Markets hesitate after indecisive economic data

Dow added 14, decliners over advancers 4-3 & NAZ gained 51.  The MLP index went up 2+ to 181 & the REIT index remained flat in the 461s.  Junk bond funds fluctuated & Treasuries had more selling bringing higher yields.  Oil was off chump change to 69 & gold was about even at 1753 (more about both below).

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The rise of the delta variant, a highly contagious strain of Covid-19, is disrupting reopening plans across the country & introducing even more uncertainty on Main Street.  Nearly 6-in-10 small business owners in the latest CNBC | Momentive Small Business Survey say the new threat is making them shift their business outlook for the rest of 2021.  Overall small business confidence, as measured in the survey of more than 2K small business owners conducted Jul 26-Aug 3, remains underwater at a score of 45 out of 100, well below its pre-pandemic level of 61 in Q1-2020.  That score is unchanged from last qtr's survey, when daily Covid-19 case rates were about ½ of what they are now.  The new wave of Covid rushing across the country is leading to increases in the hospitalization rates & death rates nationwide, but especially in areas with lower vaccination rates.  Some hospitals are as overburdened now as they were in Apr of last year, when Covid-19 was first spreading in the US.  This is happening just as American society was beginning to fully return to its pre-pandemic routines.  A Gallup poll  conducted in Jun, before the delta variant wave surged, found that 2/3 of adults in the US said their lives are either “somewhat” or “completely” back to normal, up from 37% last fall.  Small businesses have learned how to get by in this environment.  Restaurants pivoted to carry-out instead of dine-in, brick-&-mortar retailers invested in creating online storefronts, & gyms began offering virtual workouts.  After a year & a ½ of experience adapting to these ever-changing circumstances, 66% of small business owners in the latest poll say they can continue operating for more than a year under current business conditions — unchanged from 3 months prior.  One significant advantage now relative to earlier phases of the pandemic is that few cities & states are resorting to full-scale shutdowns or curfews to manage the increase in cases.  That means the restaurants, hair salons & shops that rely on in-person foot traffic can continue to keep their doors open.  What’s different about this latest Covid wave?  Vaccinations.  More than 2/3 of adults in the US have received at least one dose of a Covid-19 vaccine & those who have been fully vaccinated are largely protected from the worst effects of the virus.  Covid-19 now poses so much greater a risk to those who haven’t yet received a shot that the Biden administration has described the current situation as a “pandemic of the unvaccinated.”  In earlier waves of the pandemic, local govs resorted to curfews & total shutdowns of businesses in order to curb the spread of the virus.  Now, much more lenient policies are being implemented instead.  Even with increased mask adoption & vaccine passports, the public's concerns about the delta variant could still shift as the perceived risk ebbs & flows.  Small businesses will have to continue to adapt.

Uncertainty is back on Main Street as delta variant rattles reopening plans

The delta Covid variant has spread so rapidly across the US that most counties in the country now meet the CDC's guidelines recommending people wear masks indoors — whether they are vaccinated or not.  “We continue to see cases, hospital, hospitalizations and deaths, increase across the country. And now, over 90% of counties in the United States are experiencing substantial or high transmission,” Dr Rochelle Walensky, director of the Centers for Disease Control & Prevention (CDC), said.  “As we have been saying, by far, those at highest risk remain people who have not yet been vaccinated.”  The CDC updated its mask guidance on Jul 27 to recommend masks indoors in area of the US where community transmission was considered high or substantial.  Most counties that were experiencing high transmission rates were in Southern states, but in 2 weeks the spread of the highly transmissible delta variant expanded to most counties across the country.  The CDC recorded 132K new cases of Covid yesterday, reaching a 7-day average of about 113K cases per day, jumping almost 24% from the prior week, she added.  Hospital admissions have similarly climbed by about 31% over the previous week to about 9700 per day.  Unvaccinated Americans make up the overwhelming majority of hospitalizations & deaths across the country, she said.

CDC says over 90% of U.S. counties now meet its Covid guidelines for indoor masks

Businesses that require office-based employees to get Covid vaccinations likely don’t need to institute more precautions against the virus, even amid the delta variant surge, Dr Scott Gottlileb said.  “I think businesses right now probably don’t need to be implementing additional measures” such as regimented virus testing, Gottlieb said.  “The belief is people who are vaccinated who develop the infection might be contagious early on in the course of the infection, but they clear the infection more quickly,” added Gottlieb, who was commissioner of the Food & Drug Administration from 2017-2019.  He pointed to real-world evidence in Israel that shows “people who get vaccinated and get infected are spreading within the household but not spreading it outside the household.”  Vaccinated people still need to be vigilant against the virus & get tested if they have a viral illness, he continued.  “You’re certainly seeing infection rates go up among the vaccinated population.  People who were vaccinated a while ago are more susceptible to Covid. Eventually some of those infections are going to result in bad outcomes,” he added.  The number of businesses mandating their employees be vaccinated has grown in recent days.  Gottlieb said he expects more companies to follow suit, especially those that want employees to return to the office this fall after more than a year of remote work.  He cited the gov's vaccination requirement for US military members & federal workers — as well as the potential full authorization by the FDA of the Covid vaccines — as “additional impetus to businesses” that will “give them the confidence that they have the legal ground to stand on in terms of requiring vaccination.”

Gottlieb: Offices that mandate Covid vaccines for employees don’t need more precautions

Gold futures settled lower, a day after the commodity marked the first back-to-back advance in about a month & the sharpest daily rise in 2 weeks.  Dec gold lost $1 to settle at $1751 an ounce, following a more than 1% gain yesterday, which marked the first consecutive period of gains since a 3-session run ended Jul 15 & the best daily advance for the most-active contract since Jul 29..  

Gold ends slightly lower, a day after sharpest daily rise in 2 weeks

Oil futures posted a modest decline after monthly reports from the International Energy Agency (IEA) & OPEC raised concerns over prospects for demand growth.  In its monthly report, the IEA said it “appreciably downgraded” its outlook for growth in demand this year by 100K barrels a day, while upgrading its outlook for 2022 by 200K barrels a day.  Separately, OPEC left its forecasts for 2021 & 2022 growth unchanged, while lifting its projection of non-OPEC supply.  West Texas Intermediate crude for Sep fell 16¢ to settle at $69.09 a barrel.  Oct Brent crude, the global benchmark, lost 13¢ to settle at $71.31 a barrel.  For the week, however, prices for WTI & Brent crude have been trading higher.  In its report, the IEA said it expects crude inventories in advanced economies to draw down for the rest of 2021.  Crude saw volatile trade yesterday after the Biden administration pressed OPEC+ to further raise output & called on the Federal Trade Commission to investigate whether any illegal conduct had contributed to rising gasoline prices.

Oil prices end lower as IEA, OPEC reports highlight demand worries 

Stocks meandered, not knowing where to go.  Economic data, while significant, was difficult to help with forecasting the future.  The inflation data points to more dreary numbers coming, especially if those economic packages are approved.  At the same time, the fight with the virus is not going well.  Vaccines are helping a lot, but the virus keeps fighting on with its Delta variant.  Investors are adjusting to the problems & taking the Dow to new heights (see below). 

Dow Jones Industrials