📦 Retail sales data

and earnings

Good morning, investors! The balance of power appears to be shifting from big names to smaller companies.

Today we cover:

  • Retail sales report

  • More earnings

  • Saving gas money

📊Economy and News

What retail sales data says

US retail sales, excluding the impact of a cyberattack on auto dealerships, rose in June by the most in three months, indicating that consumers regained their footing at the end of the second quarter.

Retail purchases, excluding motor vehicles, increased by 0.4% last month following an upwardly revised 0.1% advance in May. Overall retail sales remained unchanged, hindered by a 2% decline in receipts at auto dealers. These figures are not adjusted for inflation.

This data defies a recent trend of slowing consumption growth, as Americans feel the pressure of high interest rates and a cooling labor market. It suggests that the economy remains resilient as the Federal Reserve approaches potential rate cuts.

"Consumption and economic activity have downshifted significantly so far in 2024. But conditions are far from weakening to a point that would be considered recessionary," said Rubeela Farooqi, chief US economist at High Frequency Economics, in a note. "We think the data on spending and growth, combined with improving inflation readings, support an easing in the stance of monetary policy."

Among the 13 categories tracked by the Commerce Department, only three saw declines, including gasoline sales, which reflected lower prices for the month. Sales at sporting goods stores also edged lower.

Excluding receipts at filling stations and auto dealers, retail sales jumped 0.8% — the highest since early 2023. Non-store retailers led the gains with their strongest advance in three months. Sales at health and personal care stores saw their largest increase since October, while sales at building material and garden equipment stores rose the most since February.

Global hits:

Also check: Spirit Airlines forecasts wider quarterly loss as revenue falls short of expectations.

📈Stocks

S&P 5005,667.20 (+0.64%)
DJIA40,954.48 (+1.85%)
NASDAQ18,509.34 (+0.20%)
BRENT CRUDE 83.99 (-0.01%)
* Prices as of Jul 17th, 12:20 AM UTC

Dow rallies 700 points for best day in more than a year

The Dow Jones Industrial Average advanced to new highs on Tuesday, as the bull market broadened out beyond technology names on hopes of forthcoming interest rate cuts.

Industrial bellwether Caterpillar climbed more than 4%, making it the second-biggest gainer in the Dow behind UnitedHealth. The insurer advanced 6.5% on the back of better-than-expected second-quarter results.

The rotation from megacap technology shares into small-cap and cyclical stocks began a week ago when June’s consumer price index showed the lowest inflation in three years. The reading was seen as a sign that inflation was nearing the Federal Reserve’s 2% target, and the central bank might be able to lower interest rates.

Traders now see 100% odds the Fed will lower rates in September, according to the CME FedWatch tool. A rate cut is seen as boosting small caps and industrials more reliant on borrowing costs than cash-rich, megacap technology stocks that have been riding a wave of optimism around artificial intelligence.

In the last week alone, the Russell 2000 has soared more than 11%, while the blue-chip Dow has gained more than 4%. The Nasdaq is up just 0.4% over the same period.

A bit of earnings:

  • Bank of America on Tuesday said second-quarter revenue and profit topped expectations on rising investment banking and asset management fees.

    Here’s what the company reported:

    • Earnings: 83 cents a share vs. 80 cents a share LSEG estimate

    • Revenue: $25.54 billion vs. $25.22 billion estimate

    The bank said profit slipped 6.9% from the year earlier period to $6.9 billion, or 83 cents a share, as the company’s net interest income declined amid higher interest rates. Revenue climbed less than 1% to $25.54 billion.

  • Morgan Stanley said second-quarter profit and revenue topped analysts’ estimates on stronger-than-expected trading and investment banking results.

    Here’s what the company reported:

    • Earnings: $1.82 a share vs. $1.65 a share LSEG estimate

    • Revenue: $15.02 billion vs. $14.3 billion estimate

    The bank said profit surged 41% from the year-earlier period to $3.08 billion, or $1.82 per share, helped by a rebound in Wall Street activity. Revenue rose 12% to $15.02 billion.

Reminder: You can get more tips and insights by following our X page!

💵Personal Finance

How to save gas money

We drive more in summers so why not check out some tips on how to save gas money this season.

Declutter Your Vehicle

Automakers dedicate extensive engineering efforts to reduce vehicle weight for better fuel efficiency. Don’t counteract these efforts by storing unnecessary items in your car.

If you drive a vehicle with three rows of seats but rarely use the third row, consider removing it and storing it in the garage. These seats can weigh over 30 pounds.

Every time you accelerate, your car uses fuel to move not only the vehicle and passengers but also any extra weight. When you brake, the energy converts to heat, wasting fuel. According to the EPA, for every 100 pounds of extra weight, fuel efficiency drops by about 1%. This translates to roughly $0.04 per gallon saved by decluttering.

Remove Roof Racks When Not in Use

Beyond weight, auto engineers also focus on aerodynamics, especially at highway speeds. Items on the roof can significantly reduce fuel efficiency. If you frequently carry equipment like bikes or skis, consider a hitch-mounted rack to minimize aerodynamic drag.

If roof storage is unavoidable, remove the rack when not in use. Even factory-installed crossbars can be removed to save weight. The EPA estimates that using a "large, blunt roof-top cargo box" can reduce fuel efficiency by up to 25% on the highway, potentially saving $0.07 to $0.62 per gallon.

Plan and Combine Trips

Planning your trips can save significant fuel. Grouping errands reduces the total miles driven. Moreover, cars use more fuel when the engine is cold, so fewer cold starts mean better fuel efficiency. Avoiding idling is also crucial; modern cars use less fuel restarting than idling for more than 7-10 seconds.

Drive Smart, Not Slow

Driving at lower speeds saves fuel due to decreased aerodynamic resistance. Anticipate traffic conditions to minimize braking and maintain a steady speed.

Monitor Tire Pressure

Since 2007, cars come equipped with Tire Pressure Monitoring Systems (TPMS), but these may not alert you until a tire is 25% underinflated. Regularly check your tire pressure to avoid reducing gas mileage by approximately 0.2% per pound under the recommended pressure.

Use Fuel-Saving Apps and Membership Clubs

Apps like Gas Buddy and Gas Guru make it easy to find the cheapest fuel. Membership clubs like Costco or Sam’s Club offer discounted fuel prices that can quickly offset the membership cost with savings per gallon.

💰 Be a Better Investor

“Buy when everyone else is selling and hold until everyone else is buying. That's not just a catchy slogan. It's the very essence of successful investing.”

J. Paul Getty

Resources:

What did you think of today's newsletter?

Login or Subscribe to participate in polls.

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.