Markets waver after yesterday's sharp decline

Dow inched up 38, decliners slightly ahead of advancers & NAZ was off 52.  The MLP index rebounded 1+ to the 283s & the REIT index went up 1 to the 428s.  Junk bond funds remained mixed & Treasuries continued in demand causing yields to fall.  Oil dropped 1+ to 69 as selling continues & gold added 2 to 2525 (more on both below).

Dow Jones Industrials 

The US produced more oil in 2023 than has ever been produced in any year by any country, according to the US Energy Information Administration.  Big Oil has become more productive as horizontal drilling & hydraulic fracturing, which is also known as fracking, have seen technological breakthroughs.  US oil production hit a low of 5M barrels per day in 2008 before the industry adopted horizontal drilling & fracking techniques.  In Aug 2024, US oil production hit a record 13.4M barrels per day.  This comes as the Biden administration has led an expansion into subsidies for renewable energy projects thru the Inflation Reduction Act of 2022, which included $369B to combat climate change.  The majority of that funding is delivered thru tax incentives.  “U.S. energy policy has been largely oriented towards the tax code. That’s how a lot of the renewable energy deployment that’s happened to date has come about,” Daniel Bresette, pres of the Environmental & Energy Study Institute, said.  The fossil fuel industry benefits from tax incentives, such as the intangible drilling costs tax credit, that are built into the tax code.  The intangible drilling costs incentive “is the most active subsidy they get and it’s a tax credit,” Amy Myers Jaffe, director of New York University's Energy, Climate Justice & Sustainability Lab, said.  The intangible drilling costs tax break is expected to benefit oil & gas companies by $1.7B in 2025 & $9.7B thru 2034, according to the White House Budget for Fiscal Year 2025.

How fracking helped the U.S. break the all-time oil production record

Intel's (INTC), a Dow stock, contract manufacturing business has suffered a setback after tests with chipmaker Broadcom (AVGO) failed, dealing a blow to the company's turnaround efforts.  The tests conducted by AVGO involved sending silicon wafers, the foot-wide discs on which chips are printed, thru INTC's most advanced manufacturing process known as 18A.  AVGO received the wafers back last month.  After its engineers & execs studied the results, the company concluded the manufacturing process is not yet viable to move to high-volume production.  "Intel 18A is powered on, healthy and yielding well, and we remain fully on track to begin high volume manufacturing next year," an INTC spokesperson said.  "There is a great deal of interest in Intel 18A across the industry but, as a matter of policy, we do not comment on specific customer conversations."  An AVGO spokesperson said the company is "evaluating the product and service offerings of Intel Foundry and have not concluded that evaluation."  Intel's contract manufacturing business was launched in 2021 as a key part of CEO Pat Gelsinger's turnaround strategy.  AVGO is not a household name but makes crucial networking gear & radio chips that helped generate $28B in overall chip sales in its last fiscal year.  It has benefited from the boom in spending on artificial intelligence hardware.  Some of its chip sales are from agreements with companies such as Alphabet's (GOOG) & Meta (META) Platforms to help produce in-house AI processors, which can include arrangements with a manufacturer, such as INTC or Taiwan Semiconductor Manufacturing Co.  As part of a disastrous 2nd-qtr earnings report that shaved more than a qtr from the company's market value & it announced a 15% job cut & a reduction in capital spending related to its factory construction.  Gelsinger & other execs will present a plan to the board of directors in mid-Sep on possible cuts to business units & teams to reduce costs.  INTC reported a $7B operating loss for the foundry business, wider than the $5.2B in losses the year earlier.  Execs expect the contract chip business to achieve breakeven in 2027.  INTC stock fell 67¢.

Intel Stock Drops Further as Silicon Wafers Reportedly Fail Broadcom Tests

Less than a year after McDonald's (MCD), a Dow stock & Dividend Aristocrat, McFlurry desserts lost their iconic spindles, the fast-food giant announced that the item is "getting a makeover" as it tries to reverse a current sales decline.  Starting to, MCD will be selling the new "Mini McFlurry," in addition to the standard size, & both will come in a new "more environmentally friendly four-flap cup" as they are "phasing out plastic McFlurry cup lids."  "Packaging updates like this matter," Michael Gonda, SVP, chief impact officer of North America for MCD, said.  "Not only is this a fun new way for our U.S. fans to enjoy the McFlurry; we're also moving one step closer to fulfilling our packaging and waste commitments."  The new look helps advance their "commitment to sustainability," which includes aiming to source "100% of primary guest packaging from renewable, recycled or certified materials by the end of 2025."  The new look is not entirely new to the company, as the 4-flap cups are already being used in certain intl markets.  Back in Jul, MCD reported a drop in sales for the first time in years as it struggled to draw in cash-strapped customers amid higher menu prices.  Global sales fell 1% in the 2nd qtr, its first decline in 13 qtrs, compared with an estimate of a 0.5% rise.  To reverse the decline, fast-food chains have launched several promotions in an attempt to boost customer traffic during persistent inflation.   MCD stock rose 2.37.

McDonald's give classic menu item a 'makeover' amid push to reverse sales decline

Gold prices reversed course to gain, helped by a softer $ & lower yields after falling US job openings signaled a possibility of an over-sized rate cut from the Federal Reserve at its policy meeting this month.  Spot gold gained 0.1% to $2494 per ounce, bouncing back from a 2-week low of $2471 hit earlier in the session & US gold futures settled 0.1% higher to $2526.  Data showed US job openings in Jul fell to the lowest level in 3½ years.  Traders added to bets that the Fed will deliver a 50-basis-point reduction at its Sep 17-18 meeting, raising them to about 49% from 41% immediately before the data.  ADP employment & jobless claims reports tomorrow & the non-farm payrolls report on Fri will also be closely scanned for cues on the Fed's rate-cut path.  Markets expect 100 basis points of cuts by year-end, implying a 50-basis-point cut in 1 of the next 3 FOMC meetings, although it's unlikely to be the first 1.  Bullion, which offers no interest of its own, tends to thrive in a low-interest-rate environment.

Gold Rebounds From Lows After Weak US Jobs Openings Data

Oil prices added to the previous day's heavy losses as the market shrugs off delegate comments that OPEC+ is considering a delay in plans to start unwinding output cuts.  The prospect of the producer group returning barrels to the market as demand eases has sent futures to multi-month lows.  Current market prices are suggesting that investors are not expecting demand to pick up any time soon.  It's all about OPEC, will they cut more, will they extend their output cuts?  They don't seem to mind oil prices around current levels that much, but if they see another drop in the next couple of months they may start getting worried again.  WTI settled down 1.6% at $69.20 a barrel & Brent fell 1.4% to $72.70.

Crude Extends Losses on Prospects of Higher Supply

Today traders wanted to take stocks higher, but effort failed.  The Dow remained close to even for the entire session.  Analysts suggest stocks may not be in the clear yet after the weak start in Sep.

Markets edge higher as data reveals fewer job openings than expected

Dow was up 123, advancers over decliners about 3-1 & NAZ gained 33.  The MLP index added 2+ to the 284s & the REIT index crawled up 1+ to the 429s.  Junk bond funds were mixed & Treasuries saw more buying which lowered yields.  Oil slid back pennies to 70 & gold was up 5 to 2528.

Dow Jones Industrials

Job openings slumped to their lowest level in 3½ years in Jul, the Labor Dept reported in another sign of slack in the labor market.  The closely watched Job Openings & Labor Turnover Survey (JOLTS)  showed that available positions fell to 7.67M on the month, off 237K from Jun's downwardly revised number & the lowest level since Jan 2021.  The forecast had been looking for 8.1M.  With the decline, it brought the ratio of job openings per available worker down to less than 1.1, about ½ where it was from its peak of more than 2 to 1 in early 2022.  The data likely provides further ammunition to Federal Reserve officials who are widely expected to begin lowering interest rates when they meet for their next policy meeting on Sep 17-18.  Fed officials watch the JOLTS report closely as an indicator of labor market strength.  While the job openings level declined, layoffs increased to 1.76M, up 202K from Jun.  Total separations jumped by 336K, pushing the separations rate as a share of the labor force up to 3.4%.  However, hires rose as well, up 273K on the month, putting the rate at 3.5% or 0.2 percentage point better than Jun.

Job openings fell more than expected in July in another sign of labor market softening

Atlanta Federal Reserve Pres Raphael Bostic signaled that he is ready to start lowering interest rates even though inflation is still running above the central bank's target.  Previously 1 of the more hawkish policymakers, or in favor of tighter policy to fight inflation, Bostic noted that his focus is shifting more towards the employment side of the Fed's mandate as signs increase of labor market softening.  “I believe we cannot wait until inflation has actually fallen all the way to 2 percent to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering,” he wrote on the Atlanta Fed's website.  The Fed's preferred measure showed inflation running at a 2.5% rate in Jul & just a slightly higher 2.6% core rate when excluding food & energy.  Bostic did not specify how much or when he thinks the Fed should start easing.  However, the missive comes with markets already widely expecting the central bank to cut its benchmark borrowing rate by at least a qtr percentage point when it meets Sep 17-18.  As an FOMC voting member this year, Bostic's views carry extra weight & add another level of assurance that the Fed will enact its first easing since the emergency measures it took more than 4 years ago in the early days of the Covid crisis.  Bostic said his experiences with business leaders in the Atlanta area reflect that concern.  “Rest assured, I do not sense a looming crash or panic among business contacts. However, the data and our grassroots feedback describe an economy and labor market losing momentum,” he added.  “The upside to this is that the slowdown in activity is feeding a continuing, welcome decline in the pace of inflation.”  He cited multiple factors indicating that inflation is progressing convincingly back to the Fed's target as the labor market moderates.  “Given the circumstances before us — eroding pricing power and a cooling labor market — I’ve rebalanced my focus toward both sides of the dual mandate for the first time since early 2021,” he noted.

Atlanta Fed’s Bostic says officials can’t wait for 2% inflation to start cutting

Qualcomm (QCOM) launched a new PC processor as it looks to capitalize on electronics makers' desire to put artificial intelligence on their devices.  Qualcomm took the wraps off the Snapdragon X Plus 8-core at the IFA conference in Berlin, Germany.  The processor, designed for PCs running Microsoft's (MSFT) Windows operating system, promises to power AI processes with a long battery life.  The latest chips expand QCOM's Snapdragon X Series for PCs, which it launched last year.  The US chip giant said the Snapdragon X Plus 8-core is designed for PCs costing as low as $700 as it looks to expand its semiconductors to more devices.  Qualcomm has traditionally designed chips that are used in the smartphones of many of the world's biggest players, including Samsung.  But the company stepped up its PC efforts this year when MSFT announced a Surface Laptop & a Surface Pro tablet with Qualcomm’s X Series chips that can run some AI tasks without an internet connection. MSFT calls these Copilot+ PCs.  Analysts said QCOM's timing to jump into PCs is key.  Neil Shah, a partner at Counterpoint Research, highlighted a few converging themes that are helping the company.  He highlighted the push toward “on-device AI,” where artificial intelligence applications are processed on a piece of hardware rather than via the internet.  QCOM has designed processors for smartphones that do this.  “Since the AI boom happened last year, everything has been centered around AI which works well for Qualcomm because they have been ahead in the low powered AI device experiences on mobile,” Shah said.  “Translating that to the PC form factor was not that difficult.”  The support of MSFT has also been important for QCOM to hit the mainstream in PCs, since Windows is one of the world's biggest operating systems, Shah said.  QCOM rose 3.10 & MSFT fell 72¢.

Qualcomm ramps up challenge to Intel and AMD with latest AI PC chip

The stock market recovered some losses, coming off a steep sell-off fueled by worries about economic growth & the artificial intelligence trade.  Stocks appeared to turn positive after fresh data showed further signs of the labor market cooling, prompting bond yields to fall & investors to ramp up their hopes for more extensive interest rate cuts in 2024.  The up & down start to Sep has investors bracing for more volatility as a historically tough month for stocks follows a turbulent Aug.

Markets slide further after a weak ISM manufacturing data report

Dow tumbled 626 (near session lows), decliners over advancers 5-2 & NAZ dropped 577.  The MLP index pulled back 3+ to the 283s & the REIT index was off 1+ to 426.  Junk bond funds remained weak & Treasuries continued in demand, bringing lower yields.  Oil sank 3+ to a little over 70 & gold was off 6 to 2520 (more on both below).

Dow Jones Industrials 

Semiconductor stocks, led by Nvidia (NVDA), fell during an overall down day for the stock market.  The SMH, an index that tracks semiconductor stocks, was down 6%, on pace for its biggest 1-day loss in a month.  Markets were sluggish today after the ISM manufacturing index reported Aug figures that came in below consensus expectations, raising fears about the strength of the economy but also potentially increasing chances that the Federal Reserve will cut interest rates.  Chip stocks have been rising in the past year on optimism that the artificial intelligence boom will require companies to buy more semiconductors & memory to keep up with rising computational requirements for AI applications.  The sector has been led by NVDA, which is still up nearly 129% so far in 2024, & which dominates the market for AI data center chips.  Last week, NVDA reported $30B in quarterly earnings for the qtr ending in Jul, higher than the already elevated expectations.  Revenue in the company's data center business, which includes AI processors, climbed 154% on an annual basis, partially powered by a handful of cloud & internet giants that buy Bs of $s of NVDA chips each qtr.   NVDA expects 80% sales growth in the current qtr.  But some investors saw NVDA's forecast last week as a slowdown in growth, briefly hitting chipmakers that supply NVDA with memory & other parts.  NVDA stock sank 11.22.

Nvidia tumbles, leading chip stocks lower

Spaceship. Dream car. UFO. Dumpster. Cool. Stupid. Phenomenal. Abomination.  Those were all words used to describe the Tesla (TSLA) Cybertruck during a 24-hour rental of the vehicle in metropolitan Detroit.  They were expressed by strangers, friends, family & auto industry experts & employees.  A word not used much? “Truck.”  That's because the Tesla Cybertruck is far more “cyber” than “truck.”  It indeed has some truck capabilities, such as a pickup bed & other utilitarian features, but it is not a truck in any traditional sense of the word.  It is a unique product that only comes along every so often.  Similar to the first SUV, minivan or “roadster pickups” such as the Ford Ranchero (F) & Chevrolet El Camino, it has created a new segment in the automotive industry that it solely holds.  That's good & bad for both TSLA & its competitors, specifically the truck-reliant automakers from Detroit that have spent decades refining their trucks to meet the needs of their customers.  That includes things such as bed access & door handle sizes to seating height & interior components.  The Cybertruck is not a direct competitor for electric trucks from traditional automakers.  The Cybertruck is a “truck” for TSLA fans/owners & an experiment for the company in many ways regarding its technologies, including a new electrical architecture & steering system.  TSLA stock fell 3.52.

Tesla Cybertruck is in a category of its own for better or worse

Volkswagen targeting €10B in savings by 2026 as it attempts to streamline spending.  Thomas Schaefer, head of the VW brand, warned: “The situation is extremely tense and cannot be overcome by simple cost-cutting measures.”  Pushing the changes thru will be a delicate task.  VW employs around 650K workers globally, almost 300K of whom are in Germany, & the threat of factory closures sparked an immediate fierce backlash from unions.  ½ the seats on the company's supervisory board are held by worker representatives, & the German state of Lower Saxony, which owns a 20% stake, often sides with trade union bodies.  Daniela Cavallo, chief exec of the VW works council, said on VW's intranet that management had made “many wrong decisions” in recent years, including not investing in hybrids or being faster at developing affordable battery-electric cars.  She argued that instead of plant closures, the board should be reducing complexity & taking advantage of synergies across the VW group's plans, criticizing the company's “documentation madness” & “salami-slicing tactics.”

VW considers closing German factory for first time in 87-year history

Gold prices eased to their lowest in more than a week, pressured by a firm $, while investors awaited US non-farm payrolls data that could determine the size of the potential cut in the Federal Reserve's Sep policy meeting.  Spot gold fell 0.4% to $2490 per ounce.  US gold futures settled 0.2% lower to $2523.  The dollar (.DXY), rose 0.2%, hitting a 2-week high, making gold more expensive for other currency holders.  Focus will be on Fri's US payrolls report along with ISM surveys, JOLTS job openings & the ADP employment report due later this week.  Markets are pricing in a 63% chance of a 25 basis point (bps) cut when the Fed meets on Sep 17-18, with a 37% probability of a 50-bps cut, the CME FedWatch tool, showed.  Bullion is heading for its best year since 2020, driven by investor optimism about upcoming US rate cuts & lingering concerns about the Middle East conflict.

Gold at Over One-Week Low on Firm Dollar, US Payrolls Data Awaited

Oil plummeted, erasing its gains for the year, after a prospective deal to restore supplies from Libya turned traders' attention back to concerns about tepid global demand for crude.  Global benchmark Brent dropped 4.9% to settle below $74 a barrel after earlier touching the lowest intraday price since mid-Dec 2023.  The plunge came after a Libyan central banker said a deal that would revive the OPEC nation's output appears imminent.  With more than 0.5M barrels of Libyan crude possibly coming back into the market, the focus is once again on tepid global oil consumption.  Economic concerns in key consumer countries, including China & the US, have weighed on sentiment in recent months, with only occasional geopolitical concerns & minor supply disruptions masking the angst.  Looking ahead, the market is bracing for OPEC+ to gradually restore production, starting with 180K barrels of daily supplies within weeks.  The concerns about China have only grown louder in recent days after a drumbeat of economic data over the weekend raised doubts that the world's top crude importer may struggle to meet this year's economic growth target.  Options are signaling the market is now anticipating a lower risk of futures spiking.  The bias toward puts in Brent's 2nd-month options skew has deepened to the most bearish since early Jun as traders continue to protect against price drops.  The US, meanwhile, is laying the groundwork for new sanctions on Venezuelan gov officials in response to Nicolás Maduro's disputed reelection.  The measures target key leaders that the US says collaborated with Maduro to undermine the Jul 28 vote.  WTI for Oct fell 4.4% from the Fri close to settle at $70.34 a barrel.  Futures didn't settle yesterday due to the Labor Day holiday.  Brent for Nov declined 4.9% to settle at $73.75 a barrel.

Oil Plunges as Rising Supplies, Tepid Demand Intensify Gloom

US stocks fell to kick off a historically tough month for markets.  Stocks are retreating from near highs as traders hunker down after a rollercoaster Aug, with the prospect of a potentially stormy Sep ahead which includes the Fed meeting.  Investors are assessing the risk of data shocks or presidential race surprises.

Markets decline as key data shows continued economic weakening

Dow dropped 448, decliners over advancers better than 2-1 & NAZ retreated 408.  The MLP index declined 5+ to 281 & the REIT index was up about 1 to the 428s.  Junk bond funds were sold  & Treasuries saw buying which lowered yields (more below).  Oil dropped 2+ to go under 71 (more below) & gold was off 12 to 2515.

Dow Jones Industrials

US factories remained in slowdown mode in Aug, fueling fears about where the economy is headed, according to separate manufacturing gauges.  The Institute for Supply Management (ISM) monthly survey of purchasing managers showed that just 47.2% reported expansion during the month, below the 50% breakeven point for activity.  Though that was slightly above the 46.8% recorded for Jul, it was below the for 47.9%.  “While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.  “Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty,” he added.  While the index level suggests contraction in the manufacturing sector, Fiore pointed out that any reading above 42.5% generally points to expansion across the broader economy.  It was a weaker-than-expected reading last month that sent markets further into a tailspin.  Another weak economic reading raises the probability the Federal Reserve will be cutting interest rates by at least a qtr percentage point later this month.  Following the ISM report, traders raised the odds of a more aggressive ½-point reduction to 39%, according to the CME Group's FedWatch measure.  The ISM results were backed up by another PMI reading from S&P, which showed a decrease to 47.9 in Aug from 49.6 in Jul.  The S&P employment index showed a decrease for the first time this year, while the input cost measure climbed to a 16-month high, another sign that inflation remains present if well off its mid-2022 highs.  “A further downward lurch in the PMI points to the manufacturing sector acting as an increased drag on the economy midway through the third quarter. Forward-looking indicators suggest this drag could intensify in the coming months,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Weak manufacturing measures raise specter of U.S. economic slowdown

Weak manufacturing measures raise specter of US economic slowdown.  Crude oil futures fell more than 3%, erasing all gains for the year, as OPEC+ is poised to increase production in the coming weeks & China's economy remains soft.  OPEC+ delegates have indicated that the group is still planning to increase oil production in Oct.  Manufacturing in China, meanwhile, fell to a 6-month low in Aug, according to data released over the weekend.  China is the world's largest importer of crude oil.  West Texas Intermediate Oct contract was $70.97 per barrel, down $2.58 (3.5%) & YTD US crude oil has fallen 1%.  Brent Nov contract was $74.42 per barrel, down $3.10 (4%) & YTD, the global benchmark has dropped 3.47%.  OPEC+, however, made clear in Jun that it could reverse the planned production increase based on market conditions.  The prospect of increased oil output from OPEC & a weak economy in China are overshadowing major production disruptions in Libya.  Libya's eastern gov in Benghazi has sought to shut down production & exports, amid a dispute with the UN-backed gov in Tripoli over who should lead the country's central bank. Libya's National Oil declared a force majeure at the El-Feel oil field.

U.S. crude oil falls more than 3%, erases 2024 gains as China demand, OPEC output hike loom

Treasury yields slid as markets reopened after the Labor Day holiday & investors evaluated economic data.  The yield on the 10-year Treasury yield was last trading at 3.833% after dropping close to 8 basis points & the 2-year Treasury yield was last down more than 6 basis points at 3.863%.  Yields & prices moonomive in opposite directions & 1 basis point equals 0.01%.  Investors weighed the state of the economy & considered the outlook for interest rates as they looked to key labor market data due this week.  2 readings of manufacturing production showed signs of weakness, bolstering concerns around slowing growth within the US economy.  S&P Global’s showed a decline from Jul to Aug, while the Institute for Supply Management's came in below the estimate.  Investors will be watching the data closely for fresh signals about the economic outlook.  Last month, the Jul jobs report raised fears about a recession & questions about whether the Federal Reserve should have already cut interest rates, sparking market volatility.  Recession concerns have eased since then, with the 2nd-qtr GDP last week being revised higher from the initial 2.8% reading to 3% growth.

Treasury yields slide as investors weigh slowing growth fears

Today's economic data is making investors nervous.  Of course, overbought conditions in the stock market are not helping matters.

Markets hesitate as PCE inflation data warms the hearts of investors

Dow went up 228 with buying into the close, advancers ahead of decliners 4-3 & NAZ gained 197.  The MLP index was steady in the 285s & the REIT index added 3+ to the 427s.  Junk bond funds edged higher & Treasuries were sold which raised yields.  Oil fell 2+ to the 73s & gold sank 28 to 2531 (more on both below).

Dow Jones Industrials 

Dell (DELL) reported quarterly results that beat expectations, powered by an 80% increase in server sales.  EPS was $1.17, up from 63¢ in the year-ago period.  Revenue increased about 9% from $22.9B a year ago.  The stock took a leg lower after DELL revised its full-year revenue guidance to $95.5 - $98.5B, a slight upward revision from the company's previous forecast.  Earlier this year, the company said to expect revenue of $93.5 - $97.5B for the full year, up from $88.4B in the prior year.  For the current qtr, DELL said it expects $24 - $25B in revenue, in line with the estimate of $24.6B.  DELL has emerged as a top vendor for servers that can handle artificial intelligence workloads, especially those based around Nvidia (NVDA) chips, as demand skyrockets from cloud providers.  Earlier this year, NVDA  CEO Jensen Huang called out DELL founder Michael Dell as the person to contact to place orders for systems that include the company's new chips.  AI sales are in the company's Infrastructure Solutions Group (ISG), which makes servers & systems for data centers.  It's the company's fastest-growing unit.  Overall ISG sales rose 38% to $11.6B, ahead of expectations for $10.4B.  DELL said it spent $1B in the qtr on share repurchases & divs.  DELL stock rose 4.84.

Dell beats estimates as server sales soar 80%, riding AI wave

Lululemon (LULU) lowered its guidance and posted its first revenue miss in more than 2 years after it botched a highly anticipated product launch & growth slowed in the Americas.  The company now expects full-year net revenue to be $10.4 - $10.5B, down from a previous estimate of $10.7 - $10.8B.  LULU anticipates earnings per share will be $13.95 - $14.15, down from previous guidance of $14.27 -  $14.47.  EPS for the 3-month period that ended Jul 28 rose to $3.15, compared with $2.68 per share a year earlier.  Sales rose to $2.37B, up about 7% from $2.21B a year earlier.  Beyond total sales, LULU also missed expectations on comparable sales, which grew 2%, well behind estimates of 5.9%.  Comparable sales in the Americas fell 3%.  The trend doesn't appear poised to improve in the current qtr.  LULU expects sales to grow 6-7%, lower than the 9.2% growth that had expected.  However, its profit guidance is roughly in line with what was anticipated.  The expects 3rd-qtr EPS to be $2.68 - $2.73, compared with estimates of $2.70.  The stock fell 78¢.

Lululemon cuts guidance, misses sales estimates after botched product launch

MongoDB (MDB) reported healthy fiscal 2nd-qtr earnings & pushed up full-year guidance.  EPS was 70¢ adjusted vs 49¢ expected & sales were $478M vs $464M.  MDB's revenue grew 13% year over year in the qtr that ended Jul 31.  The qtr's net loss came to 74¢ per share, compared with 53¢ per share, in the same qtr a year ago.  "We believe we are incredibly well positioned to help customers incorporate generative AI into their business and modernize their legacy application estate," CEO Dev Ittycheria said.  The company's Atlas cloud database service enjoyed modestly better consumption than expected.  In the fiscal first qtr, Atlas consumption growth slowed as clients observed more challenging economic conditions & usage in the fiscal 2nd qtr implied that the climate did not change, Ittycheria said.  "We generally have not seen the macro environment impact our ability to win new business, and that was true in Q2 as well," Ittycheria added.  "We realized that this is different from what you hear from some other software vendors."  With respect to guidance, MDB called for fiscal 3rd-qtr adjusted EPS of 65-68¢ on $493 - $497M in revenue.  Analysts had expected 60¢ in adjusted EPS on $478.8M in revenue.  Management nudged up its fiscal 2025 forecast.  MDB now sees $2.33 - $2.47 in adjusted EPS, with $1.92 - $1.93B in revenue.  That's up from the May guidance of $2.15 - $2.30 in adjusted EPS & $1.88 - $1.90B in revenue.  Analysts had predicted $2.26 per share in adjusted earnings, along with $1.90B in revenue.  The stock soared 42+ (18%).

MongoDB shares surge as high as 16% on guidance boost

Gold slipped 1% as the $ & yields firmed after US inflation data matched expectations, but the bullion is set for a monthly gain as a Sep interest rate cut by the Federal Reserve remains in play.  Spot gold fell 0.9% to $2497 per ounce & US gold futures settled 1.3% lower at $2527.  Bullion gained 2% this month after prices rallied to an all-time high of $2531 on Aug 20.  Data earlier in the day from the Commerce Dept showed the personal consumption expenditures (PCE) price index rose 0.2% last month, matching forecasts.  The PCE data confirms inflation is no longer the Fed's main concern, as they have shifted their focus to unemployment, which further validates the potential rate cuts in Sep.  Investors now look ahead to the US non-farm payroll report due next week.  Next week will solidify whether or not there will be a 50- or 25-basis-point interest rate cut at the Sep meeting.  Traders slightly raised bets of a 25-basis-point rate reduction by the Fed next month to 69%, with a 50-bps cut possibility coming down to 31% following the inflation report, according to the CME FedWatch tool.

Gold Drops as Dollar, Yields Firm After US Inflation Report

Oil prices rose as investors weighed supply concerns in Libya & Iraq, although signs of weakened demand, particularly in China, limited gains.  Brent crude futures for Oct, which expire today, were up 39¢ (0.5%) at $80.33 a barrel.  The more actively traded contract for Nov rose 34¢ (0.4%) to $79.16.  US West Texas Intermediate crude futures gained 30¢ (0.4%) to $76.21.  Both benchmarks settled more than $1 higher yesterday on oil supply concerns, up 1.6% & 1.8% respectively for the week so far.  Meanwhile, Iraqi supplies are also expected to shrink after the country's output surpassed its OPEC+ quota.  The Organization of the Petroleum Exporting Countries (OPEC) & allies, (OPEC+), is set to gradually phase out voluntary production cuts of 2.2M bpd over the course of a year from Oct 2024 - Sep 2025.

Oil prices gain on Middle East supply concerns

Stocks finished a wobbly day, week & month on a high note as the latest reading of the Federal Reserve's preferred inflation gauge bolstered rate-cut hopes.  But today the popular stock averages did not stray far from breakeven.  For the fickle month, Dow rose 720 & for the week eased up a modest 387.  Next week, traders on holiday will return & should bring even more excitement to the stock market.  Have a good holiday!

Markets struggle after the PCE inflation report

Dow dropped 106, advancers only slightly ahead of decliners & NAZ is up 46.  The MLP index added 1 to 286 after a strong advance yesterday & the REIT index hardly budged in the 423s.  Junk bond funds had modest buying & Treasuries saw minimal selling, raising yields slightly (more below).  Oil was off 1+ back down to the 74s & gold dropped 21 to 2538 on profit taking.

Dow Jones Industrials

An inflation measure closely watched by the Federal Reserve inched higher in Jul as elevated prices continue to weigh on Ms of Americans.  The Commerce Dept reported that the personal consumption expenditures (PCE) price index rose 0.2% from the previous month.  On an annual basis, prices climbed 2.5%.  Those figures are mostly in line with expectations.  When excluding food & energy prices, which are more volatile, core prices climbed 0.2% for the month & remain up 2.6% when compared with the same time last year.  While the Fed is targeting the PCE headline figure as it tries to bring consumer prices back to 2%, policymakers view core data as a better indicator of inflation.  Both the core & headline numbers point to inflation that is continuing to cool.  Other figures included in the report showed that consumer spending rose 0.5% in Jul compared with a 0.3% increase in Jun, as Americans continued to open their wallets.  Consumer spending has proven surprisingly resilient, despite high prices, steep interest rates & the resumption of federal student loan payments.  The report also showed that personal income rose 0.3% last month, slightly higher than expected.  The data comes as investors look for signs that the Fed is prepared to cut interest rates.  Policymakers, including Chair Jerome Powell, have signaled in recent days that they are ready to start adjusting interest rate policy.  "The time has come for policy to adjust," Powell said last week.  "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks."  Investors widely expect the Fed to reduce rates in Sep amid signs that the economy is weakening & inflation is still easing.  About 30% of traders are actually pricing in an even bigger ½-point rate cut next month as concerns grow about the state of the job market.

Inflation measure closely watched by the Fed rises 2.5% in July

Intel (INTC), a Dow stock, execs are working with multiple advisors to formulate options to address its flagging business.  Advisors will likely present INTC directors with options at an upcoming board meeting in Sep.  The advisors are considering a full range of options, including splitting off & selling businesses.  CEO Pat Gelsinger acknowledged publicly that the company understood investor skepticism & was working to address it.  “We realize we have to operate efficiently with nimbleness, with urgency,” Gelsinger said at Deutsche Bank's Technology Conference.  INTC remains on track to launch its next iteration of its laptop central processor, Lunar Lake, Gelsinger said at the appearance.  But investors don't see a turnaround on the horizon & have pushed the stock down almost 60% this year.  Alongside a disastrous earnings report earlier this month, INTC announced it would lay off 15K workers.  The job cuts, part of a broader focus on slashing expenses, did little to assuage investor dismay.  While Gelsinger said yesterday that the foundry business had roughly a dozen interested customers, the buildout remains costly for INTC.  INTL stock rose 1.87 (9%).

Intel working with bankers to present board with strategic options

The yield on the 10-year Treasury was unchanged as investors digested the latest batch of inflation data.  The yield on the benchmark 10-year note was flat at 3.871% & the yield on the 2-year Treasury rose 2 basis points to 3.91%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Yields ticked higher after the release of the the personal consumption expenditures price index.  It comes after economic data released yesterday further eased recession concerns.  Weekly jobless claims fell from the prior week, while 2nd-qtr gross domestic product was revised higher to 3% growth from an initial 2.8% rate.  Fed Chair Jerome Powell said last week that “the time has come for policy to adjust,” bolstering expectations for a rate cut at the central bank's next meeting.  Powell declined to provide exact indications on the timing or extent of the cut, however.

10-year Treasury yield is flat after key inflation indicator matches expectations

Dow began trading higher, but nervous investors have dragged it well into the red.  Traders are trying to take an upbeat tone going into the end of the month, with recession fears & the early-Aug rout in the rear-view mirror & a long-awaited start to Fed easing just ahead.  PCE inflation levels are closely tracked by the Fed & are watched closely to calibrate the size & pace of interest rate cuts this year.  After Chair Jerome Powell last week made it clear a pivot can be expected in Sep, bets on 0.5% cut have mounted amid signs of strength in the economy.  But the steady level of price pressures in Jul kept a 0.25% move lower in play.

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.

Markets rise even as Nvidia shares decline on results

Dow climbed 306, advancers over decliners better than 2-1 & NAZ advanced 187.  The MLP index gained 4+ to the 282s & the REIT index fell 2+ to 422.  Junk bond funds crawled higher & Treasuries had selling which reduced yields (more below).  Oil rose 1+ to the 76s & gold jumped 16 to 2553 (record territory).

Dow Jones Industrials

Artificial intelligence giant Nvidia (NVDA) 2nd-qtr earnings report, which beat estimates as the company's AI-driven momentum continued.  Analysts expected EPS to come in at 64¢, up 137% from last year, while its revenue was estimated to be $28.7B, up 112% from last year.  EPS came in at 68¢ while revenue was $30B.  Data center revenue, its largest operating segment, was projected to rise by 144% from last year to $25.1B.  The company beat estimates & brought in $26.3B in sales from the segment, an increase of 16% from the prior qtr & 154% from a year ago.  "Hopper demand remains strong, and the anticipation for Blackwell is incredible," NVDA founder & CEO Jensen Huang said of the company's core chip offering & its next-generation product, respectively.  "Nvidia achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI," Huang added.  Analysts had cited some concerns about production delays with the Blackwell AI chips that could push back deliveries & impact its revenues in the next few qtrs.  Huang said that it has started sending out Blackwell samples, but didn't offer a timeline related to its anticipated 2025 ramp-up.  "Blackwell samples are shipping to our partners and customers. Spectrum-X Ethernet for AI and Nvidia AI Enterprise software are two new product categories achieving significant scale, demonstrating that Nvidia is a full-stack and data center-scale platform," Huang said.  "Across the entire stack and ecosystem we are helping frontier model makers to consumer internet services, and now enterprises. Generative AI will revolutionize every industry."  NVDA also issued a forecast for 3rd-qtr revenue that came in above estimates, projecting revenue of $32.5B, plus or minus 2%, for the 3rd qtr, above analysts' estimate of $31.8B.  But the stock fell 3.30.

Nvidia earnings beat Wall Street expectations again amid strong AI demand

Salesforce (CRM), a Dow stock, fiscal 2nd-qtr results that beat estimates & raised its full-year profit outlook.  The company also said CFO Amy Weaver will step down.  She will remain at the company as the CFO until a successor is appointed &, after that, will stay on as an advisor.  CRM will consider internal & external candidates, Marc Benioff, the company's co-founder, chair & CEO, said.  He said it was his idea to have Weaver take over the lead financial role after joining as general counsel in 2013.  Revenue grew 8% year over year during the qtr, which ended on Jul 31.  Weaver pointed to growth in average revenue per user, partly because of a shift to premium products.  EPS was $1.47, up from $1.28 in the same qtr a year ago.  With respect to guidance, CRM called for adjusted fiscal 3rd-qtr earnings of $2.42 to $2.44 on $9.31B to $9.36B in revenue.  Analysts had expected EPS of $2.43 on $9.41B in revenue.  Management called for $10.03 - $10.11 in adjusted fiscal 2025 EPS, with $37.7B to $38B in revenue, which implies growth of 8-9%.  Last qtr's forecast was $9.86-9.94 EPS & revenue of $37.7-38.0B.  The estimate was $9.89 in adjusted EPS, with $37.84B in revenue.  Adjusted operating margin guidance for the full year is now 32.8%, up from 32.5% in May.  "We are assuming that the conditions we've been experiencing over the past few years persist," Weaver said.  Execs have previously pointed to longer sales cycles & scrutiny of budgets.  The stock went up 1.72.

Salesforce beats earnings estimates, CFO Amy Weaver to step down

The 10-year Treasury rose as investors looked ahead to a key inflation report due tomorrow.  The yield on the 10-year Treasury traded nearly 5 basis points higher at 3.886%, while the yield on the 2-year Treasury gained 4 basis points to 3.906%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  It comes as market participants await a fresh batch of economic data, with focus set to turn to the Federal Reserve's preferred inflation gauge tomorrow.  Economic data released today showed that weekly jobless claims fell from the prior week, further easing recession concerns.  In addition, 2nd-qtr gross domestic product was revised higher to 3% growth from an initial 2.8% rate.  US personal consumption expenditures price index will be published tomorrow & the reading could offer more clues on the outlook for interest rates.  Federal Reserve officials use the measure as their main baseline to gauge inflation.  Fed Chair Jerome Powell said late last week that "the time has come for policy to adjust," bolstering expectations for a rate cut at the central bank's next meeting.  Powell declined to provide exact indications on the timing or extent of the cut, however.  Market participants are firmly pricing in a rate cut at the Fed's Sep 18 meeting.  Traders are currently pricing in a 65.5% chance of a 25-basis-point rate cut next month, with 34.5% pricing in a 50-basis-point rate cut, according to the CME Group's FedWatch Tool.

Treasury yields rise as investors agwait key U.S. inflation data

The stock market's performance difficult to understand.  Even though big tech companies are doing well on NAZ, NVDA is not.  Good was just not good enough for its investors.  Meanwhile, Dow & gold are at record levels.  Go figgah!