Markets bounce back after a CPI inflation report sell-off

Dow was up 124 thanks to buying in the PM, advancers over decliners 5-4 & NAZ gained 369.  The MLP index added 1 to the 282s & the REIT index was off 1+ to the 436s.  Junk bond funds hardly budged & Treasuries had a tiny amount of buying which took yields a little lower.  Oil rose 1+ to the 67s & gold slid back 2 to 2540 (more on both below).

Dow Jones Industrials 

Small business confidence fell in Aug & reversed the prior month's gains amid growing uncertainty ahead of the Nov 5 presidential election & expectations that sales will be sluggish.  The National Federation of Independent Business (NFIB) said that its Small Business Optimism Index dropped 2.5 points to 91.2 last month.  That comes after it had surged in Jul to the highest reading since Feb 2022, though the Aug decline erased all of Jul's gain. "The mood on Main Street worsened in August, despite last month's gains," said NFIB Chief Economist Bill Dunkelberg.  "Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen."  "The stock market is expressing some unease… and the election is just weeks away," he added.  "Expect more volatility in everything in the coming months."  Inflation continues to be the top source of concern for small business owners, though the share ticked down by 1 point to 24% in Aug & fewer reported raising their average selling prices.  The net percentage of owners expecting higher real sales volumes fell by 9 points to a net negative 18%.  Reports of positive profit trends were a net negative 37%, a decline of 7 points from Jul & the lowest level since 2010.  Labor market issues are persisting for small business owners, with 40% of owners reporting job openings they couldn't fill in Aug, up 2 percentage points from Jul.  The survey found that 36% of small business owners have openings for skilled workers, an increase of 4 points, while 15% have openings for unskilled labor, a 1 point decline .  Of the small business owners surveyed, 56% of owners, including 90% of those hiring or trying to hire, reported finding few or no qualified applicants to fill open positions.  That figure was up 7 points & amounts to the highest level since Sep 2023.  The percentage of small business owners who plan to create new jobs was 13% in Aug, down 2 points from the prior month.  NFIB also found that the share of small business owners planning capital investment increased, with 24% planning capital spending in the next 6 months, up a point from Jul.

Small business confidence dipped in August amid rising election uncertainty

Campbell (CPB) announced the name change, which requires shareholder approval, as it held its investor day & provided updates on its growth strategy.  The company said it aimed to "drive growth through 16 leadership brands" across its snacks & meals & beverages segments as part of its strategy.  Goldfish, Snyder's of Hanover, Pepperidge Farm, Campbell’s, Rao’s, Prego & V8 are among some of the "leadership brands."  They collectively accounted for about 95% of Campbell’s segment operating earnings in fiscal 2024.  The company said its meals & beverages division "has a new growth trajectory for dependable and profitable growth," especially with its acquisition of Sovos Brands.   It completed its $2.7 billion purchase of Sovos, which owned Rao’s & other brands, earlier this year.  Campbell said soup "remains an important part of the Meals & Beverages division but is now a smaller portion of the transformed portfolio."  Long-term, the company is targeting a 2-3% increase in its organic net sales.  That includes the snack division growing 3-4% & the meals & beverages segment growing 1-2%, according to Campbell.  The stock fell 1.96.

Campbell Soup to make historic name change

Boeing (BA), a Dow stock, delivered 40 commercial jets in Aug, up 5 from the same month in 2023 when it struggled with a manufacturing defect on its 737 MAX, as the planemaker eyes higher output under new CEO Kelly Ortberg.  BA has pledged to boost production of its strongest selling jet, the MAX, to 38 per month by year's end.  But the planemaker faces obstacles such as a possible strike as early as Fri by more than 32K Seattle-area & Portland factory workers who vote on a new deal Sep 12.  The planemaker is 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.  BA handed over 32 MAX jets to customers last month, including 9 deliveries to customers in China, the most since 2019.  BA delivered 43 commercial jets in Jul, including 31 MAX jets.  Investors closely watch delivery numbers, as airplane makers receive the majority of payment for an aircraft when it is transferred to a customer.  After adjustments to reflect the backlog, BA reported adjusted net orders for the month of 24.  That brought its gross order total thru Aug 31 to 250.  After removing cancellations & conversions, BA posted a net total of 207 orders since the start of 2024. Following further accounting adjustments, BA reported adjusted net orders of 122 airplanes so far this year.  YTD thru Aug 31, BA delivered 258 airplanes, including 198 MAX jets.  The stock rose 1.17.

Boeing delivers 40 jets in August, up 5 from a year ago

Gold prices fell as the $ & Treasury yields firmed after US inflation data prompted investors to scale back expectations of an oversized rate cut from the Federal Reserve next week.  Spot gold was down 0.1% at $2513 per ounce & US gold futures settled mostly unchanged at $2542.  US consumer prices rose only slightly in Aug, but underlying inflation showed some stickiness, which could dissuade the Fed from delivering a ½-point interest rate cut next week.  Markets are currently pricing in an 87% chance of a 25-basis-point US rate cut, compared to 71% before the data, the CME FedWatch tool showed.  The Fed will lower interest rates by 25 basis points at each of the 3 remaining policy meetings in 2024, according to a majority of economists in a poll that found only 9 out of 101 expected a ½-percentage-point cut next week.

Gold Falls as CPI Data Dampens Talk of Oversized US Rate Cut

Oil prices climbed more than 1%, paring some of the previous day's losses, as concerns about Hurricane Francine disrupting output in the US, the world's biggest producer, outweighed worries about weak global demand.  Brent crude futures were up 84¢ (1.2%) to $70.03 a barrel, while US crude futures were at $66.56 a barrel, up 81¢ (1.2%).  Both benchmarks fell nearly $3 yesterday, with Brent hitting its lowest since Dec 2021 & WTI falling to a May 2023 trough, after OPEC revised down its demand forecast for this year & 2025.  Francine strengthened into a hurricane in the Gulf of Mexico, the National Hurricane Center said, prompting Louisiana residents to flee inland & oil & gas companies to shut production.  About 24% of crude production & 26% of natural gas output in the Gulf of Mexico were offline due to the storm, the Bureau of Safety & Environmental Enforcement (BSEE) said.  Yesterday, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for world oil demand to rise by 2.03M barrels per day (bpd) in 2024, from last month's forecast for growth of 2.11M bpd, it said in a monthly report.  OPEC also cut its 2025 global demand growth estimate to 1.74M bpd from 1.78M bpd.  But the Energy Information Administration (EIA) said yesterday global oil demand is set to grow to a bigger record this year while output growth would be smaller than prior forecasts.

Oil Prices Recover on Hurricane Supply Disruption Fears

Uncertainty around the size of the Federal Reserve's first interest-rate cut in years is driving wild swings in stocks.  Today's data showed headline inflation slipping to a more than 3-year low.  But core prices, which strip out the more volatile costs of food & gas, climbed 0.3% over the prior month, above the 0.2% expectations.  And after the hotter-than-expected month-over-month increase for core inflation, traders are now favoring a smaller cut from the Fed at its meeting next week.  The odds of the Fed lowering rates by 50 basis points now sit at just 15%, down from the 44% chance seen a week prior.