apparel was up 159%.  Spending on electronics was up 33%, video game spending was up 134% & small kitchen appliance spending jumped up 82%.  Adobe had previously projected that spending online throughout the 2-day sales event would grow 10.5% annually to a record $14B.  E-commerce has already had a strong year, with consumers spending more than $502B online in the first 6 months of the year.  Between Jul & the end of Sep, Adobe is projecting that consumers will spend $229B online, up 7.2% year over year.  "Steep discounting has been the story of e-commerce so far this year, as consumers look to get the most value out of their dollar," Adobe Digital Insights lead analyst Vivek Pandya said.  Surprisingly AMZN stock dropped 5.09.

Amazon Prime Day drives $7.2B in spending on first day of sales event

Spirit Airlines (SAVE) said it would post a wider-than-expected loss for the last qtr because of revenue that came in short of its expectations.  Spirit expects to report an adjusted loss of $160-173M for the 3 months ended Jun 30, compared with a previous estimate for a loss of no more than $145M.  It expects sales of $1.28B, down from a forecast of at least $1.32B.  Non-ticket revenue, which accounts for the myriad fees long associated with its rock-bottom fares, came in “several dollars lower than anticipated” per passenger.  “As the Company progresses on its transformation strategy, it anticipates that over time it will be able to drive improvement in total revenue per passenger segment,” SAVE said.  The company is facing several challenges, such as oversupplied US domestic market, an engine recall from supplier Pratt & Whitney that has grounded dozens of aircraft & the fallout of a federal judge's ruling to block a planned acquisition by JetBlue Airways (JBLU) earlier this year.“  As the Company progresses on its transformation strategy, it anticipates that over time it will be able to drive improvement in total revenue per passenger segment,” SAVE said.  SAVE stock dropped 34¢ (11%).

Spirit forecasts wider quarterly loss as revenue falls short of expectations

US economic activity expanded at a slight to modest pace from late May thru early Jul & firms reported some signs that the jobs market continues to soften, underscoring the Federal Reserve's recent pivot to more keenly assessing slowing demand for labor to ensure it doesn't wait too long before cutting interest rates.  The central bank's latest temperature check on the health of the economy also showed that inflation pressures increased at a modest pace.  "Economic activity maintained a slight to modest pace of growth in a majority of Districts this reporting cycle," the Fed said in its survey, which polled business contacts across the central bank's 12 districts thru July 8.  "While seven Districts reported some level of increase in activity, five noted flat or declining activity - three more than in the prior reporting period."  The analysis, released roughly every 6 weeks, comes as Fed Chair Jerome Powell and his colleagues have emphasized that risks on inflation & jobs are now in balance.  Earlier today 2 top Fed officials said interest rate cuts are "getting closer," remarks that appear to set the stage for a lowering of borrowing costs in Sep.

More US Fed districts see pullback in economic activity in recent weeks, Fed survey shows

Gold prices notched up to an all-time high, as growing optimism for an interest-rate cut from the Federal Reserve in Sep & a weaker $ boosted demand.  Spot gold dropped about 0.6% to $2454 per ounce due to profit-taking after hitting an all-time high of $2482 earlier in the session.  US gold futures settled 0.3% lower to $2459 per ounce.  Expectations that the Fed is getting closer to an interest rate cut & as yields continue to slowly grind lower in anticipation, that, along with a weaker $, are the main supportive factors behind this gold move.  More Fed policymakers have suggested they are getting increasingly comfortable that the pace of price increases is more firmly on track, back down to the Fed's goal, after higher-than-expected readings earlier in the year.

Gold Extends Record Rally on Fed Rate-Cut Bets, Softer Dollar

West Texas Intermediate (WTI) crude oil closed higher after a report showed US inventories fell again last week amid strong summer demand while the $ fell to a 4-month low.  WTI crude oil for Aug closed up $2.09 to settle at $82.85 per barrel, while Sep Brent crude, the global benchmark, was last seen up $1.25 to $84.98.  In its weekly survey, the Energy Information Administration reported US oil inventories fell by 4.9M barrels last week, well above the estimate for a drop of 3K barrels.  Gasoline & distillate inventories rose by 3.3M & 3.5 M barrels, respectively.  The inventory drop may assuage traders who pushed oil to the lowest in more than 3 weeks yesterday as concerns over weak demand, particularly from China, the #1 oil importer.  China's ruling Communist Party is staging its Third Plenum this week to craft stimulus measures.  A weaker $ is also aiding prices, with the ICE dollar index last seen down 0.52 points to 103.75, the lowest since Mar 20 on expectations the Federal Reserve will begin cutting interest rates in Sep.

WTI Rises on Falling U.S. Inventories and Weakening Dollar

As shown above, Dow is roughly up a staggering 2K in Jul.  That qualifies as an eye popping advance.  But already the advance decline ratio is negative, more stocks are losers than gainers.  The market is heavily overbought & should take a breather to let investors digest this rally.