Dow jumped 408 session highs, advancers over decliners 4-1 & NAZ advanced 407. The MLP index slid back fractionally to the 268s & the REIT index was up 3+ to 410. Junk bond funds crawled higher & Treasuries remained in demand, lowering yields. Oil pulled back, down 1+ to the 78s, & gold was up 3 to 2470 (more on both below).
Dow Jones Industrials
Small business owners felt a little more optimistic about the economy last month, but a greater share said inflation is their biggest operating problem, according to National Federation of Independent Businesses (NFIB) data. The NFIB reported its Small Business Optimism Index, which is compiled monthly thru a survey of small businesses, rose 2.2 points in Jul to 93.7. That is the highest reading since Feb 2022, but the 31st straight month below the 50-year average of 98. Meanwhile, the percentage of small business owners that cited inflation as their top problem rose four points from Jun, to 25%. "Despite this increase in optimism, the road ahead remains tough for the nation’s small business owners," said NFIB chief economist Bill Dunkelberg. "Cost pressures, especially labor costs, continue to plague small business operations, impacting their bottom line," Dunkelberg continued. "Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or gov policies will impact them." The survey found fewer small businesses raised compensation for employees last month, with a seasonally-adjusted 33% reporting lifting pay, down 5 points from Jun to the lowest level since Apr 2021. At the same time, the net percent of owners raising average selling prices fell 5 points from Jun to a seasonally adjusted net 22%, while the share that planned price hikes for Jul fell 2 points to 24%, the lowest reading since Apr. NFIB said its latest survey findings indicate inflation, which has been well above the Federal Reserve's 2% target rate for years, continues to plague Main Street. Although the consumer price index has fallen from a peak of 9.1%, it remains notably higher than pre-pandemic levels, coming in at 3% year-over-year in Jun. When compared with Jan 2021, before prices began to spike, inflation is up more than 18%.
Small business owners still citing inflation as their top concern
Boeing (BA), a Dow stock,
said on it delivered 43 commercial jets in Jul, unchanged from
the same month a year earlier when it faced supply chain hurdles, as
the US planemaker works to grow aircraft production under new CEO Kelly Ortberg. The
company has pledged to grow output by the end of the year, after
wrestling with supply chain snags & operating a slower assembly line
since a Jan 5 in-flight blowout of a door plug on a 737 MAX 9 jet that
heightened regulatory scrutiny. The
company handed over 31 MAX jets to customers last month, including a
handful to Chinese carriers. BA had said it resumed deliveries of
its best-selling airplane in Jul to China, in a boost for the company,
after a delay stemming from regulatory issues. BA also finalized a guilty plea to a criminal fraud conspiracy
charge & agreed to pay at least $244M after breaching a 2021
agreement with the Justice Dept. BA also reported
72 gross orders in Jul, up from 52 during the same month a year
earlier, including orders for 57 737 MAX planes that were partly
announced during the Farnborough Air Show. After adjustments to reflect the backlog, BA reported adjusted net orders for the month of 72. That
brought its gross order total so far this year thru Jul 31 to
228. After removing cancellations & conversions, BA posted a net
total of 186 orders since the start of 2024. Following further accounting adjustments, BA reported adjusted net orders of 98 airplanes so far this year. YTD thru Jul 31, BA delivered 218 airplanes, including 166 MAX jets. The stock rose 4.45.
Boeing delivers 43 jets in July, flat year-on-year
Interest-rate cuts are coming by end of the year, Atlanta Fed pres says. Talk about a looming recession in the US is overblown, Atlanta Fed Pres Raphael Bostic said. "A recession is not in my outlook. There is still enough momentum in the economy where we can see slowing and not see the labor market deteriorate to a level of considerable concern," Bostic said. Bostic noted that business leaders have told him that they are not planning "a lot of layoffs." "Right now, we're not hearing a lot of layoffs. We're not hearing a lot of hiring. Everyone is in a hold mode," he continued, adding that employers think they can meet their demand with their existing workforce. "As long as that continues, I think we will be in a good place." Bostic continued to project an interest-rate cut from the Federal Reserve by the end of the year. "It is coming. I think we will get there," he said. "If the economy evolves as I expect, you all will have bigger smiles on your face by the end of the year." Bostic added that he wanted to see "a little more data ... to be absolutely sure" before cutting rates. "It would be really bad if we started cutting rates, & then had to turn around & raise them again. That would raise all sorts of uncertainty," he said.
Fed's Bostic downplays recession fears
Gold prices steadied to hover close to an all-time high hit in Jul, as the $ & Treasury yields crept lower after US producer price data cemented hopes for a interest rate cut from the Federal Reserve in Sep. Spot gold was down 0.2% to $2467 per ounce due to some profit-taking. Non-yielding gold touched a record high of $2483 on Jul 17 & is up 20% so far this year. US gold futures for Dec settled 0.2% higher at $2507. The $ was down 0.4% against its rivals, making gold more attractive for other currency holders, while the Benchmark 10-year note yields slipped to a 1-week low. US producer prices increased less than expected in Jul, indicating that inflation continued to moderate. Traders now look forward to the. Jul consumer price index (CPI) data due tomorrow & the retail sales data on Thurs for further direction on US central bank's next policy move. Fears that the conflict in Gaza could turn into a broader Middle East war have escalated after the killing of Hamas leader Ismail Haniyeh in Iran last month.
Gold Firms as Dollar, Yields Slip after US PPI Data
Oil prices steadied after rising for 5 consecutive sessions, as markets refocused on concerns about demand after OPEC cut its forecast for demand growth in 2024 due to softer expectations in China. Benchmark Brent crude futures were down 30¢ (0.4%) at $82.00 a barrel. US West Texas Intermediate crude was down 29¢ (0.4%) at $79.77. Brent yesterday gained more than 3% while US crude futures rose more than 4% on expectations of a widening Middle Eastern conflict that could tighten global crude oil supplies. The 2024 demand forecast cut from the Organization of the Petroleum Exporting Countries' (OPEC) highlighted the dilemma faced by the wider OPEC+ group as it aims to raise output from Oct.
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