The real yield on a 10-year U.S. Treasury bond, which measures the return that investors can expect once inflation is taken into account, is -1.19%. Nominal rates at the bottom and a high inflation rate (although inflation expectations have not really increased in recent weeks thanks to the Fed's job) contribute to this result.
This is a far cry from the debates at the beginning of the year that the rise in bond yields could overshadow stocks. Investors looking for yield have no other alternative than to move into risky assets. Despite this, one asset in particular is struggling to regain positive momentum despite the favorable environment: gold, which, almost to the day a year ago, was the darling of investors when it peaked at more than USD 2,000 an ounce.
Meanwhile, new data shows the U.S. private sector added 330,000 jobs in July, well below expectations, according to the monthly survey by ADP. Most commentators believe this is due to a shortage of labor and raw materials. Economists surveyed by Reuters were expecting an average of 695,000 jobs to be created.
On the oil front, friction was raised again yesterday with new incidents in the Gulf of Oman that resulted in the potential hijacking of a Panamanian-flagged oil tanker into Iranian waters. This was certainly a serious incident, but one that investors have learned to come to terms with, as Iran is not a newcomer.
There are still a few earnings reports today, such as Toyota, Sony, General Motors, Softbank and Ford.
Today's economic highlights:
The final services PMIs for July are published throughout the day. The ISM services and oil inventories are also on the agenda. The Chinese services PMI remains in an expansion phase marked by a jump in the PMI to its highest level since May at 54.9.
* CVS Health reported a 6.5 percent drop in quarterly profit Wednesday, driven by higher medical costs.
* Pfizer - The U.S. Food and Drug Administration is aiming to fully approve Pfizer and BioNTech's COVID-19 vaccine by early September, The New York Times reported.
* Activision Blizzard expects adjusted revenue for the current quarter to be above market expectations, betting on strong demand for its "Call of Duty" and "Candy Crush" franchises, the company announced Tuesday night. The video game publisher's stock gained 6% in pre-market trading.
* Amgen - The U.S. biotech said its quarterly revenue rose 5%, but a decline in medical visits is expected to affect sales for the rest of the year.
* Lockheed Martin said Tuesday it is searching for a new chief financial officer after Kenneth Possenriede resigned for personal reasons.
* Lyft posted an adjusted quarterly profit three months ahead of target, but still warned of a chip shortage and the spread of the Delta variant.
* Occidental Petroleum reported an adjusted profit in the second quarter after posting a loss in the previous quarter, supported by higher crude prices, easing of travel restrictions and increased COVID-19 vaccination.
* UnitedHealth - The U.S. Department of Justice is considering a possible lawsuit to block the deal to buy Change Healthcare for nearly $8 billion, The Information reported.
* Facebook - WhatsApp users will now be able to send photos and videos ephemerally, in a bid to better compete with the Snap app.
* Royal Caribbean Group - The group's division, Royal Caribbean International, has announced that its entire fleet will resume sailing by spring 2022.
* Match Group, owner of Tinder, said Tuesday that economic recovery in some of its "important" Asian markets lagged the U.S. and Europe, sending its stock down 4% in after-hours trading.
* Callon Petroleum announced the purchase of assets in the Delaware Basin from Primexx Energy Partners for $788 million.
* Devon Energy reported earnings ahead of Wall Street expectations as easing of travel restrictions and vaccinations boosted demand and crude prices.
* Lumen Technologies announced it is selling part of its U.S. business to Apollo Global Management in a deal valued at $7.5 billion.
- Alnylam: Piper Sandler downgrades to neutral from overweight. PT up 1.2% to $181
- Chatham Lodging: B Riley Securities upgrades to buy from neutral. PT up 31% to $15
- Chevron: DZ Bank AG cut the recommendation to hold from buy. PT up to 7.2% to $110
- Clorox: Atlantic Equities cut the recommendation to neutral from overweight. PT down 8.6% to $150
- Global Payments : MoffettNathanson adjusts pt to $210 from $230, maintains neutral rating
- Mercury Systems: Cut to Neutral at Baird. PT lowered by 12% to $56
- Nikola : BTIG lowers price target to $16 from $18, reiterates buy rating
- Pinnacle West Capital: KeyBanc Capital Markets downgrades to underweight from sector weight. PT set to $72 - an 11% decrease from last price.
- Rambus : Jefferies & Co adjusts pt to $23 from $20, maintains hold rating
- Rio Tinto: Barclays maintained his recommendation on the stock with a Neutral rating. The target price is set at GBp 6000 versus GBp 6150.
- Ultragenyx Pharmaceutical : JPMorgan adjusts pt to $132 from $147, maintains neutral rating