Markets rise but the early advance was pared late in the day

Dow was up only 81 after yesterday's slide, advancers over decliners about 3-1 & NAZ was down 160.  The MLP index stayed near 290 & the REIT index fell 1+ to the 396s.  Junk bond funds edged higher & Treasuries saw limited buying which reduced yields a little.  Oil climbed in the 78s & gold tumbled 58 to 2357 (more on both below).

Dow Jones Industrials 

Keurig Dr Pepper (KDP) reported quarterly earnings & revenue that met expectations as higher prices fueled its US soda sales.  The beverage company reported 2nd-qtr EPS of 38¢, up from of 36¢ a year earlier.   Excluding items, EPS was 45¢.  Net sales rose 3.5% to $3.92B.  Volume, which excludes pricing & currency changes, increased 1.8% during the qtr, while prices were up 1.6% compared with the year-ago period.  The US refreshment beverages division, which includes Snapple, Canada Dry & Sunkist, reported sales growth of 3.3%.  Prices for its drinks were up 2.9% compared with the year-ago period.  Its Dr Pepper Creamy Coconut drink was the company's most successful limited-time beverage.  While soda sales have been resilient, sales of still beverages & even energy drinks are under more pressure due to the “uneven” consumer environment, execs said.  The US coffee division's sales shrank 2.1% to $1B, fueled by a 2.9% decline in pricing.  Shipments of its K-Cup pods were roughly flat, which the company credited to strong market share trends.  The company's intl division saw sales climb 15.5% for the qtr, but it accounts for less than a 6th of total revenue.  The company also reiterated its prior full-year outlook of constant currency revenue growth in the mid-single-digit range & adjusted EPS growth in the high single digits.  The stock went up 44¢.

Keurig Dr Pepper earnings meet estimates as higher prices fuel U.S. soda sales

Mortgage rates remained relatively unchanged from last week, with a slight movement higher.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage increased to 6.78% this week from 6.77% last week & the average rate on a 30-year loan was 6.81% a year ago.  "Mortgage rates essentially remained flat from last week but have decreased nearly half a percent from their peak earlier this year," said Sam Khater, Freddie Mac's chief economist.  "Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data."  The average rate on the 15-year fixed mortgage increased to 6.07% from 6.05% last week & 1 year ago, the rate on the 15-year fixed note averaged 6.11%.

Mortgage rates increase slightly

American Airlines (AAL) CEO vowed to be “diligent” in making sure capacity doesn't outgrow demand after the carrier slashed its profit forecast for the year after a backfired sales strategy & an industrywide glut of flights that have forced airlines to discount seats.  AAL expects to earn an adjusted 70¢ - $1.30 this year, well below the $2.25 - $3.25 it forecast in Apr & short of the $1.10 - $2.60 that analysts were expecting.  The airline also estimated its unit revenue would drop as much as 4.5% for the3rd qtr as high travel demand failed to make up for an excess of flights.  EPS fell 46% during the 2nd qtr to $1.01, even though revenue rose 2% to $14.3B.  Carriers have faced an oversupplied domestic market, & executives at AAL & other airlines are planning to scale back their capacity growth in the 2nd ½ of the year.  AAL expects to grow capacity in the 2nd ½ of the year by about 3.5%, down from roughly 8% growth in the first ½ in line with an estimate it gave in May.  “As we take a look into the fourth quarter and then beyond, we’re going to react to the marketplace and making sure that we’re competitive, but at the same time, doing what’s right for profitability,” CEO Robert Isom said.  “As we take a look out into 2025, we’re going to be very diligent in assessing and making sure that we’re certainly not outgrowing demand.”  AAL has also reversed policies of a direct-to-consumer sales strategy it adopted in 2023 that backfired.  It said today that it has “taken swift and aggressive action to reorient its sales and distribution strategy” after complaints from travel agents & customers.  Isom said that the strategy, which sought to drive more bookings to its platforms but alienated some corp customers that didn't have access to all of the airline's fares, would cost the carrier about $1.5B in revenue this year.  The stock rose 43¢.

American issues weak profit forecast after backfired sales plan

Gold prices slipped to its lowest in over 2 weeks as profit-taking kicked in after gold's recent rally, while traders awaited US economic data that could offer more cues on when the central bank will cut interest rates.  Spot gold fell 1.8% to $2355 per ounce, having touched its lowest since Jul 9.  US gold futures settled about 2.6% lower at $2353.  Gold hit an all-time high of $2483 last week on growing optimism for an interest-rate cut from the Federal Reserve in Sep.  Former New York Fed Pres Bill Dudley said the Fed should cut rates next week, citing recent employment data.  Markets see a 100% chance of a rate cut in Sep, according to the CME FedWatch Tool.  Non-yielding bullion's appeal tends to shine in a low-interest rate environment.  Traders now await the US personal consumption expenditure (PCE) data, the Fed's preferred inflation gauge, due tomorrow.  Meanwhile, China's net gold imports via Hong Kong slumped 18% in Jun from the previous month, Hong Kong Census & Statistics Dept data showed, as the recent surge in gold prices weighed on jewellery demand.

Gold Hits Over 2-Week Low as Investors Book Profit; US Data in Focus

Oil prices rose as an equity market rally carried futures prices out of an earlier slump.  West Texas Intermediate (WTI) settled above $78 a barrel after earlier falling to the lowest since early Jun.  Crude is tracking equities, which have risen on faith that the Federal Reserve will secure a soft landing for the US economy.  Data from the US have provided upward pressure.  GDP figures beat estimates, helping oil prices pare some of the earlier drop.  The US reported that commercial crude inventories fell by 3.7M barrels, down for a 4th week, with stockpiles of gasoline & distillates also shrinking.  Crude has eased from a peak at the start of the month amid concern about a soft demand outlook in Asia's largest economy, as well as selling by trend-following commodity trading advisers.  That has countered the lift from OPEC+ output curbs & expectations of US interest-rate cuts.  Crude imports by China — which sources supplies from across the globe including Russia, the Middle East & the Americas — were 2.3% lower in the first ½ on the year compared with the same period of 2023.  WTI’s options skew has reached its most bearish level since early Jun, indicating that negative sentiment has taken hold market-wide.  WTI for Sep rose 0.9% to settle at $78.28 a barrel & Brent for Sep climbed 0.8% to $82.37.

Oil Rises as Equity Rally Counteracts China Demand Slump

Dow was up sharply at midday, but enthusiasm faded in the PM.  Today's rally was not impressive.  Market leader NAZ is still seeing a lot of selling in its stocks while investors are rethinking their attitudes towards AI stocks.  With uninspiring earnings reports, the oversold stock market needs to take a rest.