DAILY MARKET REPORTS
- The S&P 500 surged above 3,000 for the first time.
- The Dow Jones Industrial Average joined the S&P 500 at an all-time high after the Fed chairman said in prepared remarks that downside risks to the economy remain, even after Friday’s strong jobs report forced investors to recalibrate rate-cut expectations.
- The yield on 10-year U.S. Treasurys rose to 2.061% from 2.058% on Tuesday. Yields and prices move in opposite directions.
- Data showed the British economy returned to growth in May.
US FINANCIAL MARKET
Oil Jumps on Bigger-Than-Expected Fall in U.S. Inventory
- Oil prices climbed on a combination of falling U.S. inventories and risks to supply in the U.S. and Middle East.
- Brent crude, the global benchmark, was up 2.2% at $65.68 a barrel on London’s ICE Futures exchange.
- On the New York Mercantile Exchange, West Texas Intermediate (WTI) futures rose 2.3% to $59.13 a barrel.
- Crude oil inventory figures released by the American Petroleum Institute on Tuesday reportedly showed an 8.1-million-barrel drop in the most recent reporting week, a bigger decline than many investors had expected.
Levi Strauss profit tanks 17%, hit by a stronger dollar, and higher marketing and online expenses
- Net income fell to $28.2 million from $74.9 million a year earlier, hit primarily by costs related to its IPO earlier this year.
- Revenue rose 5% to $1.30 billion, edging past expectations.
- Sales at its China unit rose 3%, but Levi’s said the business was “far from its potential” and had “significant untapped opportunity.”
American Airlines Raises Revenue Expectations
- Airline sees profit hit of roughly $185 million related to grounding of Boeing 737 MAX fleet.
- The carrier said it expects to report a 3% to 4% rise in unit revenue, a key metric for airlines, in the quarter ended June 30, up from its previous guidance of 1% to 3%.
- The airline said it had canceled about 7,800 flights in the second quarter due to a Federal Aviation Administration order on March 13 to ground all of its 24 Boeing 737 MAX 8 aircraft and an additional 76 aircraft that were on order. Seven aircraft were expected to be delivered in the latest quarter.
Walmart’s Supplier Says Chinese Factories in ‘Desperate’ State
- The world’s largest supplier of consumer goods says China’s factories are getting “urgent and desperate” as worried U.S. retailers accelerate a move out of the country amid heightened trade tensions.
- China will see more factory shutdowns as the trade war that’s roiled the global supply chain exacerbates an exodus, said Spencer Fung, chief executive officer of Li & Fung Ltd.
- “Vietnam, for example, is full, completely full,” he said. “There’s no extra capacity for the U.S. companies to get in.”
US ECONOMY & POLITICS
Jerome Powell Signals Openness to Rate Cut as Uncertainty Dims Outlook
- Jerome Powell took the Federal Reserve closer to cutting interest rates this month, citing risks from the trade war with China and saying June’s strong U.S. jobs report hadn’t shifted the outlook.
- Asked if that month’s report of stronger-than-expected hiring in the U.S. had changed the Fed’s thinking, Powell said: “A straight answer to your question is, no.”
- Traders reacted to Powell’s semi-annual testimony by cementing bets on a rate cut at the Fed’s next meeting July 30-31.
- U.S. stocks advanced, pushing the S&P 500 index past 3,000 for the first time, and Treasuries rose with gold.
Trump Says Iran ‘Secretly’ Enriched Uranium Despite Nuke Deal
- President Donald Trump accused Iran of “secretly” enriching uranium in violation of the 2015 nuclear deal he withdrew from last year, and said the U.S. would soon impose more sanctions on the Islamic Republic.
- Trump didn’t elaborate on how he knew Iran had violated the nuclear pact or what new sanctions he would impose. The International Atomic Energy Agency has said Iran was in compliance with the 2015 agreement, which allowed some enrichment. Recently, Iran and the IAEA said the country began exceeding limits imposed by the deal.
EUROPE & WORLD
Kim Darroch Resigns as U.K. Ambassador to U.S After Leaked Cables
- Britain’s ambassador to the U.S. said he is resigning after secret cables in which he criticized President Trump were leaked, causing a diplomatic firestorm.
- “The current situation is making it impossible for me to carry out my role as I would like,” Kim Darroch wrote in a resignation letter.
- The decision to stand down follows a Twitter spat with the president that threatened to strain the relationship between the U.K. and U.S.
- On Sunday, a U.K. newspaper published leaked diplomatic cables in which Mr. Darroch was highly critical of the U.S. president.
- In one of the cables, Mr. Darroch described the Trump administration as dysfunctional, faction-ridden, diplomatically clumsy and inept.
- Mr. Trump responded to the leaks in a series of Twitter posts in which he called Mr. Darroch “very stupid” and “wacky.”
- Mr. Trump said he would no longer work with the ambassador, who was excluded from an official dinner at the Treasury Department earlier in the week. The U.S. president also criticized Prime Minister Theresa May’s handling of the U.K.’s departure from the European Union.
Germany’s Merkel Suffers Third Bout of Shaking During Ceremony
- For the third time in less than a month, Chancellor Angela Merkel had to downplay concerns that health issues could affect her leadership ability at a time that Germany’s economy is slowing and her coalition is wobbling.
- Merkel, who turns 65 next week, was seen trembling and biting her lip as she stood alongside Finnish Prime Minister Antti Rinne during a ceremony in Berlin on Wednesday.
- At a press conference with Rinne shortly after, a calm and composed Merkel said she was doing fine and still mentally working through what happened during the first episode of shaking on June 18.
Nintendo Unveils Cheaper Version of Switch Gaming Console
- Nintendo introduced a new cheaper, version of its portable Switch gaming console, as the Japanese company seeks to expand the potential market for games.
- The Switch Lite will retail for $199.99, or $100 less than the original device.
- The new console will be released Sept. 20 and will come in yellow, gray and turquoise, the company said in a statement.
- In April, with the new console in the works, analysts were baffled by Nintendo’s forecast that it will sell 125 million new software titles, significantly below market expectations for 161 million and lower than all but one of 10 projections tracked by Bloomberg.
TODAY in HISTORY
- Wyoming became the 44th state in the United States (1890)
- The Battle of Britain began (1940)
- The Bahamas became independent from Great Britain (1973)
- The Coca-Cola Company announced that it was bringing back the original Coke and calling it Coca-Cola Classic (1985)
- Boris Yeltsin was sworn in as Russia’s first elected president (1991)
- Spain opened its first mosque (in Granada) since the Moors were expelled in 1492 (2003)
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