Markets slide ahead of Powell's speech tomorrow

Dow dropped 114, decliners over advancers 3-2 & NAZ was off 50.  The MLP index added 1+ to the 281s & the REIT index was even in the 415s.  Junk bond funds fluctuated & Treasuries saw selling which raised yields (more below).  Oil rebounded from a 7 month low 1+ to 73 & gold fell 28 to 2518.

Dow Jones Industrials

Closed sales of previously owned homes rose 1.3% in Jul compared with Jun to a seasonally adjusted, annualized rate of 3.95M units, according to the National Association of Realtors (NAR).  That was the first gain in 5 months.  Sales were 2.5% lower compared with the same time last year.  Sales saw the biggest gains in the Northeast & were flat in the Midwest & prices also rose the most in the Northeast.  “Despite the modest gain, home sales are still sluggish,” said Lawrence Yun, NAR's chief economist.  “But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates.”  These sales are based on contracts that were likely signed in May & Jun, when mortgage rates were well over 7% on the popular 30-year fixed loan.  Rates began dropping in Jul & are now hovering around 6.5%.  All-cash offers made up 27% of Jul sales, up from 26% the year before & far higher than the historical norm.  The supply of homes for sale continued to move higher in Jul.  At the end of the month, there were 1.33M homes on the market, an increase of 0.8% from Jun & 19.8% higher than in Jul 2023.  At the current sales pace, that represents a 4-month supply, slightly lower than it was in Jun.  The increase in supply did not, however, help to cool home prices.  The median price of an existing home sold in Jul was $442K, an increase of 4.2% year-over-year.  First-time buyers made up 29% of sales in Jul, unchanged from Jun but down from 30% in Jul 2023.  Historically, these buyers make up closer to 40% of home sales, but affordability has been hit hard in the last 2 years due to fast-rising home prices & higher mortgage rates.  With rates now slightly lower, demand is starting to pick up.  A separate report from Redfin, a real estate brokerage, found requests for tours & other buying services from Redfin agents rose 4% over the last week to its highest level in 2 months.

July home sales break a four-month losing streak as supply rises nearly 20% over last year

The US 10-year Treasury rose as investors looked ahead to remarks from Federal Reserve Chairman Jerome Powell.  The yield on the 10-year Treasury climbed more than 6 basis points at 3.839%, while the yield on the 2-year Treasury added almost 6 basis points to 3.98%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Powell is set to give a speech at the annual Jackson Hole symposium tomorrow.  His comments come after the release of minutes from the central bank's Jul policy meeting.  The minutes showed the “vast majority” of Fed officials “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.”  Market participants are firmly pricing in an interest rate cut at the central bank's next meeting.  Traders are currently pricing in a roughly 66% chance of a 25-basis-point rate cut in Sep, with just over 1/3 pricing in a 50-basis-point rate cut, according to the CME Group's FedWatch Tool.  Jobless claims data released today came in slightly higher than expected.  That can add to a growing view that the labor market is not as strong as once believed, a theory bolstered yesterday when nonfarm payroll growth was revised down by 818K.  That leg up comes after yields slid in the previous day.

Treasury yields rise as traders await Powell remarks

Peloton (PTON) said it is digging itself out of the red & eked out a slight sales increase for the first time in 9 qtrs as it slashed its overall losses.  The beleaguered connected fitness company, which 2 board members have run since former CEO Barry McCarthy resigned earlier this year, saw sales grow by 0.2% during its fiscal 4th qtr.  While only a modest uptick, it's the first time PTON posted year-over-year revenue growth since its 2021 holiday qtr.  The company also indicated it's ready to focus on profitability over growth with significant cuts to its marketing & sales spending & meaningful increases to free cash flow & adjusted EBITDA.  Those cuts helped narrow its quarterly losses to $30.5M from $241.1M in the year-ago period.  For the current qtr, PTON projects sales to be worse than expected but is guiding to higher-than-forecast adjusted EBITDA.  The company said it anticipates sales to be $560-580M, compared with estimates of $609M.  It's expecting to post adjusted EBITDA of $50-60M, compared with estimates of $45M.  For the full year, PTON expects sales to be $2.4 - $2.5B, compared with estimates of $2.7B.  For the 3-month period that ended Jun 30, Peloton significantly narrowed its losses.  The company posted a loss of 8¢ per share, compared with a loss of 68¢ per share a year earlier.  Sales rose to $643.6M, up from $642.1M a year earlier.  That's only a $1.5M increase, but PTON did it at a time when sales are typically a bit slower for the company, because the qtr bleeds into the summer when people are more focused on going out & traveling than working out.  The last time PTON delivered year-over-year sales growth was during its holiday season in 2021, which is typically the company's strongest qtr.  The low priced stock rose 95¢ (28%).

Peloton shares rise more than 15% as turnaround plan takes hold, losses shrink

Investors are weighing how deeply the Federal Reserve might lower interest rates next month on the eve of a key speech by Chair Jerome Powell.  Stocks took a positive tone after minutes from the Fed's last meeting showed several officials were open to a Jul rate cut, signaling a pivot is likely in next month's policy decision.  Mounting hopes for lower rates have already helped markets recoup losses from the early Aug rout.  The Jackson Hole symposium kicks off tomorrow with the market on high alert for any shift in tone from the policymakers when Powell speaks.

Markets inch higher when Fed minutes point to ‘likely’ rate cut in Sep

Dow rose 55, advancers over decliners about 3-1 & NAZ gained 102.  The MLP index was flattish at 280 & the REIT index added 1+ to the 415s.  Junk bond funds were mixed & Treasuries saw more buying which lower yields.  Oil was off 1+ to 72 & gold inched up 3 to 2553 (more on both below).

Dow Jones Industrials 

Federal Reserve officials at their Jul meeting moved closer to a long-awaited interest rate reduction, stopping short while indicating that a Sep cut had grown increasingly probable, minutes showed.  “The vast majority” of participants at the Jul 30-31 meeting “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the summary stated.  Markets are fully pricing in a Sep cut, which would be the first since the emergency easing in the early days of the Covid crisis.  While all voters on the rate-setting Federal Open Market Committee voted to hold benchmark rates steady, there was an inclination among an unspecified number of officials to start easing at the Jul meeting rather than waiting until Sep.  The document stated that “several [meeting participants] observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision.”  In the parlance the Fed uses in its minutes, which do not mention names nor specify how many policymakers felt a certain way, “several” is a relatively small number.  However, the summary made clear that officials were confident about the direction of inflation & are ready to start easing policy if the data continue to cooperate.  The sentiment was 2-fold: Inflation markers had shown price pressures easing considerably, while some members noted concerns over the labor market as well as the struggles that households, particularly those at the lower end of the income spectrum, were having in the current environment.  “With regard to the outlook for inflation, participants judged that recent data had increased their confidence that inflation was moving sustainably toward 2 percent,” the minutes stated.  “Almost all participants observed that the factors that had contributed to recent disinflation would likely continue to put downward pressure on inflation in coming months.”  On the labor market, “many” officials noted that “reported payroll gains might be overstated.”  Earlier today, the Bureau of Labor Statistics reported, in a preliminary revision of the nonfarm payroll numbers from Apr 2023 thru Mar 2024, that gains may have been overstated by more than 800K.  “A majority of participants remarked that the risks to the employment goal had increased, and many participants noted that the risks to the inflation goal had decreased,” the minutes said.  “Some participants noted the risk that a further gradual easing in labor market conditions could transition to a more serious deterioration.”  In its post-meeting statement, the committee noted that job gains had moderated & that inflation also had “eased.”  However, it chose to hold the line on its benchmark funds rate, which is 5.25-5.50% range, its highest in 23 years.

Fed minutes point to ‘likely’ rate cut coming in September

Macy's (M) cut its full-year sales forecast, as the department store operator said it is contending with selective shoppers & more promotions.  The retailer posted a mixed qtr, as it topped earnings expectations but missed on revenue.  Macy's now anticipates net sales of $22.1 - $22.4B, which is lower than the $22.3 - $22.9B range it had previously anticipated.  That also would be a year-over-year decline from the $23.1B it reported for fiscal 2023.  Macy's expects comparable sales, which take out the impact of store openings & closures, to decrease of about 2% to a decline of about 0.5%.  It had previously expected comparable sales to range from a decline of about 1% to a gain of 1.5%.  That metric includes owned & licensed sales, which encompass merchandise that Macy's owns & items from brands that pay for space within its stores, along with its 3rd-party online marketplace.  The department store operator said that the new outlook range “gives the flexibility to address the ongoing uncertainty in the discretionary consumer market.”  CEO Tony Spring said customers aren’t spending as freely across all of Macy's brands, even higher-end department store Bloomingdale's.  “We see that there is definitely a softness, a carefulness, a delay in the conversion of purchasing,” he said.  “And people on the things that they want, the things that are priced sharply, on the newness, they’re responding, but even the affluent consumer is not spending like they were a year ago.”  He added “there’s a lot of noise out there,” which is distracting customers or causing them to hold off on spending, including higher interest rates, inconsistent weather patterns & a busy news cycle.  Net sales fell from $5.13B in the year-ago period.  In the 3-month period that ended Aug 3, Macy's EPS was 53¢, compared with a loss of 8¢ per share in the year-ago period.  Yet even when excluding the weaker stores that Macy's is shutting, sales were lackluster.  Comparable sales for its go-forward namesake brand, which includes the Macy's stores that will remain open & online sales, declined 3.3% on an owned-plus-licensed basis, including the 3rd-party marketplace.  The stock fell 2.30 (13%).

Macy’s cuts sales forecast as department stores struggle to draw shoppers

TJX's (TJX) raised its full-year guidance after posting another qtr of strong sales, but its outlook still fell just short of expectations.  The discounter behind Marshalls, HomeGoods & TJ Maxx is now expecting full-year EPS to be $4.09 - $4.13, compared with estimates of $4.14.  For the current qtr, TJX is expecting EPS to be $1.06 - $1.08, compared with estimates of $1.10.  So far this earnings season, retailers that disappoint with guidance haven’t seen much negative impact to their shares, suggesting investors are prepared for uncertainty in the 2nd ½ of the year ahead of the presidential election & a potential rate cut from the Federal Reserve.  EPS in the 3-month period that ended Aug 3 was 96¢ compared with 85¢ a year earlier.  Sales rose to $13.5B, up from $12.8B a year earlier.  Throughout the fiscal 2024 year, which ended in Feb, the company posted strong sales gains & robust guidance, but investors have been keen to see how it will lap those numbers in the qtrs ahead & if it can keep growing.  During the qtr, consolidated comparable store sales increased by 4% & were “entirely driven by an increase in customer transactions,” indicating more shoppers are coming to its stores.  That jump is ahead of the 2.8% uptick that had expected.  “We see excellent buying opportunities in the marketplace and are strongly positioned to ship fresh and compelling merchandise to our stores and online throughout the fall and holiday selling seasons.  We marked a milestone for our Company in the 2nd qtr by opening our 5000th store,” said Herrman.  “Longer term, we are excited about our potential to capture additional market share in all of our geographies and to continue our global growth”  The stock rose 6.88 (6%).

T.J. Maxx owner raises full-year guidance, posts 5.6% sales gain

Gold traded near a record high as Federal Reserve minutes & a downward revision of US payrolls reinforced expectations that policymakers will cut interest rates in Sep.  Several Federal Reserve officials acknowledged there was a plausible case for cutting interest rates at their Jul 30-31 meeting before the central bank's policy committee voted unanimously to keep them steady.  Swap traders now expect a qtr-point cut next month & a roughly 20% chance for a ½-point reduction.  Gold remains above $2500 an ounce after hitting successive all-time highs in recent sessions.  All eyes will be on Fed Chair Jerome Powell's speech at the Jackson Hole symposium on Fri, when he's expected to set the table for an interest-rate cut while reassuring investors that policymakers can stave off a sharp economic slowdown.  Gold has rallied by more than a 5th this year.  It's also been supported by robust purchases by central banks, increased haven demand, as well as healthy buying of physical bars in the over-the-counter market.  Spot gold rose 0.1% to $2516 an ounce. The Bloomberg Dollar Spot Index was 0.07% lower.

Gold Near Record as Jobs Revision, Fed Minutes Support Rate Bets

Oil prices settled down by $1 a barrel after the gov revised sharply lower a set of employment statistics closely watched by investors.  Brent crude futures settled down $1.15 (1.5%) at $76.05 a barrel & US West Texas Intermediate crude futures settled $1.24 lower or 1.7% at $71.93.  US employers added far fewer jobs than originally reported in the year thru Mar, the Labor Dept reported.  The estimate for total payroll employment for the period from Apr 2023 - Mar 2024 was lowered by 818K.

Oil Settles $1 Down After US Job Data Revised Significantly Lower

Stocks are eyeing a return to recovery from an early Aug sell-off as focus intensifies on the labor market as a factor in the Fed's policymaking, given inflation seems to be subsiding.  The minutes from the Fed meeting, the highlight in PM trading, said that the "vast majority" of policymakers said it would "likely be appropriate to ease policy at the next meeting" if inflation data kept softening.  Earlier today, new data showed the US economy employed 818K fewer people than originally reported as of Mar 2024, showing the labor market may have been cooling long before initially thought.  But economists were pointing out the updated data still reflect a labor market that's softening but not "rapidly deteriorating."  Minutes from the meeting did not inspire inspire a lot confidence by investors.

Markets hover as traders wait for rate cut clues

Dow edged up 11, advancers over decliners 2-1 & NAZ added 41.  The MLP index inched up about 1 to 281 & the REIT index was off 1 to the 412s.  Junk bond funds were little changed & Treasuries had a little buying which reduced yields slightly (more below).  Oil was even in the low 73s & gold slid back 8 to 2541 on profit taking.

Dow Jones Industrials

The US economy created 818K fewer jobs than originally reported in the 12-month period thru Mar 2024, the Labor Dept reported.  As part of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics (BLS) said the actual job growth was nearly 30% less than the initially reported 2.9M from Apr 2023 thru Mar of the following year.  Traders had been watching the numbers closely, with many economists expecting a sizeable reduction in the originally reported numbers.  Even with the revisions, job creation during the period stood at more than 2M, but the report could be seen as indication that the labor market is not as strong as the previous BLS reporting had made it out to be.  At the sector level, the biggest downward revision came in professional & business services, where job growth was 358K less.  Other areas revised lower included leisure & hospitality (-150K), manufacturing (-115K) & trade, transportation & utilities (-104K).  Within the trade category, retail trade numbers were cut by 129K.  A few sectors saw upward revisions, including private education & health services (87K), transportation & warehousing (56K) & other services (21K).

Nonfarm payroll growth revised down by 818,000, Labor Department says

Target (TGT), a Dividend Aristocrat, sales grew about 3% in its fiscal 2nd qtr, a return to growth after a prolonged stretch of sluggish sales & squeezed profits.  The discounter beat earnings & revenue expectations, as shoppers made more visits to TGT stores & website, & bought more discretionary items like clothing.  Even so, the company stuck by its previous full-year sales forecast & struck a cautious note.  TGT expects comparable sales for the full year to be flat to up 2%, but said it now expects the increase will likely be in the lower ½ of the range.  TGT raised its profit guidance, however, saying it expects adjusted EPS of $9 - $9.70, up from the previous guidance of $8.60 - $9.60.  COO Michael Fiddelke said TGT took a “measured approach” with its outlook because it's hard to predict consumers' mindsets & the state of the economy in the coming months.  “While we’ve been pleased with our performance so far this year, and our view of the consumer remains largely the same, the range of possibilities and the macroeconomic backdrop in consumer data and in our business remains unusually high,” he said.  EPS jumped to $2.57 from $1.80 in the year-ago qtr, for a more than 40% year-over-year increase.  Total revenue rose from $24.8M in the prior year.  Comparable sales climbed 2% in the qtr, the first time in 5 qtrs that TGT posted a gain.  The industry metric tracks sales online & at stores open at least 13 months.  Digital sales drove most of those gains, growing 8.7% in the qtr, as more customers used same-day services like curbside pickup & home delivery.  Comparable store sales rose slightly, up 0.7%.  Customer traffic across its website & store grew 3% in the 2nd qtr compared with the year-ago period.  The average size of customers' shopping baskets, however, declined slightly.  Discretionary sales, which have been under pressure across the retail industry, improved.  TGT said apparel sales, for instance, grew more than 3% in the qtr compared with the year-ago period.  The stock jumped 16.23 (11%).

Target shares spike as profits rise, despite cautious sales outlook

The 10-year Treasury  yield was little changed as investors awaited the release of minutes from the latest Federal Reserve meeting.  The yield on the 10-year Treasury was down by less than 1 basis point at 3.818% & the 2-year Treasury yield slid to 3.966% after dipping by more than 3 basis points.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors looked to the release of minutes from the Federal Reserve's last meeting, at which it left rates unchanged but hinted at a potential Sep interest rate cut.  Since that meeting, uncertainty about the economy & worries about an economic slowdown have at times raised concerns about whether the Fed should have already begun cutting interest rates.  However, retail sales figures & weekly initial jobless claims data last week somewhat eased investor concerns.  Markets are firmly pricing in an interest rate decrease for Sep.  CME Group's FedWatch tool showed that traders are more so questioning how big of a cut comes.

10-year Treasury yield holds steady ahead of Fed meeting minutes release

Stocks are eyeing a return to recovery from an early Aug sell-off as focus intensifies on the labor market as a factor in the Fed's policymaking, given inflation seems to be subsiding.  But overall, investors are treading cautiously ahead of Jerome Powell's appearance at the Jackson Hole symposium on Fri.  Expectations for a Sep rate cut are running high & his comments will be closely watched for signs a 0.5% reduction is on the table.  The jobs data above did not disturb investors as it makes rate cuts more likely.

Markets ease lower while gold reaches new record highs

Dow was in the red just about all day & finished down 61, decliners over advancers 2-1 & NAZ was off 59.  The MLP index pulled back 4 to 281 & the REIT index was even in the 413s.  Junk bond funds crawled higher & Treasuries continued in demand bringing lower yields.  Oil slid to the high 73s & gold rose 10 to 2551 for another record (more on both below).

Dow Jones Industrials 

General Motors (GM) premium GMC brand wants to become the leader in all-electric truck sales for US consumers as it launches its new electric Sierra pickup.  The Sierra EV joins electric versions of the Hummer, including an SUV and pickup, in GMC's electric “truck” lineup.  The automaker is expecting the Sierra will become GMC's top seller for its EV lineup as lower-priced variants become available next year.  A roughly $100K “Edition 1″ of the vehicle recently started reaching customers.  “We believe this is a totally different proposition than anything that’s been launched by anybody else before. So, we’re confident about the demand,” Duncan Aldred, global VP of GMC said.  GMC did not disclose a timeline for when the brand expects to lead retail electric truck sales.  But to do so, it will have to outsell its sibling Chevrolet Silverado EV as well as competitors led such sales with its Cybertruck in the 2nd qtr.  Aldred said he believes there will be cross-shopping between the Sierra & Cybertruck, but he doesn't necessarily believe they are primary competitors, despite the vehicles being similarly priced.  He said many Cybertruck buyers already own Teslas (TSLA), while roughly 80% of GMC's reservation holders for the Sierra previously had non-GMC vehicles.  Automakers such as GM rushed to release all-electric pickup trucks, in part because TSLA planned to build such a vehicle.  That led to fears that the US.  EV leader would dominate the truck market, which is crucial to the Detroit automakers, like it did for electric cars.  But EV adoption has been slower than many expected & the electric truck market remains in its infancy.  The all-electric pickup truck market was roughly 38K vehicles during the first ½ of the year, including retail & fleet sales, according to Motor Intelligence.  That compares with the more than 1M traditional or hybrid full-size pickup trucks sold this year thru  Jun.  GM stock was up 21¢.

GMC expects to outsell its electric truck competitors as it launches new Sierra pickup

Eli Lilly's (LLY) highly popular weight loss drug reduced the risk of developing Type 2 diabetes by 94% in obese or overweight adults with prediabetes compared with a placebo, according to initial results from a long-term study.  The late-stage trial on tirzepatide, the active ingredient in the company's weight loss injection Zepbound & diabetes drug Mounjaro, also found that patients experienced sustained weight loss over the roughly 3-year treatment period.  Adults on the highest weekly dose of the drug saw a 22.9% decrease in body weight on average after 176 weeks, compared with 2.1% for those who received a placebo.  The results suggest that treatment could meaningfully delay a potential diagnosis for people with prediabetes, or those with blood sugar levels that are higher than normal but not high enough to be classified as Type 2 diabetes.  More than 1 in 3 Americans have prediabetes, according to the latest gov data, which health experts say can be reversed with lifestyle changes such as diet and exercise.  People who are overweight or have obesity are at a higher risk for prediabetes.  The new data also shows the potential long-term health benefits of taking a buzzy class of obesity & diabetes medications called GLP-1s, which mimic hormones produced in the gut to tamp down appetite and regulate blood sugar.  As LLY's Zepbound & Mounjaro have skyrocketed in popularity over the last 2 years, the companies have raced to study other clinical uses for their drugs.  The results are “another reminder of the huge investment which Lilly has made to prove not only do you lose weight but when you do on this medicine, it converts to health benefits. This is our fourth study this year that does such a thing,”  CEO David Ricks said, adding that tirzepatide has shown promise as a treatment for heart failure, sleep apnea & fatty liver disease in 3 other clinical trials.  LLY tested tirzepatide in more than 1000 adults over 176 weeks in the phase 3 trial, followed by a 17-week period where patients stopped treatment.  It is the longest completed study on the drug to date.  The stock jumped 28 (3%).

Eli Lilly’s weight loss drug slashes the risk of developing diabetes in long-term trial

Boeing (BA), a Dow stock, said that it has paused flight tests of its 777X after it found damage in a structure of 1 of the wide-body aircraft.  The company discovered the damage to the custom part, which it said is between the engine & the airplane structure, during scheduled maintenance.  It has since grounded the 3 other 777-9 airplanes in its test fleet.  No other flight testing was scheduled for the other aircraft.  “Our team is replacing the part and capturing any learnings from the component and will resume flight testing when ready,” BA said.  It has informed the Federal Aviation Administration & its customers, which have ordered 481 of the 777X.  It wasn't immediately clear whether the grounding & issue would impact certification & delivery of the new wide-body jetliners, which are slated for 2025, about 5 years behind schedule.  BA began flight tests of the aircraft with the FAA in Jul, a major milestone.  The stock dropped 7.55 (4%).

Boeing pauses tests of 777X aircraft after finding damage to one of the jets' structures

Gold prices extended their record run, holding firm above the key $2500 level, driven by a weaker $ & growing investor confidence that the Federal Reserve will likely cut interest rates in Sep.  Spot gold rose 0.3% to $2510 per ounce, after hitting an all-time high of $2531 earlier in the session & US gold futures settled 0.4% higher at $2550.  The $ index sank to a 7-month low, making gold more attractive for other currency holders, while benchmark US 10-bond yields slipped.

Gold Extends Record Rally On Dollar Weakness, Rate-Cut Bets

Crude futures fall for a 3rd straight session with demand concerns & easing geopolitical risk premium keeping sellers at the forefront.  The oil market's recent poor form is continuing this week as a ceasefire in Gaza grows more likely & China demand weakness shows little sign of recovery.  If the market fundamentals don't break this bearish trend soon, OPEC+ may be hesitant to unwind their voluntary cuts anytime soon.  Sep WTI goes off the board at $74.04 a barrel, down 0.4%, while the most active Oct contract falls 0.7% to $73.17 & Brent settles down 0.6% at $77.20 a barrel.

Oil Futures Extend Losses on Demand Concerns

The stock market had a quiet day as some traders are away in this semi-holiday period prior to Labor Day.  While stocks roar ahead with the popular averages at or near records, gold continues in demand by investors who have negative outlooks for stocks.  It's amazing, but this relationships has lasted for months.

Markets slide after Harris proposes higher corporate taxes

Dow was off 124 & sliding lower, decliners over advancers better than 2-1 & NAZ slipped back 56.  The MLP index fell 3+ to the 283s & the REIT index dropped 1+ to the 412s.  Junk bond funds inched higher & Treasuries saw buying which reduced yields.  Oil was pennies lower in the 74s & gold added 6 to 2548 (record territory).

Dow Jones Industrials

Lowe's (LOW) cut its full-year forecast, as the retailer's quarterly sales declined & it projected weak home improvement spending in the 2nd ½ of the year.  The company now projects total sales of $82.7 - $83.2B for the full year, compared with the $84 - $85B that it previously expected & expects comparable sales to fall by 3.5-4%, compared with its prior forecast of a decline of 2-3%.  It anticipates adjusted EPS will be $11.70 - $11.90, compared with the prior outlook of $12 - $12.30.  CEO Marvin Ellison said consumers are waiting for the Federal Reserve to cut interest rates.  He added shoppers also under pressure from the economic backdrop.  “Inflation remains high,” he said.  “And big-ticket purchases are being delayed as customers sit back and wait for interest rates to fall.”  Fed Chair Jerome Powell has signaled a rate cut could come as soon as Sep, but Ellison said it's difficult to predict how soon home improvement activity would gain momentum again after that.  About 90% of LSS customers are homeowners & most have a fixed 30-year mortgage rate of less than 4%.  That explains customers' hesitance to get a new mortgage or take out a loan for a major home project with higher interest rate, he added.  LSS has not seen “a dramatic shift one way or another in overall consumer sentiment,” but is waiting for housing turnover to go up.  In the 3-month period that ended Aug 2, EPS fell to $4.17 compared with $4.56 per share, in the year-ago period.  LOW got a $43M pretax gain from the sale of its Canadian retail business in 2022, which lifted its earnings in the 2nd qtr.  That boosted the EPS by 7¢.  Excluding the gain, EPS was $4.10.  Net sales dropped from $24.96B in the prior year.  It posted a year-over-year sales decline for the 6th straight qtr.  Comparable sales, an industry metric that takes out 1-time factors like store openings & closures, dropped 5.1%, as the company said customers took on fewer discretionary home projects & unfavorable weather hurt sales of outdoor & seasonal items.  Those declines were partially offset by growth in its online business & sales to home professionals, such as contractors & electricians.  For pros, comparable sales rose by mid-single digits and online sales increased by 2.9%.  The stock was off 3.01.

Lowe’s cuts full-year outlook; expects weaker home improvement sales

VP Harris' economic policy roll out continued as her campaign said that if she wins the presidency she would push to raise the corp rate to 28% from its current level of 21%.  Harris campaign spokesperson James Singer said the policy is "a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share."  The US corp tax rate was 35% when former Pres Trump & congressional Reps enacted the Tax Cuts & Jobs Act (TCJA) in 2017.  The law lowered the corp tax rate to 21% while also reducing personal income taxes for most taxpayers.  Harris' proposal aligns with Pres Biden's budget proposal for fiscal year 2025 that was released earlier this year & had the corp tax rate rising to 28%.  "Raising the corporate income tax rate to 28 percent is the largest driver of the negative effects, reducing long-run GDP by 0.6 percent, the capital stock by 1.1 percent, wages by 0.5 percent, and full-time equivalent jobs by 128,000," the Tax Foundation wrote.  The organization's analysis estimated that raising the corp tax rate to 28% would bring in over $1T in tax revenue over the 2024-2034 period.  The nonpartisan Committee for a Responsible Federal Budget (CRFB) also analyzed the FY2025 Biden-Harris budget proposal, which found that raising the corp income tax rate from 21% to 28% would bring in $1.425T in tax revenue over 2024-2034.  Raising the corp income tax rate to 28% would push that rate above the worldwide average, which stood at an average of 23% on average across 181 jurisdictions as of Dec 2023, according to the Tax Foundation.  When weighted by GDP, it found the average corp tax rate was 25.7%.  Harris' announcement comes after she unveiled part of her economic agenda on Fri that CRFB estimated would cost at least $1.7T over a decade, potentially rising to $2T if certain provisions supporting the housing industry were made permanent.

Harris calls for raising corporate tax rates to 28%

Treasury yields were little changed as investors wait for commentary from the Federal Reserve on inflation, interest rates & the economy.  The yield on the 10-year Treasury was less than 1 basis point higher at 3.875% & the 2-year Treasury yield nudged 1 basis point lower to 4.057%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Traders are gearing up for a Fed-focused week.  There's the release of Federal Reserve Jul meeting minutes tomorrow, followed by the start of the central bank symposium at Jackson Hole, Wyoming, on Thurs.  The week will be rounded off by a highly anticipated speech by Fed Chair Jerome Powell at Jackson Hole.  While analysts don't expect firm guidance on the path ahead for interest rates, they are looking for a sense of Powell's latest thinking on US inflation & the economy.  His remarks come after data showed annualized inflation hit 2.9%, while Jul retail sales & weekly initial jobless claims boosted sentiment last week.  These events come as market participants become increasingly confident that the central bank will soon begin cutting interest rates.  Indeed, Fed funds futures are pricing in a 100% probability that the central bank decreases the borrowing cost at its Sep meeting, according to CME's Fed Watch tool.

Treasury yields hover as investors await Fed updates

Stocks are marking time after notching their longest rally this year, amid optimism that Jerome Powell will signal the Federal Reserve is open to a deeper cut when it starts lowering interest rates.  Meanwhile Harris' proposal to raise corp taxes does not warm the hearts of investors & the stock market is overbought after an 8 day rally.

Markets gained for an 8th straight session as recovery rally continues

Dow climbed 236 (near session highs), advancers over decliners about 3-1 & NAZ was up 245.  The MLP index was 1 higher to the 284s & the REIT index rose 2+ to the 413s.  Junk bond funds fluctuated & Treasuries continued to see modest buying which lowered yields.  Oil dropped 2+ to the 74s & gold added 4 to 2542 (more on both below).

Dow Jones Industrials 

In another sign of cracks forming in the US labor market, a New York Federal Reserve survey showed a slide in people reporting they are employed, a surge in those looking for work & growing dissatisfaction with pay.  The thrice-yearly measure of labor activity, confidence & satisfaction reflected growing concern in Jul about job security & an increase in those expecting to work past typical retirement age.  Workers are still looking for higher starting salaries but are getting lower offers.  The results come with the Fed policymakers watching the developments closely for clues about where things are headed for the US economy.  Among the findings was that, of those who were employed at the time of the last survey in Mar, 88% still had jobs, the lowest in data that goes back to 2014.  Similarly, those who expected to become unemployed rose to 4.4%, a 0.5 percentage point increase from a year ago & the highest in the survey's history.  Moreover, the level of those searching for a new job in the previous 4 weeks popped to 28.4%, up 9 percentage points from a year ago & another historic high going back to 2014.  On wages, satisfaction with current compensation dropped to 56.7%, down more than 3 percentage points from the same period in 2023.  Satisfaction with benefits tumbled to 56.3%, off more than 8 points from a year ago, while satisfaction with opportunities for promotion slid to 44.2%, down from 53.5% last year, & was most pronounced among women, those without a college degree & respondents with household incomes less than $60K.  The typical wage offering for full-time jobs in the past 4 months declined slightly to $69K while the average “reservation wage,” or the minimum level workers would accept for a new job rose to $81K, up about $2500 from a year ago but fractionally below the record high in the last survey.  Finally, the expected likelihood of working past age 62 nudged up to 48.3% of respondents & increased to 34.2% of those saying they expect to work past 67, an increase of more than 2 percentage points.

Fed survey shows lows in employment, worries about finding work and dissatisfaction with pay

The Federal Reserve will cut interest rates by 25 basis points at each of the remaining 3 meetings of 2024, 1 more reduction than predicted last month, according to a slim majority of economists polled who said a recession is unlikely.  The change in Fed rate cut calls follows a weaker-than-expected Jul US jobs report, which encouraged interest rate futures traders to price in as much as 120 basis points of reductions in 2024 earlier this month.  That pricing has reduced to roughly 100 now.  Investors also said a violent, but brief market sell-off also was a driver of aggressive rate cut calls, related to the unwinding of large leveraged positions as a result of a sudden, sharp rise in the Japanese ¥.  Although some Fed officials have hinted rate cuts are coming, most economists in the poll were not expecting a rapid series of rate cuts.  Recent data, including last week's strong retail sales report, suggests the economy is performing relatively well even as inflation recedes. The central bank will cut the federal funds rate by 25 basis points in Sep, Nov & Dec taking the range to 4.50%-4.75% by end-2024, according to 54% of those polled.  Markets, which were earlier betting on a ½-percentage-point cut in Sep, are currently pricing around 70% probability of a qtr percentage point cut next month.  34 of those polled, predicted 2 rate cuts this year & 1 respondent forecast only 1 rate reduction.  11 economists of the 101 expected the Fed to cut rates by 100 basis points or more.

Fed is predicted to deliver three quarter-point rate cuts this year

California Gov Gavin Newsom has signed 10 new bills into law that aim to combat retail crime in the state.  The package includes new laws that crack down on shoplifting, theft from a vehicle, organized theft & online marketplaces where these stolen goods are sometimes resold.  The new laws come after retailers have called on both local & federal govs to do more to combat retail theft, citing it as a growing challenge that’s impacted profits, customers & staff.  1 of the bills in the package establishes tougher penalties for middlemen in organized retail crime rings.  That bill establishes additional prison time & fines for the sale, exchange or return of stolen property — the bread & butter of retail resale crime rings.  Before to the law's passage, those charged with being involved in organized retail crime rings could face up to 3 years in prison.  Critics said that sentence & penalty were not enough of a deterrence.  Newsom said the law was designed to go after middlemen.  Theft & organized retail crime rings like that of Mack's “California Girls” have been cited by retailers as a reason for lower profits, difficulty in hiring & retaining staff, & the degradation of the in-store experience.  Others have countered these claims, saying that retailers are overstating the impact of theft & downplaying the operational issues behind lower profits.  Commercial burglary & commercial robbery rates in California have been steadily rising over the past few years, according to data  from the Public Policy Institute of California.  Shoplifting, although still well below pre-pandemic levels, is seeing an increase as well.  Since Jan, the California Highway Patrol's Organized Retail Crime Task Force has made 884 arrests & recovered more than 250K stolen items valued collectively at over $7.2M, according to the press release announcing the new legislation.

California cracks down on organized retail crime with new package of laws

Gold was subdued after piercing the $2500 ceiling in the previous session, as investors booked profits from the record run & positioned for more cues from the Federal Reserve & developments in the Middle East.  Spot gold was down 0.2% at $2501 per ounce, shy of the record high of $2509 hit on Fri & US gold futures settled 0.1% higher at $2541.  The focus will turn to minutes from the Fed's last policy meeting this Wed & Chair Jerome Powell's speech at an economic symposium in Jackson Hole on Fri.  One analyst said gold could rise further in the coming months, likely reaching $2600/oz by end-year, adding all eyes will be on any indication of an imminent rate cut from Powell.

Gold Subdued After Record Run as Traders Await Cues From Fed

Oil fell the most in more than 2 weeks, with the lackluster demand outlook for the world's 2 largest economies outweighing geopolitical tensions in the Middle East.  West Texas Intermediate dropped 3% to settle near $74 a barrel.  Prices have dropped amid signs of softness in China, the biggest oil importer, as economic growth has slowed & the decarbonization of the transportation sector has eroded some fuel demand.  The positive correlation between oil & equity indices broke down which is underlining the bears' dominance & selling is intensifying as crude prices approach key technical levels.  Meanwhile, traders are awaiting a potential retaliatory attack by Iran on Israel.  Ceasefire efforts are being hampered by fresh disagreements between Israel & Hamas, & Iran-backed Palestinian groups claimed responsibility for what they said was a "suicide mission" in Tel Aviv yesterday.  Elsewhere, production at Libya's Waha oil field has returned to normal levels of about 300K barrels a day after pipeline maintenance was completed earlier than expected.  Its Sharara field, however, remains offline & its central bank has been pulled into a dispute between the OPEC nation's rival govs.  WTI for Sep dropped $2.28 to settle at $74.37 & Brent for Oct settlement fell $2.02 to settle at $77.66.

Oil Slumps as China Demand Fears Ignite ‘Bearish Dominance'

Stocks consolidated last week's strong gains as a measure of calm returns to a market previously whipsawed by worries about a potential recession.  Last week's rally recouped the losses stacked up in an early Aug sell-off as investors fretted about cracks in the economy.  Those concerns that have since been eased by improving economic data.

Markets edge higher as investors await Fed’s Jackson Hole conference

Dow went up 189, advancers over decliners 3-1 & NAZ gained 54.  The MLP index added 2+ to the 285s & the REIT index was up 2+ to the 213s.  Junk bond funds hardly budged & Treasuries had a little buying which reduced yields slightly (more below).  Oil slid lower in the 76s & gold crawled up 3 to 2540.

Dow Jones Industrials

General Motors (GM) is laying off more than 1000 salaried employees globally in its software & services division following a review to streamline the unit’s operations.  The layoffs, including roughly 600 jobs at GM’s tech campus near Detroit, come less than 6 months after leadership changes overseeing the operations, including former Apple (AAPL) exec Mike Abbott leaving the automaker after less than a year in Mar due to health reasons.  “As we build GM’s future, we must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact,” a GM spokesman said.  “As a result, we’re reducing certain teams within the Software and Services organization. We are grateful to those who helped establish a strong foundation that positions GM to lead moving forward.”  The layoffs represent about 1.3% of the company’s global salaried workforce of 76K as of the end of last year.  That included about 53K US salaried employees.  The cuts come as automakers attempt to reduce costs &, in many instances, employee headcount amid fears of an industry downturn, & as they're spending Bs of $s on emerging markets such as all-electric vehicles & so-called software-defined vehicles.  The stock went up 3¢.

GM lays off more than 1,000 salaried software and services employees

Whoever wins the White House in Nov will need to put 3 policy items at the top of the "To Do" list, according to the nation’'top economists.  "A majority of panelists identifies budget deficits and immigration reform as the top two policy issues facing the next administration," said National Association for Business Economics (NABE) Pres Ellen Zentner, chief economic strategist & global head of thematic & macro investing for Morgan Stanley Wealth Management.  NABE's Aug survey also listed the overall economy as the 3rd priority.  59% of participants listed budget deficits as the #1 issue.  The US borrowed over $1.5T over the first 10 months of the fiscal 2024 year, including more than $240B last month, according to the Congressional Budget Office's Monthly Budget Review.  Maya MacGuineas, pres of the Committee for a Responsible Federal Budget, urged the next pres not to waste time in confronting these issues.  "Our fiscal trajectory cannot be left on autopilot – the stakes are far too high and the consequences far too steep to leave our national debt climbing in perpetuity," she warned.  The national debt, which measures what the US owes its creditors — stands at over $35T thru last week, according to the Treasury Dept.  4 decades ago, it averaged just over $900B.  "Considering the sheer size of the challenges we already face – interest costs on course to exceed our defense and Medicare budgets, deficits barreling toward $2 trillion, and no plan in the works to turn things around – how can we afford to sit idle any longer?" she added.  On Fri , VP Kamala Harris unveiled her economic plan coined "Agenda to Lower Costs for American Families."  The broad plan included $25K for first-time homebuyers, multiple housing affordability measures & an expansion of the Child Tax Credit & Earned Income Tax Credit, among other initiatives.  Following the release, the Committee for a Responsible Federal Budget (CRFB) found that these plans would increase federal budget deficits by $1.7T over the next decade.

U.S. economists list top election issues: NABE

Treasury yields were little changed, with the release of Federal Reserve meeting minutes & the closely watched central bank symposium at Jackson Hole on the agenda this week.  The yield on the 10-year Treasury slid nearly 2 basis points lower to 3.877% & the 2-year Treasury yield was near flat at 4.062%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors are still digesting last week's release of US retail sales figures for Jul & weekly initial jobless claims, which were both better than expected.  The figures helped ease recent concerns about the health of the US economy, boosting global stock markets.  Markets continue to fully price in a Fed rate cut in Sep, though they have slashed the odds of a 50 basis point reduction to just 26.5%, according to CME Group's FedWatch tool.  Looking ahead, investors will monitor the release of minutes from the Fed's Jul meeting minutes on Wed.  That comes ahead of the Jackson Hole symposium, which kicks off on Thurs.  Fed Chair Jerome Powell will deliver a speech Fri at the annual event, which attracts economists, monetary policymakers & academics from around the world.

Treasury yields dip ahead of Fed minutes and Jackson Hole

Stocks were broadly steady after posting their best week in a year as investors began counting down to a speech by Fed Chair Jerome Powell at Jackson Hole that could reset rate cut expectations.  Calm returned to a market previously whipsawed by worries about a potential recession.  Last week's rally recouped the losses stacked up in an early Aug sell-off as investors fretted about cracks in the economy, concerns that have since been eased by encouraging inflation & consumer spending data.

Markets higher as stocks have best week of the year while gold soars

Dow went up 96 advancers over decliners about 2-1 & NAZ added 37.  The MLP index jumped 5+ to the 282s & the REIT index was off 1 to 410s.  Junk bond funds inched higher & Treasuries continued in demand, which reduced yields.  Oil fell 1+ to the 76s & gold soared 49 to 2541 (more on both below).

Dow Jones Industrials 

Mortgage rates are still uncomfortably high for many would-be homebuyers & sellers, but recent declines have contributed to a significant boost in demand for refinancing.  The Mortgage Bankers Association (MBA) reported that refinancing applications soared 35% last week, when rates for the average 30-year & 5-year fixed-rate mortgages hit their lowest point in more than a year, according to Freddie Mac.  The surge in refinancing demand was the driving force behind the increase in overall demand for mortgage applications, which was up 15% on the week.  For comparison, purchase applications only increased by 3%.  Year-over-year, refinancing demand was up 118%.  There was a particular jump in refinance applications for VA loans, which were up 77% from last week.  "Given the bond market’s sensitivity to data, this should only be a temporary bump in refinance applications, as mortgage bond prices have come down about 0.625 points from their highs on August 2nd," said Emily Overton, Capital Markets Analyst at major VA lender Veterans United Home Loans.  Overton noted that, according to industry data, it's estimated that approximately 200K VA loan borrowers have a mortgage rate of 7% or higher.  The latest data from Freddie Mac showed that the average 30-year fixed rate mortgage is at 6.49% this week.  The surge in refinancing demand was the driving force behind the increase in overall demand for mortgage applications, which was up 15% on the week.  For comparison, purchase applications only increased by 3%.  According to Holden Lewis, NerdWallet's mortgage expert, the surge in refinances over the past few weeks is a direct response to the sharp decline in interest rates rather than folks looking to cash out their equity.  Most of the jump in refinancing comes from what are called rate-and-term refinances," Lewis said.  "These are homeowners who merely want to snag a lower monthly payment on their house. They aren't looking to pay off high-rate credit card debt."  Still, he noted, "Plenty of people do refinance their mortgages for more than they owe so they can pay off their credit cards and other high-interest debt."

Mortgage refinancing demand surges as rates fall for second straight week

US consumer sentiment rose in Aug, driven by developments in the race for the White House, while inflation expectations remained unchanged over the next year & beyond, a survey showed.  The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 67.8 this month, compared to a final reading of 66.4 in Jul.  The forecast had forecast a preliminary reading of 66.9.  In terms of the Nov 5 US presidential election, the survey noted that sentiment for those who identified as Dems jumped 6% in the wake of Pres Biden's decision to drop out of the race & VP Kamala Harris' emergence as the party's presidential nominee, the first rise since Mar.  For Reps, sentiment declined 5% in Aug to the lowest level since last Nov.  Sentiment among those who self-identified as independent voters, whose views of the economy so far this year have more closely aligned with the sour view of Reps, rose 3%, the first increase since Jan.  The survey's reading of 1-year inflation expectations was unchanged at 2.9% in Aug, matching the reading in Jul.  Its 5-year inflation outlook remained at 3.0% for the 5th straight month.  Earlier this week, an alternative sentiment survey run by the New York Federal Reserve showed medium-term inflation expectations eased substantially among consumers in Jul, even as their near- & longer-term outlooks for price pressures held steady.

US consumer sentiment rises in August; inflation expectations steady

On a recent weekday morning, John Case heard a familiar buzzing outside his quiet suburban home in College Station, Texas. He recognized it immediately as 1 of Amazon's (AMZN) Prime Air drones, whizzing by on its delivery route to unload small packages of batteries, vitamins & dog treats.  “It sounds like a giant hive of bees,” Case, a semi-retired orthodontist, said.  “You know it’s coming because it’s pretty loud.”  Case has lived in College Station for the past 40 years.  The drones are a common sight when he & his wife go on their regular walks around the neighborhood.  Nurses, police officers & firefighters who work the nightshift talk about it disrupting their sleep during the day.  Noise complaints are just the latest challenge for AMZN's drone program that's been struggling to get off the ground since the company started testing deliveries in 2022.  A mix of regulatory hurdles, missed deadlines & layoffs last year, coinciding with widespread cost-cutting efforts by CEO Andy Jassy, has halted progress of the ambitious service, which was conceived of by AMZN founder Jeff Bezos more than a decade ago.  As AMZN prepares to scale up Prime Air & expand it to more areas, it's encountering another reason why that won't be so easy.  In a Jul letter to the Federal Aviation Administration, College Station Mayor John Nichols wrote that residents in his city, home to Texas A&M University, have grown tired of the drones loudly buzzing near their homes.  “Since locating in College Station, residents in neighborhoods adjacent to Prime Air’s facility have expressed concern to the City Council regarding drone noise levels, particularly during take-off and landing, as well as in some delivery operations,” Nichols wrote.  His letter followed a proposal  from AMZN to the FAA to allow the company to increase deliveries to 469 flights per day, up from its current level of 200 flights per day.  AMZN is asking for the ability to operate between 7 AM - 10 PM, rather than being limited to daylight hours as the program is today, & to expand its delivery area to up to 174 square miles surrounding the company's drone port, up from its current operating range of 44 square miles.  If AMZN gets its wish, there would be up to 940 combined takeoffs & landings, all so the drones can deliver 1 package at a time, weighing no more than 5 pounds.  The stock fell 53¢.

Amazon’s troubled drone delivery program faces latest challenge in Texas: Annoyed residents

Gold prices soared to an all-time high as the $ weakened on growing expectations for an interest-rate cut from the Federal Reserve in Sep & as tensions in the Middle East bolstered demand for bullion.  Spot gold was up 1.7% to $2498 per ounce, after hitting a record high of $2500 earlier & US gold futures settled 1.8% higher at $2537.  Bullion rose 2.8% this week.  The $ index fell 0.4% & posted a 4th week of losses, making gold more appealing for buyers overseas.  Federal Reserve Chair Jerome Powell is scheduled to deliver remarks on the economic outlook next Fri, the first full day of the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming.  The Jul releases of the producer price index & consumer price index this week indicated inflation was subsiding, which could keep the Fed on track for a 25-basis-point rate cut next month.

Gold Rallies To Record High On Softer Dollar, Rate-Cut Expectations

West Texas Intermediate (WTI) crude oil slumped on concerns over the health of China's economy & easing geopolitical worries.  West Texas Intermediate crude for Sep closed down 1.51 to settle at $76.65 per barrel, while Oct Brent crude, the global benchmark, was last seen down $1.02 to $80.02.  The drop comes as China, #1 importer of crude oil, released the latest in a series of weak economic reports as its economy continues to falter amid a debt crisis linked its real-estate sector, high youth unemployment & tepid consumer spending.  The weak performance from the world's 2nd-largest company comes as concerns over a wider Middle Eastern war ebb as Iran continues to hold off from its promise to retaliate against Israel for the assassinations earlier this month of key leaders in the Hezbollah & Hamas militant groups.  Iran indicated it is waiting as ceasefire talks to end Israel's war on Hamas in Gaza intensify & the Biden Administration pushes for an end to the conflict.

WTI Oil Closes With a Loss as China's Economy Continues to Weaken and Geopolitical Tensions Ease

Stocks were modestly higher today as consumer sentiment ticked higher in Aug.  Once again, stock averages & gold are at or next to record highs.  For the week, Dow rose 1162.