Markets plunge on fears Fed may have waited too long for rate cuts

Dow dropped a very big 610 (with a little buying into the close), decliners over advancers 3-1 & NAZ tumbled 417.  The MLP index fell 5+ to 281 & the REIT index was steady at 411.  Junk bond funds saw selling along with the stock market & Treasuries were very heavily purchased which brought major reductions in yields.  Oil was down 2+ to the 73s & gold fell 9 to 2471 (more on both below).

Dow Jones Industrials 

Apple (AAPL), a Dow stock, reported fiscal 3rd-qtr earnings that beat expectations, with overall revenue rising 5%.  AAPL reported $21.5B in net income during the qtr, versus $19.9B, or $1.26 per share in the year-ago period.  Its most important business remains the iPhone, which accounted for about 46% of total sales during the qtr.  While the tech giant beat estimates, the product line still declined about 1% year over year, to $39.3B in revenue.  “On a constant currency basis, we grew year on year. And so that’s sort of how we look at it from an operational point of view,” CEO Tim Cook said.  Cook said that while AAPL can't yet speak to the positive sales impact from its newly announced Apple Intelligence service until it starts shipping to customers later this fall, he said the company has boosted spending to get the service ready.  “What we’ve done is we’ve redeployed a lot of people on to AI that were working on other things,” Cook said.  “From a data center point of view, as you know, we have a hybrid approach. So, we both have our own and we partner with people. And so that capex would be in the partners’ financials, and we would be paying expense.”  “Certainly embedded in our results this quarter is an increase year over year in the amount we’re spending for AI and Apple intelligence,” Cook added.  The Services business is the most important growth category for AAPL & includes hardware warranties, revenue from Google (GOOG), monthly cloud storage subscriptions, & the company's content subscriptions, such as Apple TV+.  The company reported $24.2B in Services sales, up 14% and in line with its forecast.  AAPL stock rose 4.44 (4%).

Apple sales rise 5%, topping estimates as iPad and Services revenues jump

Intel INTC, a Dow stock, shares plunged the most in 50 years, reaching a price not seen since 2013, after the chipmaker reported a big earnings miss & announced a massive restructuring.  The stock plummeted 27% to $21.22 this AM.  It was the 2nd worst day ever for the shares, behind only a 31% drop in Jul 1974, which was 3 years after INTC's IPO.  The company's market cap is now below $100B.  The company swung to a $1.6B net loss after reporting net income of $1.48B in the year-earlier period.  Adjusted EPS of 2¢ fell way short of the average analyst estimate of 10¢ & revenue also missed expectations.  INTC said it won't pay its div in the fiscal 4th qtr of 2024 & lowered its forecast for full-year capital expenditures by over 20%.  The company said it would lay off more than 15% of its employees as part of a $10B cost-reduction plan.  “This is the most substantial restructuring of Intel since the memory microprocessor transition four decades ago,” CEO Pat Gelsinger said.  “We have laid out an audacious journey of rebuilding this company, and we’re going to get that done.”  The stock tumbled 7.90 (27%).

Intel heads for worst day on Wall Street in 50 years, falls to lowest price in over a decade

The electric vehicle (EV) market is in full swing globally, despite some tough times for EV-giant, Tesla (TSLA).  In Q2 2024, electric vehicle sales grew 11.3% in the US, according to a report from Kelley Blue Book.  A record-high 330K units were sold in the qtr.  Sales grew thanks to more availability, continued discounts on EVs & a larger number of leases.  General Motors (GM) led the charge for new products, helping to improve sales numbers.  TSLA, however, saw a 6.3% year-over-year drop in sales volume.  In fact, its electric vehicle market share fell to 49.7%, the first time it’s dropped below 50% in the US.  Despite the disappointing sales numbers, overall electric vehicle sales accounted for about 8% of all new vehicle sales in the 2nd qtr, which is higher than the 7.1% of sales in Q1 2024.  "This increased competition is leading to continued price pressure, gradually boosting EV adoption. Automakers that deliver the right product at the right price and offer an excellent consumer experience will lead the way in EV adoption," Cox Automotive Industry Insights Director Stephanie Valdez Streaty explained.  The most notable new players in the EV market in Q2 included the BMW i5, Cadillac Lyriq, Honda Prologue & Kia EV9 SUV.  General Motors (GM) also added more than 21K new EVs, including electric options of the Chevy Blazer, Equinox & Silverado.  "We remain bullish on electric vehicle sales in the long term. The growth will, at times, be very slow, as all-time horizons in the automobile business are vast, but the long-term trajectory suggests that higher volumes of EVs will continue over time. As EV infrastructure and technology improve, and more models are launched, many shoppers sitting on the fence will eventually choose an EV," Valdez Streaty said.

Despite tough times for Tesla, EV sales set new record in second quarter

Gold prices retreated as profit-taking kicked in after bullion jumped over 1% earlier in the session on hopes of rate cuts buoyed by weaker than expected US jobs data.  Spot gold fell 0.5% to $2432 per ounce & US gold futures settled 0.4% lower to $2476.  However, gold gained 1.8% this week as rising safe-haven demand due to Middle East tensions & expectations of rate cuts by the Federal Reserve made the metal more appealing for investors.  Meanwhile, 10-year yields dropped to their lowest since Dec & the $ hit its lowest since Mar after data showed that employers added fewer jobs in Jul than economists had forecast, while the unemployment rate increased to 4.3%.  The data follows comments from Fed Chair Jerome Powell, who said on Wed that rates could be cut as soon as Sep if the US economy follows its expected path.  Bullion is traditionally considered a hedge against geopolitical & economic risks, & lower interest rates reduce the opportunity cost of holding the asset.

Gold retreats on profit-taking, logs weekly gain

Oil futures fell, contributing to a 4th straight weekly decline as worries about the demand outlook in both China & the US overshadowed fears of a wider Middle Eastern conflict that could threaten crude flows from the region.  West Texas Intermediate crude fell $2.32 (3%) to $73.99 a barrel, leaving it on track for a weekly fall of more than 4.  Oct Brent crude, the global benchmark, declined by $2.01 (2.5%) to $77.51 a barrel, headed for a 3.5% weekly fall.  Overall, it's been a volatile week.  Crude slumped to a 7-week low after weak China data underlined concerns about demand from the world's largest crude importer.  Then oil bounced sharply higher Wed after the assassination of a top Hamas official visiting Tehran, which Iran blamed on Israel, vowing retaliation.  The oil market saw a fairly muted reaction to events in the Middle East & only temporarily reversed the recent downtrend in prices.

Oil prices see 4th straight weekly decline on worries over demand

Stocks hovered around session lows before the close, after today's weaker-than-expected jobs report sent markets into a downward spiral.  The Jul jobs report showed the US economy added 114K nonfarm payroll jobs in Jul - far fewer than than 175K expected by economists.  The unemployment rate jumped more than expected, to 4.3%, its highest level since Oct 2021.  Investors are anxious & nervous.  This week with prices from the old & new month, Dow finished down 850.