Dow recovered 127, advancers over decliners about 3-1 & NAZ bounced back 280. The MLP index added 1+ to 298 & the REIT index rose 4 to the 404s. Junk bond funds crawled higher & Treasuries finished with modest selling which raised yields. Oil was off pennies going back under 80 & gold slid 2 to 2396 (more on both below).
Dow Jones Industrials
Automakers report earnings this week. GM is set to be the standout
McDonalds (MCD), a Dow stock & Dividend Aristocrat, will extend its $5 value meal beyond its initial 4-week window in
most of its US markets as the fast-food giant says the offer is
driving traffic back to restaurants. In a memo to the US execs wrote that nearly every business
unit, encompassing 93% of its restaurants, voted to extend the promotion
past its original end date late this month. The memo said the majority
of locations will extend thru Aug, or plan to vote on whether to
do so. The $5 value meal rolled out on menu boards beginning Jun 25 & was initially set to last roughly a month. It includes a McChicken
or McDouble, 4-piece chicken nuggets, fries & a drink. The combo
costs substantially less than purchasing those items individually. “Our
message is resonating with our millions of customers,” Myra Doria,
national field pres & Tariq Hassan, US chief marketing &
customer experience officer, wrote in the memo. “When our customers are
ordering the $5 Meal Deal, they aren’t visiting the competition, and
early performance shows this deal is meeting the objective of driving
guests back to our restaurants.” The
move comes as restaurants offer deals to boost sagging traffic, as
consumers, particularly lower-income diners, balk at higher prices
after years of inflation-fueled hikes. The meal has faced competition
from other chains which have offered deals ranging $3-5, as
companies look to bring in value-conscious consumers in a highly
competitive environment. The memo went on: “We must remember that
driving guest counts ultimately propels our business and is the key to
sustained growth.” The stock rose 2.36.
McDonald’s to extend $5 value meal in most U.S. markets as diners return to restaurants
Boeing (BA), a Dow stock, output of 737 Max planes is showing signs of improvement, the new
head of its commercial unit said ahead of a major air show yesterday,
while admitting that the manufacturer has “disappointed” customers with
delayed planes. BA is trying to get past several safety & manufacturing crises,
including the midair door plug blow out in Jan, which have slowed
deliveries of planes to airlines & prompted the Federal Aviation
Administration to increase its oversight of the storied manufacturer. Stephanie
Pope, in her first press conference since taking over the key role at
the troubled aircraft manufacturer in Mar, reiterated that BA has
committed to increasing production of the Max to 38 a month. Production
slipped into the mid-20s per month in the first ½ of the year,
analysts have said. Pope said BA is on the right path to
improving its manufacturing quality, safety & predictability of
deliveries, a “transformational change” that she said will take years. “It
still doesn’t take away the reality that we’ve disappointed” our
customers, she said. “We’ve impacted their business and we
haven’t met the commitments and lived up to being the partner that they
expect and they need us to be.” BA has unveiled a host of
goals aimed at getting it back on the right path, like improving worker
training & manufacturing processes, among others. In the spring it
delivered an improvement plan to the FAA that the agency ordered after
the blowout in Jan. “This plan is not a three month plan,” said Pope. “I call it transformational because some of these actions will take years.” The stock fell 77¢.
Boeing commercial jet CEO says company on path to ‘transformational change’
Gold edged lower as traders mulled Pres Biden's decision to end his re-election campaign & what it means for Donald Trump's chances of returning to the White House. Spot bullion traded just under $2400 an ounce, erasing earlier gains. Biden said he would serve out his term & endorsed VP Kamala Harris to replace him as a candidate, though she still must secure the official nomination at the Dem National Convention next month. The fresh uncertainty helped boost the precious metal's safe-haven appeal while a reversal of the Trump trade could catalyze additional selling activity. At the same time, traders are also weighing signs of buying fatigue in Asia, a key pillar in gold's rally in the first ½ of the year. The premium gold on the Shanghai Futures Exchange held against its London counterpart since late last year has flipped to a discount, signaling falling demand from the Asian nation. Gold has surged by more than 15% this year, hitting an all-time high last week. The precious metal has been supported by expectations of interest rate cuts by the Federal Reserve, strong buying by central banks & haven asset demand amid ongoing geopolitical tensions. Trump's odds of winning the US election race have edged lower since Biden announced he would step aside, but he remains the front runner. If successful, his administration could unleash both bullish & bearish forces on gold. For instance, the possibility of tax cuts, tariffs & duties could push up inflation & force the Fed to increase rates more than it otherwise would. Higher interest rates are typically bearish for non-yielding gold. But Trump has also signaled a preference for the $ to weaken, which is potentially bullish for commodities, including the yellow metal, priced in that currency. Meanwhile, China's gold imports plunged last month, the nation has increased support for the economy with surprise interest rate cuts, seeking to prop up growth after a lack of short-term stimulus. Spot gold was down 0.6% to $2386 an ounce. The Bloomberg Dollar Spot Index was down 0.1%, while US 10-year Treasury yield edged lower.
Gold Slips as Traders Absorb Biden Withdrawal From US Election
Oil extended its recent slide as investors assessed how Pres Biden's decision not to seek reelection could impact markets. West Texas Intermediate's more-active Sep contract settled near $78 a barrel, touching a 5-week low. The slump was accelerated by trend-following commodity trading advisers. Some traders say that Biden's decision against running for a new term has oil analysts pricing in victory for Donald Trump, who would push for a boost in US crude production that would be bearish for prices in the long term. Despite the recent slump in front-month prices, WT'I’s prompt spread, the difference between its 2 nearest contracts, has strengthened to $1.53 in backwardation, which signals demand is outweighing supplies in the short term. Oil has pushed higher this year as OPEC+ reined in output, setting the scene for a drawdown in global stockpiles over the Northern Hemisphere summer. Geopolitical tensions have also contributed, with the Israel-Hamas war & clashes with Iranian-backed groups including the Houthis in Yemen sparking concerns of regional instability that could threaten supply. Traders are also monitoring Canada, where a blast of heat across the Alberta oil patch has triggered a wave of wildfires. An estimated 348K barrels a day of production are at risk, according to local wildfire & Alberta Energy Regulator data. WTI for Sep shed 0.3% to settle at $78.40 a barrel. The Aug contract which expired today, fell 0.4% to $79.78. Brent for Sep lost 0.3% to $82.40 a barrel.
Oil Falls to 5-Week Low as Traders Weigh US Political Turmoil
Earnings season will be prominent along with understanding the new US presidential race this week. Biden's political shock could inject more volatility into an already battered stock market. Gold is pausing after its latest rally.
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