Markets hesitate as Treasury yields jump higher

Dow was off 16, decliners over advancers 5-2 & NAZ went up 82.  The MLP index stayed in the 288s & the REIT index fell 5+ to the 373s on higher interest rates.  Junk bond funds crawled higher & Treasuries had heavy selling, sharply raising yields (more below).  Oil rose about 1 to the 82s (more below) & gold slid back 1 to 2338.

Dow Jones Industrials 

Treasury yields were higher as investors awaited key economic data due this week & digested the latest inflation insights.  The yield on the 10-year Treasury was up by nearly 10 basis points at 4.441% & the 2-year Treasury yield was last more than 6 basis points higher at 4.781%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors considered the latest economic data & looked ahead to insights from the labor market expected this week.  On Fri, the personal consumption expenditures price index showed that inflation slowed to its lowest annual rate in over 3 years in May.  Core PCE, which excludes food & energy, rose by a seasonally adjusted 0.1% on a monthly basis in May & 2.6% from a year earlier, which was in line with previous estimates.  Headline inflation including food & energy was flat from the previous month & increased 2.6% on an annual basis, which was also in line with forecasts.  The data comes as Federal Reserve officials have repeatedly said that they are looking for more data evidence of inflation & the economy easing before making decisions about when & how often to cut interest rates this year.  Further insights about the state of the economy are expected this week, when a series of labor market data is due.  That includes job openings figures for May, ADP's latest private payrolls report & the Jun jobs report, which includes nonfarm payrolls.  Should the numbers indicate an easing of the labor market, hopes for interest rate cuts could be boosted.

10-year Treasury yield climbs as investors look to data in week ahead

US crude oil futures rose ahead of the Fourth of July holiday, after booking a 6% gain last month on the back of fears of a wider Middle East war & expectations of rising summer fuel demand.  Though oil prices have been steadily rising, the average price for a gallon of gasoline stands at $3.49 nationwide, down about 5¢ from last month.  West Texas Intermediate  Aug contract was $82.04 per barrel, up 50¢ (0.6%) & YTD US oil has gained 14.5%.  Brent  Sep contract was $85.58 per barrel, up 58¢ (0.7%) & YTD, the global benchmark is ahead by 11.1%.  Oil market speculators have added long positions, betting on higher prices as tensions rise between Israel & the Iran-backed Hezbollah militia in Lebanon.

U.S. crude oil rises, tops $82 per barrel ahead of Fourth of July holiday

Starbucks (SBUX) cafes across the country are starting to change how they make drink orders, among other tweaks designed to reduce bottlenecks & long wait times that have dogged the chain.  The overhaul comes as the coffee giant prepares for an anticipated swell of orders through its mobile app.  At the heart of the plan is “Siren Craft System,” a series of processes that aim to make baristas' jobs easier & speed up service times for customers.  More than 10% of its 10K stores have already implemented the system, which includes changing the production order for hot & cold drinks.  It will be deployed across North America by the end of Jul.  Execs hope the changes will provide a much needed jolt to SBUX.  In Apr, the company reported a disappointing 2nd qtr, as US same-store sales fell 3% & traffic dropped 7%.  The coffee chain cut its 2024 outlook.  SBUX reported rates of incomplete mobile app orders in the mid-teens & said occasional customers came in less.  CEO Laxman Narasimhan mentioned the need to make improvements to stores.  SBUX has done something uncharacteristic in recent weeks, joining the stream of value offerings with a $5 food & beverage combo option.  Communicating value to customers is also part of the plan to drum up business.  The stock dropped 88¢.

Inside Starbucks’ plans to improve stores for customers and baristas

Stocks started trading higher but enthusiasm faded bringing popular averages to around even.  However there is limited demand for tech stocks on NAZ.  Higher yields do not warm the hearts of traders in a holiday shortened week.  US manufacturing activity data released today showed the Institute for Supply Management's manufacturing PMI fell further into contraction territory in Jun, hitting a 4-month low.  In the meantime, the prospect of political gridlock in France is gripping investors after the first round of voting in national elections.