Dow fell 191 with selling into the close, decliners over advancers 5-4 & NAZ gave back 162.  The MLP index hovered in the 236s & the REIT index added 1+ to the 373s.  Junk bond funds inched higher & Treasuries continued to have limited buying which lowered yields.  Oil climbed 1+ to the 84s & gold was off 10 to 1949 (more on both below).

AMJ (Alerian MLP Index tracking fund)

US Mortgage Rates soared to the highest level in 9 months this week following the surprise decision by Fitch Ratings to downgrade the nation's credit score.  The Mortgage Bankers Association (MBA) reported that the average Rate on the 30-year loan climbed to 7.09% from 6.93% the previous week, the highest level since last Nov.  "Treasury yields rates rose last week and mortgage rates followed suit, due to a combination of the Treasury’s funding announcement and the downgrading of the U.S. government debt rating," said Joel Kan, MBA's deputy chief economist. "Rates increased for all loan types in our survey."  The steeper rates weighed heavily on mortgage demand, with a key measure of home-purchase applications tumbling 3.1% last week to the lowest level since Feb.  Demand for refinancing also continued to decline last week, sliding another 4%.  Compared with the same time last year, refinance applications are down a stunning 37%.  "Not surprisingly, mortgage applications continued to decline given these higher rates, with overall application counts falling for the third consecutive week, as both purchase and refinance activity declined," Kan said.  The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve's aggressive tightening campaign.  Policymakers already lifted the benchmark federal funds rate 11 consecutive times as they try to crush stubborn inflation and slow the economy.  The move by Fitch last week to cut its US debt grade from the highest AAA rating to AA+ on concerns over the country's bloated national debt has only exacerbated troubles within the housing market.  The downgrade pushed the 10-year Treasury yield, which underpins mortgage rates, to the highest level in a year.  Not only are higher mortgage rates dampening consumer demand, they are limiting inventory.  That is because sellers who locked in a low mortgage rate before the pandemic began have been reluctant to sell with rates continuing to hover near a 2-decade-high, leaving few options for eager would-be buyers.  "The purchase index fell for the fourth consecutive week, as homebuyers continue to struggle with low for-sale inventory and elevated mortgage rates," Kan added.  A recent report from Realtor.com showed that the number of available homes on the market in Jun was down more than 47% from the typical amount before the COVID-19 pandemic began in early 2020.

Homeowners get short end of the stick after economy's latest rating

Electric vehicle maker Rivian Automotive (RIVN) reported a loss for Q2 that was narrower than expected & raised its production guidance for the full year.  It now expects to build about 52K vehicles in 2023, more than twice the number it made in 2022 & up from its previous production guidance of 50K vehicles.  Rivian delivered 12.6K vehicles during Q2, up 59% from its Q1 total & well above the 4467 EVs it delivered in Q2-2022.  It produced 14K vehicles in the qtr, up from 9395 in Q1-2023 & 4401 in Q2-2022.  The net loss for the qtr was $1.2B ($1.27 per share).  A year ago, Rivian reported a net loss of $1.7B ($1.89 per share).  On an adjusted basis, RIVN reported a loss of $1B ($1.08 per share).  Revenue in Q2 rose to $1.1B from $364M in the same period in 2022.  Q2 revenue included $34M from the sale of regulatory credits.  “Our second quarter results reflect our continued focus on cost efficiency as we accelerate the drive towards profitability,” CEO RJ Scaringe said.  “We have achieved meaningful reductions in both R1 and EDV vehicle unit cost across the key components, including material costs, overhead and logistics. It was a strong quarter, and we remain focused on ramping production, driving cost efficiencies, developing future technologies, and enhancing the customer experience.”  RIVN reiterated that it expects to reach a positive gross profit sometime in 2024.  The EV maker had $10.2B in cash remaining as of Jun 30, down from $11.8B as of Mar 31.  It also had about $1.1B in credit lines available as of qtr end, for total liquidity of $11.3B.  Capital expenditures in Q2 were $255M, versus $359M in the same period last year.  For the full year, RIVN expects about $1.7B in capex, down from $2B in prior guidance.  Rivian produced roughly 23.4K vehicles in H1-2023.  The company is currently building the R1T pickup, the R1S SUV & a series of electric delivery vans for Amazon (AMZN) at its factory in Normal, Illinois.  The stock fell 2.45 (10%).
If you would like to learn more about RIVN, click on this link:
club.ino.com/trend/analysis/stock/RIVN_aid=CD3289&a_bid=6aeoso5b6f7

Rivian raises 2023 EV production guidance, posts narrower-than-expected loss

Rocket Lab (RKLB) reported Q2 results that largely met expectations & the company said it added contracts for 10 more launches in 2023 & 2024.  “The second quarter saw strong performance across Rocket Lab’s launch and space systems businesses with three successful Electron [rocket] launches, more than 17 spacecraft featuring Rocket Lab satellite components deployed to orbit, and multiple new launch contracts signed with new and returning customers,” Rocket Lab founder & CEO Peter Beck said.  The company reported a net loss of $46M (10¢ per share), compared with a loss of 9¢ a share expected.  That was wider than the loss of 8¢ a share in the same qtr a year earlier.  Revenue grew 12% year over year in Q2 to $62M, versus $61.8M expected.  Its launch business saw $22.5M in revenue in Q2, while its space systems unit brought in $39.6M.  Its contract backlog increased from the previous qtr, rising by $40M to $534M.  CFO Adam Spice said the space systems business had “a bit of a timing issue with … [recognizing] revenue over certain programs on the satellite manufacturer side.”  “We expect to make up a lot of that ground in the fourth quarter,” Spice added.  For Q3, Rocket Lab expects revenue to grow to $73-77M.  The stock fell 21¢.
If you would like to learn more about RKLB, click on this link:
club.ino.com/trend/analysis/stock/RKLB_aid=CD3289&a_bid=6aeoso5b6f7

Rocket Lab results match estimates, company adds contracts for 10 launches

Gold closed lower for a 3rd day even as the $ edged down.  Gold for Dec closed down $9 to settle at $1950 per ounce.  The drop comes despite a weaker $, which makes gold more affordable for intl buyers.  The ICE dollar index was last seen down 0.09 points to 102.44.  The lower $ comes ahead of tomorrow's release of US inflation data for Jul, with expectations for a 3.3% annualized rise in the consumer price index, up from a 3% rate in Jun.  A positive outlook is expected for gold as global growth slows, bond yields peak & the FOMC ability to hike rates becomes increasingly challenged.  Treasury yields were mixed.  The US 2-year note was last seen paying 4.787%, up 2.9 basis points, while the yield on the 10-year note was down 2.6-basis points to 4.007%.

Gold Closes Lower Even as the Dollar Weakens Ahead of July Inflation Data

Oil climbed to the highest in almost 9 months on concern that a possible escalation of the conflict between Russia & Ukraine may choke off more supplies in an already tightening market.  West Texas Intermediate futures ended the session above $84 a barrel, breaking thru an earlier high for the year set in Apr.  Prices held onto gains even after US gov data showed crude inventories rose by about 5M barrels last week as investors focused on fuel stockpiles that declined by the most in 3 months.  Key market gauges have been pointing to tighter markets in recent days.  Stockpiles at the key storage hub of Cushing, Oklahoma, have declined for 5 of the past 6 weeks.  Oil has rallied since late Jun following pledges by OPEC+ heavyweights Saudi Arabia & Russia to cut supply, but headwinds still linger.  China's economic rebound remains sluggish & the Energy Information Administration lowered its forecast for US consumption of products this year.  WTI for Sep rose $1.48 to settle at $84.40 a barrel & Brent for Oct increased $1.38 to settle at $87.55 a barrel.

Oil Hits High for the Year as Supply Risks Grow in Tight Market

Traders are eagerly waiting for the CPI data which will come before the markets open tomorrow.

Dow Jones Industrials