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.
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Dow Jones Industrials
Inflation Measure Closely Watched by the Fed rises 2.5% in July
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.
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.
