Markets rally amid a revival in tech stocks

Dow gained 203, advancers over decliners about 5-2 & NAZ bounced back 427.  The MLP index was steady at 291 & the REIT index added 1+ to the 408s.  Junk bond funds edged higher along with the stock market rally & Treasuries had  buying which reduced yields.  Oil shot up 2+ to 77 after an Israeli strike killed a Hamas leader in Iran & gold gained 16 to 2468 (closing in on its recent record).

Dow Jones Industrials 

Private job growth slowed further in Jul while the pace of wage gains hit a 3-year low, payrolls processing firm ADP.  Companies added just 122K jobs on the month, the slowest pace since Jan & below the upwardly revised 155K in Jun.  The forecast had been looking for a gain of 150K.  ADP also reported that wages for those who stayed in their jobs increased 4.8% from a year ago, the smallest increase since Jul 2021 & down 0.1 percentage point from Jun.  “With wage growth abating, the labor market is playing along with the Federal Reserve’s effort to slow inflation,” said ADP chief economist Nela Richardson.  “If inflation goes back up, it won’t be because of labor.”  There was more positive inflation news, as the Labor Dept's Bureau of Labor Services reported that the employment cost index, an indicator Fed officials watch closely, increased just 0.9% in the 2nd qtr, according to seasonally adjusted figures.  That was below the 1.2% acceleration in the first qtr & the estimate for a 1% increase.  Both reports could add to the likelihood that the Fed will signal a Sep rate cut when it concludes its 2-day meeting later in the day.  Job growth was heavily concentrated in 2 sectors — trade, transportation & utilities, which added 61K workers & construction, which contributed 39K.  Other sectors seeing gains included leisure & hospitality (24K), education & health services (22K) & other services (19K).

Private payroll growth slowed to 122,000 in July, less than expected, ADP says

Microsoft (MSFT), a Dow stock, shares fell as investors looked past better-than-expected earnings & revenue & focused instead on disappointing cloud results.  But execs provided a dose of optimism when they predicted a cloud growth speed-up in the first ½ of 2025.  Revenue increased 15% year over year in the fiscal 4th qtr, which ended on Jun 30.  Net income, at $22.04B, was up from $20.08B, or $2.69 per share, in the year-ago qtr.  With respect to guidance, MSFT called for fiscal first-qtr revenue of $63.8 - $64.8B, implying 13.8% growth at the middle of the range.  Analysts were looking for $65.2B in revenue.  The forecast included $15.2B in operating expenses at the middle of the range, under the estimate of $16.1B.  The top segment, Intelligent Cloud, generated $28.5B in revenue.  It includes the Azure public cloud, Windows Server, Nuance & GitHub.  The total was up about 19% & below the $28.68B forecast.  GitHub's revenue is now at an annual run rate exceeding $2B, CEO Satya Nadella said.  MSFT sees fiscal first-qtr Azure revenue growth of 28 - 29% at constant currency in the fiscal 2nd qtr, with faster growth in the 2nd ½ of the fiscal year.  Analysts were looking for fiscal 2nd-qtr revenue growth of 30.6% for Azure.  The stock fell 5.64.

Microsoft shares drop as cloud miss overshadows better-than-expected revenue and earnings

Boeing (BA), a Dow stock, reported a bigger quarterly loss & weaker revenue than expected as both its commercial airplane & defense programs continued to struggle.  BA also said it hired more-than-3-decade aerospace industry veteran Robert “Kelly” Ortberg to become its next CEO as the manufacturer tries to regain its footing.  “Despite a challenging quarter, we are making substantial progress strengthening our quality management system and positioning our company for the future,” CEO Dave Calhoun said.  Calhoun said in Mar that he would step down by the end of the year.  BA reported a net loss for the 2nd qtr of $2.33 per share, compared with a loss of 25¢ per share, during the year-earlier period.  On an adjusted basis, the company reported a loss of $2.90 per share, coming in nearly $1 per share under expectations.  Revenue for the 3 months ended Jun 30 was down 15% to $16.9B.  BA is trying to stabilize its operations after a door plug blowout from a nearly new 737 Max at the start of the year reignited additional scrutiny from regulators & further slowed deliveries of new, more fuel-efficient jets to airlines.  BA said it still plans to increase output of its Max planes to 38 a month.  Analysts said it was producing them in the mid-20s per month in the last qtr.  The stock rose 3.11.

Boeing reports wider-than-expected loss, weaker revenue

The market is overwhelmingly convinced a Fed pivot is coming in Sep.  The debate now is whether rates will go down by 0.25% or 0.50%, according to the CME FedWatch tool.  Chair Jerome Powell's post-meeting comments will be closely followed for hints that recent inflation & labor data could support a deeper cut.  At the same time safe haven gold is in demand.