Dow retreated 149, decliners over advancers about 2-1 & NAZ slipped 105. The MLP index lost 3 to the 182s & the REIT index was fractionally higher to the 464s. Junk bond funds were mixed & Treasuries continued in demand. Oil crawled higher in the 73s & gold declined 22 to 1814 (more on both below).
AMJ (Alerian MLP Index tracking fund)
The pace of vaccinations is rising again as the delta variant drives a new surge in cases across the US, especially in states with the lowest vaccination rates &, not so coincidentally, the worst outbreaks. Centers for Disease Control & Prevention data shows nearly 800K shots were recorded nationwide on Sun, the highest single-day total in weeks. The 7-day average of reported vaccinations, including first & 2nd shots, has risen by 16% over the past week to 615K shots per day as of yesterday. The stark contrast in hospitalizations & deaths between the vaccinated & unvaccinated has become clear in recent weeks & may be convincing people on the fence about getting the shots, according to Jen Kates, a senior VP at the Kaiser Family Foundation. The overwhelming majority of serious Covid cases — 97% of hospital admissions & 99.5% of Covid deaths — are occurring among those who are not vaccinated. “Cases are rising, and almost all of those who are hospitalized and dying are unvaccinated,” she said. “The data are right there, and I think people are realizing that vaccines are our best bet at controlling this.” The number of first vaccine doses has climbed more sharply than the overall rate in recent days, representing new people getting their very first shots. An average of about 390K first doses were administered every day over the past 7 days as of yesterday, up 31% from a week ago. “That is the marker you want to see — the first doses trending up,” said Kates, because it represents new people getting their first shots. That includes people receiving a first shot of the vaccine. The pace of daily shots remains far from peak levels, when more than 3M daily vaccinations, were being reported in mid-Apr. But the upward trend in first doses is encouraging, public officials say. 48 states & DC have reported an increase in average daily first doses compared to the prior week, up from 37 states with increasing rates of first doses a week ago. States with the worst outbreaks are seeing the biggest jumps in vaccination rates.
Exxon Mobil, a Dow stock & Dividend Aristocrat, posted its biggest quarterly profit in more than a
year that also topped estimates as demand for oil, gas & chemicals rebounded, quelling some concerns over its recent weak performance. 2021
capital spending is expected to be at the lower end of the previously
forecast of $16-19B. "Positive momentum continued during the second quarter across all of our
businesses as the global economic recovery increased demand for our
products," CEO Darren Woods said. Some of the deep cost cuts undertaken last year as the COVID-19 pandemic
slashed demand have remained, allowing price gains to bolster profits. EPS was $1.10 in Q2, beating the estimate of 99¢. Oil & gas production also led the way in the qtr with an operating
profit of $3.19B. Output fell 2% to 3.6M oil-equivalent
barrels per day during the qtr. The company's net income for Q2 came in at $4.69B, compared with a loss of $1.08B a year ago, which
included a gain related to reversing an inventory writedown. Absent the
inventory change, the loss would have been $3B. The stock lost 1.40
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Chevron (CVX), a Dow stock & Dividend Aristocrat, reported its highest profit in 6 qtrs & joined an oil industry
stampede to reward investors with share buybacks, as rebounding crude
oil prices carried earnings & cash flow to pre-pandemic levels. Oil & gas are trading near multi-year highs as fuel consumption has thrown
off pandemic losses & natural gas has soared on weather demand. The company cut its annual capital spending forecast. At about $13B, it is now below what it had spent last year. It had earlier
budgeted $14-16B a year in annual capital spending
thru 2025. CVX last year cut expenses to allow profits to
flow at above $50 a barrel. Lower costs & higher prices generated the
highest cash flow in 2 years, enabling the company to pare debt &
resume share repurchases. Share buybacks will resume
this quarter at an annual rate of $2-3B,
said CEO Michael Wirth, about ½ the annual rate it had
planned. "We’ve always said
we would begin buybacks when we were confident that we could sustain
it, and our breakeven is $50 per barrel and we are now well above it,"
ChiefFO Pierre Breber said. "We’re trying to win back investors...demand for our products has fully recovered, demand for our stock is recovering." The 2nd-largest US producer's oil & gas production earned
$3.18B in the qtr, compared with a loss of
$6.09B a year ago. Total oil & gas production rose 5%
over a year ago to 3.13M barrels of oil equivalent per day
(boepd), while CVX sold its US oil for $54 a barrel last qtr,
compared with $19 a year earlier. CVX expects output from the
Permian basin to be almost same as last year’s, but said it will add
drilling rigs in H2. CFO Breber said cost-cuts are largely over & it has achieved targeted
savings from its 2020 takeover of Noble Energy. It is aiming to raise as
much as $2B from asset sales this year. Adjusted EPS of $1.71 per share beat estimates of $1.59. The stock was off 98¢
If you would like to learn more about CVX, click on this link:
Gold futures finished lower, capping a strong week & month for bullion that recently saw prices touch their highest levels in 6 weeks. Dec gold, the most-active contract, fell $18 (1%) to settle at $1817 an ounce. A 1.7% surge yesterday marked the highest settlement for the most-active futures contract since Jun 16 & largest one-day percentage gain since May 6. For the week, bullion based on the most-active contracts rose 0.9% & scored a 2.6% monthly advance, its 3rd such gain of the past 4 months. Gold gained yesterday, buoyed by weaker-than-expected US economic data, even as the Federal Reserve indicated Wed that the central bank may taper its bond-buying programs in coming months. Data released today revealed that inflation in the US rose sharply again in Jun, with the PCE price index up 0.5%. Separately, data showed consumer spending rose by 1% last month. Also, the final reading of University of Michigan's consumer sentiment index declined to 81.2 in Jul from 85.5 in Jun.
Oil futures settled higher, shaking off earlier declines as tight US crude supplies helped lift prices up for a 4th month in a row. US benchmark West Texas Intermediate crude for Sep rose 33 (0.5%) to settle at $73.95 a barrel, the highest front-month finish since Jul 13. Front-month prices logged a 2.6% weekly rise & a 0.7% monthly climb. Global benchmark Brent crude saw its front-month Sep , which expired at the end of the session, move up by 28¢ to end at $76.33 a barrel, around 3% higher for the week & up 1.6% for the month. The most-actively traded Oct Brent crude contract rose 31¢ to settle at $75.41 a barrel. Crude got a boost earlier this week as US gov data showed a weekly drawdown in domestic crude, gasoline & distillate inventories. Domestic crude inventories are tight at 436M barrels last week — about 7% below the 7-year average for this time of year, according to the Energy Information Administration.
The news on vaccinations sounds good although the virus continues its fight. Stocks, although choppy, had a fairly good month with the Dow gaining over 400. The pork filled bills in Congress, the fight with the virus & confusion about wearing masks are major issues to watch.
Dow Jones Industrials