Dow advanced 185 (near session highs) , advancers over decliners better than 3-1 & NAZ gained 215.  The MLP index was fractionally lower to the 236s & the REIT index recovered 5+ to the 362s.  Junk bond funds were in demand along with stocks & Treasuries had heavy buying, sharply reducing the high yields on Treasuries.  Oil fell almost 1, going below 79, & gold jumped 20 to 1946 (more on both below).

AMJ (Alerian MLP Index tracking fund)

New home sales climb in July despite steep Mortgage rates

A key measure of home-purchase applications tumbled last week to a nearly 3-decade low as consumer demand cooled sharply amid a recent surge in mortgage rates.  The Mortgage Bankers Association's (MBA) index of mortgage applications fell 4.2% last week to the lowest level since 1995.  The data also showed that the average rate on the popular 30-year loan climbed to 7.31% from 7.16% the previous week, the highest level since 2000.  By comparison, just one year ago, rates hovered around 5.65%.  "Treasury yields continued to spike last week as markets grappled with illiquidity and concerns that the resilient economy will keep inflation stubbornly high," said Joel Kan, MBA's deputy chief economist.  The steeper rates weighed heavily on housing demand, with applications for a mortgage to purchase a home tumbling 5% for the week.  Application volume is down 30% compared with the same time last year.  Demand for refinancing also continued to fall last week, sliding another 3%, according to the survey.  Compared with the same time last year, refinance applications are down 35%.  "Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power," Kan said.  "Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing."  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 & slow the economy.  The number of available homes on the market at the end of Jul was down by more than 9% from the same time last year & down 46% from the typical number before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com.

Mortgage rates spike to highest level since 2000

Foot Locker (FL) reported another qtr of falling sales & slashed its outlook for the 2nd time this year as inflation-weary consumers think twice before shelling out for footwear & apparel.  The sneaker giant's adjusted fiscal 2nd-qtr earnings were in line with expectations, but fell short of estimates on sales & saw another qtr of slimmer margins due to promotions & higher shrink (theft).  The company swung to a loss of 5¢ per share, compared with EPS of 99¢ a year earlier.  Excluding one-time items, the company reported EPS of 4¢.  Sales declined to $1.86B, down 9.9% from $2.07B a year earlier.  The dismal qtr prompted FF to lower its forecast again – just 5 months after introducing it.  The company also paused its quarterly cash div beyond its board's recently approved Oct payout of 40¢ per share.  The athletic apparel retailer now expects sales to drop 8-9% for the year, compared with a previously issued forecast of down 6.5-8%.  It is projecting a decline in same-store sales of 9-10%, compared with its previous guidance of down 7.5-9%.  The company cut its adjusted EPS guidance to $1.30 - $1.50, down from $2.00 - $2.25 a share.  “We did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers, while still leaning into the strategic investments that drive our Lace Up plan,” CEO Mary Dillon said.  The stock tumbled 6.51 (28%).
If you would like to learn more about FL, click on this link:
club.ino.com/trend/analysis/stock/FL_aid=CD3289&a_bid=6aeoso5b6f7

Foot Locker reports another sales decline, cuts guidance

Gold futures climbed, tacking on more than 1% to score their largest single-session rise since the end of Jul.  Prices for the metal had been under increased pressure in recent weeks amid surprisingly resilient US economic data & concerns over the Federal Reserve's likely response.  But gold still looks attractive to some as a long-term portfolio hedge, especially given the uncertain global growth outlook, volatile equity market dynamics & unsettled geopolitics.  Dec gold climbed $22 (1.2%), to settle at $1948 an ounce.

Gold Futures Mark Their Largest Daily Gain so Far This Month

Crude futures fell as signs of a thaw in US relations with sanctioned oil producers Iran & Venezuela undercut expectations of tightening global supplies.  West Texas Intermediate fell below $79 to the lowest closing price in more than a month.  The Biden administration is in talks with Venezuela to explore easing sanctions that have hindered its oil sales if the country holds cleaner elections.  Meanwhile, observed exports from Iran have surged this month as back-door diplomatic efforts with the US appear to be easing pressure on the Middle Eastern nation.  Capping crude's losses was a bullish stockpile report showing that supplies remain tight despite concerns about a potential slowdown in demand.  US inventories dwindled to the lowest since Dec 2022 while stockpiles in the nation's biggest storage hub in Cushing, Oklahoma, slid the most since Oct 2021.  WTI for Oct fell 75¢ to settle at $78.89 a barrel & Brent for Oct slid 82¢ to settle at $83.21.

Oil Falls as Venezuela, Iran Thaw Undercuts Supply Concerns

After all the selling this month, buying at lower levels is understandable.  This is generally a quiet period for stocks.  Powell's comments on Fri will drive the stock market into next week.

Dow Jones Industrials