Markets edge higher ahead of a busy week for earnings reports

Dow gained 76, advancers over decliners 4-3 & NAZ climbed 131.  The MLP index was fractionally higher to the 234s & the REIT index slid back 3 to the 381s.  Junk bond funds crawled higher & Treasuries had limited buying, lowering yields slightly.  Oil fell 1+ to about 74 & gold declined 4 to 1959 (more on both below).

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Treasury Secretary Janet Yellen warned there is a risk of contagion from the growing slowdown in the Chinese economy, but maintained that a recession in the US is unlikely this year.  Data released today revealed that GDP in China grew just 6.3% in the 3-month period from Apr-Jun as a result of falling exports, weak consumer spending & a prolonged downturn in the vital property market.  The lower-than-expected data painted the picture of an anemic economy that is failing to bounce back from the COVID-19 pandemic & strict lockdowns.  On top of that, the youth unemployment rate in China surged to a new record high, with the jobless rate of those with ages of 16-24 jumping to 21.3% last month.  "Many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia, and slow growth in China can have some negative spillovers for the United States," Yellen said.  "Growth has slowed, but our labor market continues to be quite strong," Yellen said.  "I don’t expect a recession."  The US economy is already battling higher interest rates, stubborn inflation & ongoing fears of a recession this year or next.  Inflation continued to decline in Jun, falling to the lowest pace in more than 2 years.  But it remains well above the Federal Reserve's 2% target & there are other signs of a slower retreat for steep consumer prices.  Yellen lauded the recent decline in inflation, saying the US is on a "good path" to bring down prices without a significant weakening in the labor market. 

Yellen warns of 'negative spillover' from China's economic slowdown

Americans' credit card debt is on the rise despite high borrowing costs that may tick up further later this year & squeeze household budgets even more if the Federal Reserve follows thru with anticipated interest rate hikes.  During the COVID-19 pandemic, consumer credit card loans dipped dramatically as the gov injected stimulus into the economy to insulate consumer finances from the pandemic's economic fallout.  Federal Reserve data shows that outstanding credit card debt fell from $858B in Mar 2020 to $736B in Apr 2021, at which point it began a rebound that has seen credit card debt to $993B last week.  Credit card debt reaching record highs comes as the Federal Reserve's campaign of interest rate hikes aimed at tamping down inflation has pushed borrowing costs upward.  According to LendingTree, the average credit card interest rate (or annual percentage rate) for credit cards is 24% as of Jul 10.  Credit card users are likely to see their APR tick slightly higher later this year as the Federal Reserve is expected to increase the benchmark federal funds rate – which influences rates for credit cards, mortgages & other borrowing – at least 2 more times.  Inflation dipped to 3% year-over-year in Jun but remained above the Fed's 2% target.  The rising levels of credit card debt show that American consumers feel confident enough about the economy to spend their hard-earned money & carry credit card balances.  But high levels of credit card debt coupled with high-interest rates remain a risk for consumers should the economy slow, as rates will likely remain elevated through the year & growing credit card debt will require cardholders to pay more in monthly interest to carry balances forward on their cards.

Credit card debt rising in double-edged sword for the economy

Ford (F) cut prices for its electric F-150 Lightning pickup, saying its efforts to boost production & lower costs for battery minerals have paid off.  Ford said prices for some of the least expensive versions of the Lighting would fall by nearly $10K.  Prices for all versions, including the top-line Platinum trim, will drop by at least $6K from levels set in Mar.  The company had increased the Lightning's prices several times since its 2021 debut, citing supply constraints & sharply higher prices for the minerals used in the electric truck’s batteries.  Ford has worked to increase production of the truck in recent months, with factory upgrades that are expected to triple its output set to be in place by fall.  The factory that makes the Lightning will be closed for several weeks while the production upgrades are put in place.  Increasing production of the Lightning & other Ford EVs has been a key priority for CEO Jim Farley this year.  But the effort to boost production hasn’t been a smooth one.  Ford sold just 4466 Lightnings in Q2 after a fire in a just-completed truck in Feb led it to shut down production for 5 weeks.  At the time of its 2021 debut, the lowest-priced version of the Lightning, the work-truck Pro trim, was about $40K.  That price was increased several times, hitting about $60K in Mar; these cuts reduce the entry-level truck’s sticker price to about $50K.  The most expensive version of the Lightning, the extended-range Platinum trim, will now start at about $92K, down from just over $98K.  The stock fell 89¢.
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Ford cuts prices on its electric F-150 Lightning pickups by as much as $10,000

Gold futures finished lower, giving back a portion of last week's climb.  Gold's rebound will have to take a break until it is clear the Federal Reserve is done raising rates at the Jul 26 monetary policy meeting.  The labor market is still hanging in there, but expectations remain for it to gradually weaken.  Gold for Aug fell $8 (0.4%) to settle at $1956 an ounce.  Prices based on the most-active contract ended Fri at their highest since finish since mid-Jun & gained about 1.7% last week.

Gold Futures Settle Lower After Last Week's Rise

Oil futures fell, with US & global benchmark prices settling at their lowest in a week after data on China's economic growth fell short of expectations, raising concerns over the outlook for energy demand.  West Texas Intermediate crude for Aug fell $1.27 (1.7%) to settle at $74.15 a barrel, the lowest finish in a week.  Prices on Fri fell 1.9%.  Sep Brent crude, the global benchmark, dropped $1.30 (1.7%) to $78.50 a barrel, also the lowest since Jul 10.  China reported that its economy grew 6.3% year over year in Q2, missing expectations for 7.1% growth.  This prompted analysts to mark down forecasts for the world's 2nd-largest economy.  Disappointment in China's rebound following the lifting of strict COVID-19 curbs on activity has been cited as a factor keeping crude under pressure in 2023.  China is the world's top oil importer, & its GDP figures missed the consensus by a full percentage point, posing a big question on the pace of the recovery in the world's 2nd-largest economy & hitting oil prices as expectations for future demand were downgraded.  Meanwhile supply cuts by Saudi Arabia & Russia have also helped buoy crude amid expectations for the global market to move into deficit in H2.

Oil prices post a second straight session loss after weak China data

Investors are not worried about the slowdown in China's economy.  Early earnings reports are coming shortly & they will give signals about strength in the US economy.

Dow Jones Industrials