Dow gained 32, decliners ahead of advancers about 5-4 & NAZ crawled up 1. The MLP index was off 2+ to the depressed 216s & the REIT index sank 7 to the 402s. Junk bond funds edged lower & Treasuries were sold. Oil went up to the 57s & gold tumbled 25 to 1486.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The US services sector rebounded in Oct after hitting a 3-year low in Sep. The ISM non-manufacturing index rose 2.1 percentage points to 54.7 as respondents remained “concerned about tariffs, labor resources & the geopolitical climate,” according to the Institute for Supply Management. A reading above 50 signals the sector is growing. Business activity, new orders & employment all showed improvement while prices fell. The services sector makes up about 2/3 of the US economy. The upbeat report on the services sector comes days after a separate report showed America's manufacturing sector remained in contraction last month. ISM manufacturing rose 0.5 percentage points to 48.3, ending a 6-month streak of worsening numbers.
Gold futures fell, as a climb in US stocks, bond yields & the $ on hopes for a US-China trade deal, along with a stronger-than-expected ISM services reading, sent prices for the precious metal to their lowest finish in 3 weeks. In economic news, the ISM US service sector activity index rose to 54.7% in Oct, up from 52.6% in Sep with the upbeat economic news dulling haven demand for gold, prompting prices to touch fresh session lows shortly after the data were released. Dec gold fell $27.40 (1.8%) to settle at $1483 an ounce. That was the lowest most-active contract settlement since Oct 15 & biggest one-day $ & percentage decline since Sep 30. Prices also settled below $1500, a level seen by technical analysts as a dividing line between bearish & bullish sentiment, for the first time 4 sessions.
Gold ends at 3-week low as hopes for a trade deal support stocks, bond yields and the dollar
There is a risk that US businesses could convince themselves that bad times are around the corner & actually cause a downturn, said Richmond Federal Reserve Pres Thomas Barkin. Right now, firms are frustrated with political polarization & there is a high degree of uncertainty about the outlook for government policies, Barkin said in a speech. Businesses say they’re not scaling back yet but are reluctant to “double down,” he added. “For these reasons, I don’t discount the idea that we could talk ourselves into a recession — particularly if the uncertainty begins to affect consumer confidence and spending,” he said. Barkin said he didn't think a recession was imminent. “There’s no evidence that we’re faltering.” “In other words, as long as consumers keep spending, we will be in a good place,” he said. Barkin also said his business contacts are showing “some reluctance on hiring” but no “leaning forward on layoffs.” Businesses that have significant exposure overseas are the most negative about the outlook, Barkin said. But the US has never “imported” recessions in the past. Companies that have mainly a domestic focus are less concerned, he noted. He didn't know where monetary policy would go next following the three quarter percentage point rate cuts in Jul, Sep & Oct. Fed Chair Jerome Powell has described this monetary easing as “insurance.” “I hope we will see over the next six months the kind of impact you want to have” on that insurance policy, Barkin said. “I think it’s a good time to pause and see where we go and see how it evolves,” he said. But he was not saying rates were on hold for 6 months. “The outlook could change for a hundred different reasons, and if it did, I’d have to stop and think about the right policy response,” Barkin said. The Fed's 3 rate cuts are aggressive & “relatively unprecedented” given the historically low unemployment rate, he added. At the moment, the economy is giving “conflicting signals,” he said. The Fed expects a modest easing. A key question is how long uncertainty lasts. “The recent headway made on trade negotiations may lessen our downside, as might the progress made in the Brexit negotiations,” he said. He called on Congress & the White House to take steps to support the economy. These steps were not just the traditional spending and taxation but efforts to create a better climate for business investment, he said. “We’ll get the most bang for the buck if the fiscal environment is a supportive one,” he added.
Fed's Barkin says recession is not imminent
Oil futures rose, with positive expectations around US-China trade talks & a move further into record territory by US stocks helping to lift global & US benchmark crude prices to their highest settlements in 6 weeks. Jan Brent crude, the global benchmark, gained 83¢ (1.3%) to settle at $62.96 a barrel. West Texas Intermediate (WTI) crude for Dec delivery rose 69¢ (1.2%), to settle $57.23 a barrel. Both front-month WTI & Brent contracts posted their highest finish since Sep 24. US benchmark stock indices were trading higher as oil futures settled, with major US equity indices looking to notch another record finish. Reports the US might rollback tariffs on $112B worth of Chinese imports as a concession to seal a “phase one” trade deal was credited with buoying sentiment across markets. In addition, OPEC said it expects oil supplies to fall continuously over the next five years, indicating the cartel might need to further cut output to stabilize prices on the back of a US production boom & sluggish oil demand. OPEC & its allies are set to debate whether to continue current production cuts of 1.2M barrels a day or deepen the reductions when they meet in early Dec.
The bulls did not have enough strength to take stocks higher, but bullish sentiment is riding high. The volatility index (VIX) is in the 12s indicating investors are willing to purchase risky investments such as stocks. Of course after months of plodding along, they want a signed deal before making new commitments aggressively.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US services sector rebounded in Oct after hitting a 3-year low in Sep. The ISM non-manufacturing index rose 2.1 percentage points to 54.7 as respondents remained “concerned about tariffs, labor resources & the geopolitical climate,” according to the Institute for Supply Management. A reading above 50 signals the sector is growing. Business activity, new orders & employment all showed improvement while prices fell. The services sector makes up about 2/3 of the US economy. The upbeat report on the services sector comes days after a separate report showed America's manufacturing sector remained in contraction last month. ISM manufacturing rose 0.5 percentage points to 48.3, ending a 6-month streak of worsening numbers.
US services sector rebounds after hitting three-year low
Gold futures fell, as a climb in US stocks, bond yields & the $ on hopes for a US-China trade deal, along with a stronger-than-expected ISM services reading, sent prices for the precious metal to their lowest finish in 3 weeks. In economic news, the ISM US service sector activity index rose to 54.7% in Oct, up from 52.6% in Sep with the upbeat economic news dulling haven demand for gold, prompting prices to touch fresh session lows shortly after the data were released. Dec gold fell $27.40 (1.8%) to settle at $1483 an ounce. That was the lowest most-active contract settlement since Oct 15 & biggest one-day $ & percentage decline since Sep 30. Prices also settled below $1500, a level seen by technical analysts as a dividing line between bearish & bullish sentiment, for the first time 4 sessions.
Gold ends at 3-week low as hopes for a trade deal support stocks, bond yields and the dollar
There is a risk that US businesses could convince themselves that bad times are around the corner & actually cause a downturn, said Richmond Federal Reserve Pres Thomas Barkin. Right now, firms are frustrated with political polarization & there is a high degree of uncertainty about the outlook for government policies, Barkin said in a speech. Businesses say they’re not scaling back yet but are reluctant to “double down,” he added. “For these reasons, I don’t discount the idea that we could talk ourselves into a recession — particularly if the uncertainty begins to affect consumer confidence and spending,” he said. Barkin said he didn't think a recession was imminent. “There’s no evidence that we’re faltering.” “In other words, as long as consumers keep spending, we will be in a good place,” he said. Barkin also said his business contacts are showing “some reluctance on hiring” but no “leaning forward on layoffs.” Businesses that have significant exposure overseas are the most negative about the outlook, Barkin said. But the US has never “imported” recessions in the past. Companies that have mainly a domestic focus are less concerned, he noted. He didn't know where monetary policy would go next following the three quarter percentage point rate cuts in Jul, Sep & Oct. Fed Chair Jerome Powell has described this monetary easing as “insurance.” “I hope we will see over the next six months the kind of impact you want to have” on that insurance policy, Barkin said. “I think it’s a good time to pause and see where we go and see how it evolves,” he said. But he was not saying rates were on hold for 6 months. “The outlook could change for a hundred different reasons, and if it did, I’d have to stop and think about the right policy response,” Barkin said. The Fed's 3 rate cuts are aggressive & “relatively unprecedented” given the historically low unemployment rate, he added. At the moment, the economy is giving “conflicting signals,” he said. The Fed expects a modest easing. A key question is how long uncertainty lasts. “The recent headway made on trade negotiations may lessen our downside, as might the progress made in the Brexit negotiations,” he said. He called on Congress & the White House to take steps to support the economy. These steps were not just the traditional spending and taxation but efforts to create a better climate for business investment, he said. “We’ll get the most bang for the buck if the fiscal environment is a supportive one,” he added.
Fed's Barkin says recession is not imminent
Oil futures rose, with positive expectations around US-China trade talks & a move further into record territory by US stocks helping to lift global & US benchmark crude prices to their highest settlements in 6 weeks. Jan Brent crude, the global benchmark, gained 83¢ (1.3%) to settle at $62.96 a barrel. West Texas Intermediate (WTI) crude for Dec delivery rose 69¢ (1.2%), to settle $57.23 a barrel. Both front-month WTI & Brent contracts posted their highest finish since Sep 24. US benchmark stock indices were trading higher as oil futures settled, with major US equity indices looking to notch another record finish. Reports the US might rollback tariffs on $112B worth of Chinese imports as a concession to seal a “phase one” trade deal was credited with buoying sentiment across markets. In addition, OPEC said it expects oil supplies to fall continuously over the next five years, indicating the cartel might need to further cut output to stabilize prices on the back of a US production boom & sluggish oil demand. OPEC & its allies are set to debate whether to continue current production cuts of 1.2M barrels a day or deepen the reductions when they meet in early Dec.
Oil ends at 6-week high on optimism about demand after progress seen on trade deal
The bulls did not have enough strength to take stocks higher, but bullish sentiment is riding high. The volatility index (VIX) is in the 12s indicating investors are willing to purchase risky investments such as stocks. Of course after months of plodding along, they want a signed deal before making new commitments aggressively.
Dow Jones Industrials
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