Markets rise with stock averages and gold at or near records

Dow rose 243 although late dry selling trimmed gains, advancers over decliners about 3-1 & NAZ finished down 39.  The MLP index soared 6+ to the 285s & the REIT index slid back 1+ to the 413s.  Junk bond funds were little changed & Treasuries had marginal selling which lifted yields slightly.  Oil finished up 1+ to nearly 76 & gold advanced 18 to 2556 (more on both below).

Dow Jones Industrials 

Gap (GAP) beat quarterly earnings & revenue estimates & raised its full-year profit margin outlook, the apparel retailer said.  Sales climbed 5% to $3.7B in its 2nd qtr & comparable sales rose 3%.  EPS was 54¢ for the period ended Aug 3, compared with 32¢ in the prior-year period.  The retailer also affirmed its full-year sales guidance of up slightly from the previous year.  GAP increased its gross margin outlook to about a 200 basis point expansion, up from at least a 150 basis point improvement potentially.  It also hiked its operating income guidance to approximately 50% growth, up from percentage growth in the mid-40s.  Comparable sales were strongest at the Old Navy brand, where they rose 5% & GAP's namesake brand posted 3% comparable sales growth.  Comparable sales were flat at Banana Republic, while they fell 4% at Athleta.  Earnings come as CEO Richard Dickson, who took the helm last year, tries to lead a sales turnaround at the legacy retailer.  The stock rose 64¢.

Gap beats earnings and revenue estimates, hikes profit margin outlook

Dollar General (DG) shares tumbled after the discount retailer slashed its sales & profit guidance for the full year, suggesting its lower-income customers are struggling in this economy.  The company now expects fiscal 2024 same-store sales to be up 1.0-1.6%, lower than its prior outlook for a 2-2.7% increase.  EPS for the year are expected to be just $5.50 - $6.20, versus the prior forecast of $6.80 - $7.55.  “While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control,” said CEO Todd Vasos.  However, he also acknowledged that the company has more work to do.  DG has said that it needs to improve its stores & how it handles inventory to curb losses.  EPS for the 3-month period that ended Aug 2 was $1.70, compared with $2.13 a year earlier.  Sales rose to $10.2B, up about 4.2% from $9.8B a year earlier.  The stock plunged 37 (39%).

Dollar General shares crater 25% as retailer cuts outlook, blaming ‘financially constrained’ customers

Mortgage rates are down again this week, but remain too high to spark any significant movement in the housing market as the affordability crisis remains set in.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage fell to 6.35% this week from 6.46% last week & the average rate on a 30-year loan was 7.18% a year ago.  "Mortgage rates fell again this week due to expectations of a Fed rate cut," said Sam Khater, Freddie Mac's chief economist.  "Rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until we see further declines."  The average rate on the 15-year fixed mortgage declined to 5.51% from 5.62% last week & 1 year ago, the rate on the 15-year fixed note averaged 6.55%.

Mortgage rates drop again, but housing market remains stalled

Gold prices gained 1%, fueled by strong expectations of a Federal Reserve rate cut in Sep with investors focusing on US inflation data for further insights on the potential size of the cut.  Spot gold rose 0.9% to $2524 per ounce & US gold futures settled 0.9% higher at $2560.  The market seems to be penciling in a rate cut no matter what, & now it is simply a question of what size & how big of a rate cut.  There does seem to be that strong floor of support because of geopolitics.  The Israeli military said its troops killed 5 Palestinian militants who were hiding inside a mosque in the West Bank city of Tulkarm.  Gold is used as a safe investment during times of economic & geopolitical uncertainties.  Data earlier showed US initial jobless claims slipped last week, with the Labor Dept adding that the unemployment rate probably remained high in Aug.  Fed Chair Jerome Powell last Fri signaled interest rate cuts were imminent in a nod to concerns over the jobs market.  Traders see a 65.5% chance of a 25-basis-point (bp) rate cut in Sep & about a 34.5% probability of a bigger 50-bp reduction, according to the CME FedWatch tool.  Investors are now looking at Personal Consumption Expenditures (PCE) price index, the Fed's preferred measure of inflation, due tomorrow.

Gold Gains Nearly 1% as Investors Zero in on Fed Cuts, Inflation Data

Oil futures finished higher, finding some support after posting back-to-back session declines, as discord in Libya continued to limit supply from the OPEC producer.  West Texas International crude for Oct rose $1.39 (1.9%) to settle at $75.91 a barrel & Oct Brent crude, the global benchmark, added $1.29 (1.6%) at $79.94 a barrel.  The more actively traded Nov Brent contract gained $1.24 (1.6%) to $78.82 a barrel.  A dispute between Libya's eastern leaders & western authorities over the nation's central bank has resulted in an oil blockade that has significantly curtailed crude flows, with output down about 500K barrels a day & that figure doesn't include the shutdown of the Sharara oil field earlier this month.

Oil Prices End Higher as Standoff Over Libya Central Bank Curtails Supply

Investors are weighing the lackluster reception for the numbers from Nvidia (NVDA) whose stellar growth streak has underpinned the market's rally this year.  While the AI chipmaker's quarterly profit & revenue guidance topped estimates, the size of the beats fell short of high-running hopes.  That stirred questions as to whether the AI boom has peaked but analysts remain bullish.  The inflation data will drive the market tomorrow.