Dow climbed 335, advancers over decliners 2-1 & NAZ gained 234. The MLP index added 1+ to the 293s & the REIT index was up another 2 to 396 following recent strength. Junk bond funds rose along with the stock market & Treasuries had limited selling, raising yields slightly (more below). Oil was off pennies to 82 on weak China data & gold was 17 to 2438 (just below its record).
Dow Jones Industrials
The 10-year Treasury yield advanced as investors weighed the effect of the assassination attempt on former Pres Donald Trump. Traders also looked ahead to comments from Federal Reserve officials including Chair Jerome Powell. The yield on the 10-year Treasury climbed more than 4 basis points to 4.23% & the 2-year Treasury yield was little changed at 4.57%. Yields & prices have an inverted relationship & 1 basis point equals 0.01%. Traders considered the effect of the assassination attempt on Trump on markets & the economy ahead of the Nov election. Investors will often buy Treasuries during geopolitical tumult, but they appeared to not be doing so today with bond prices mostly lower & yields higher. Investors are looking ahead to a series of remarks from Federal Reserve officials slated for the week. Powell will speaks at the Economic Club today. Many are hoping that the remarks will provide fresh hints about the path ahead for interest rates & when the first interest rate cut could happen. This comes after last week's inflation data, which saw the consumer price index (CPI) unexpectedly decline, while the producer price index came in hotter than expected. Investors also looked ahead to a series of remarks from Federal Reserve officials slated for the week.
10-year Treasury yield rises ahead of Powell comments
Department store Macy's (M) said its board has unanimously decided to end negotiations with
the activist group that had been looking to take the retailer private
for roughly $6.9B, saying that questions on
financing & premium were insurmountable. “We have concluded that
Arkhouse and Brigade’s proposal lacks certainty of financing and does
not deliver compelling value,” Macy's lead independent director Paul Varga
said. Arkhouse & Brigade had for months been attempting to buy out the storied
retailer. Earlier this month, the bidders increased their offer to
$24.80 per share, the latest in a series of price hikes since they first
launched their takeover effort last year. Macy's said the company
had gone “well beyond what is customarily required” in a due diligence
period, offering the bidder group store-by-store profit & loss
information & leases for each location. The company also noted that
Arkhouse & Brigade had been allowed to share that confidential
information with more than a dozen “credible financing sources.” For the fiscal year, Macy's expects net sales of $22.3-22.9B, which would be a drop from $23.09B in
2023. It expects comparable sales, which take out the
impact of store openings & closures, to decline from about
1% to a gain of 1.5% on an owned-plus-licensed basis & including 3rd-party marketplace sales. The stock fell 2.46 (13%).
Macy’s ends buyout talks with Arkhouse and Brigade after months of negotiations
China's National Bureau of Statistics said the country's 2nd-qtr GDP rose by 4.7% year on year, missing expectations of a 5.1% growth. Jun retail sales also missed estimates, rising 2% compared with the 3.3% growth forecast. “We estimate that discretionary retail spending fell at the sharpest sequential pace since the April 2022 Shanghai lockdowns,” Oxford Economics Lead Economist Louise Loo said. The firm now pegs China's 2024 GDP growth at 4.8%, higher than the 4.4% it estimated in Dec 2023 for the year ahead. Industrial production year-on-year growth in Jun, however, beat expectations at 5.3%, compared an estimate of 5%. High-tech manufacturing saw an 8.8% increase in value added in Jun. Urban fixed asset investment for the first 6 months of the year rose by 3.9%, meeting expectations. Investment in infrastructure & manufacturing slowed on a YTD basis in Jun versus May, while real estate investment declined at the same 10.1% rate. Housing-related wealth in China rose by 2.2% in 2023, down sharply from the 13% average annual pace in 2016-2021, Oxford Economics said. “We must work harder to invigorate the market and stimulate the internal impetus,” the bureau said. It also called for efforts to “consolidate and enhance the momentum for economic recovery and growth, so as to ensure the sustained and sound development of the economy.” The urban unemployment rate in Jun was unchanged from the prior month at 5%. The jobless rate for people ages 16-24 who are not in school typically comes out a few days after the overall figure. The latest data available showed the youth unemployment rate remained high, at 14.2% in May. For the first ½ of the year, average per capita disposable income for city residents was 27,561 yuan ($3801), a nominal growth of 4.6% from a year ago. Rural disposable income grew at a faster rate, up 6.8% in nominal terms, but at 11,272 yuan, it was less than ½ that of urban residents.
China reports second-quarter GDP growth of 4.7%, missing expectations
Business leaders around the US are reacting with shock, sorrow & prayers to the attempted assassination of former Pres Trump during a campaign rally Sat. Traders considered the effect of the assassination attempt on Trump on markets & the economy ahead of the Nov election. Investors will often buy Treasuries during geopolitical tumult, but they appeared to not be doing today with bond prices mostly lower & yields higher. There has been little commentary from economists on the shooting. The stock market took deeper hold, with Trump galvanizing supporters & drawing sympathy by exhibiting defiant resilience after being shot in the ear on stage at a Pennsylvania rally.
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