Dow rose 113, decliners modestly ahead of advancers & NAZ dropped 143. The MLP index drifted 1+ lower to 217 & the REIT index was about even in the 485s. Junk bond funds were weak & Treasuries had selling, raising Treasury yields. Oil fell 1 to the 103s & gold was off 9 to 1975.
AMJ (Alerian MLP index tracking fund)
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Consumers continued to spend in Mar even as inflation rose to its highest level since 1981, according to gov data. Retail sales climbed 0.5% from the previous month, slightly less than the 0.6% estimate & a deceleration from the upwardly revised 0.8% gain in Feb. The move came with inflation rising 1.1% for the month as measured by the consumer price index. Retail sales data are not adjusted for inflation. Consequently, the biggest gain in sales for the month game at gas stations, which saw an 8.9% increase in sales as gasoline prices rose 18.3% during the period. The sector has seen a 37% sales burst over the past year. By contrast, online sales slumped sharply, falling 6.4% for the month. General merchandise stores saw a gain of 5.4%, sporting goods & electronics stores both saw 3.3% gains, & bars & sales at food & beverage stores along with bars & restaurants rose 1%. Retail sales broadly rose 6.9% from a year ago, a period during which CPI inflation surged 8.5%, the highest level since 1981. Also, inflation continued to hit imports, with prices rising by 2.6%, the largest month increase since 2011, the Bureau of Labor Statistics reported. That was higher even than the 2.2% estimate. On a 12-month basis, import prices jumped 12.5%, the largest such gain since 2011.
Retail sales rose 0.5% in March amid inflation jump; import prices hit 11-year high
Wells Fargo (WFC) reported lower-than-expected Q1 revenue amid a drop in
mortgage lending, but beat earnings expectations as the bank decreased
its credit reserves. Profit fell 20.8% from a year ago to $3.7B. EPS was 88¢ vs the 80¢ estimate & revenue was$17.6B vs the $17.8B estimate. Slowing mortgage demand weighed on results as the Federal Reserve hikes interest rates to fight inflation, sending >mortgage rates higher. Home lending fell 33% from the year prior. “Our
internal indicators continue to point towards the strength of our
customers’ financial position, but the Federal Reserve has made it clear
that it will take actions necessary to reduce inflation and this will
certainly reduce economic growth,” CEO Charlie Scharf said. Q1 results also come as Russia's invasion of
Ukraine has injected volatility into financial markets & has raised
concerns about global economic growth. “In addition, the war in Ukraine adds additional risk to the downside,” Scharf added. The stock fell 1.85.
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Wells Fargo shares fall as quarterly revenue misses estimates
The ECB kept its monetary policy unchanged but confirmed it will end its bond buying in Q3. The Governing Council faces a dilemma, with inflation hitting a record high of 7.5% in Mar, while the economic growth outlook weakens due to the war in Ukraine. The ECB said that it expects to conclude its net asset purchases under its APP (asset purchase program) in Q3. It had previously said this would be the course of action if supported by the data. “At today’s meeting the Governing Council judged that the incoming data since its last meeting reinforce its expectation that net asset purchases under the APP should be concluded in the third quarter,” the bank said. Once the bond buying program is completed, the ECB is expected to begin hiking interest rates, following the same path as the Bank of England & the Federal Reserve. ECB Pres Christine Lagarde said that how the eurozone economy develops will “crucially depend on how the conflict evolves, on the impact of current sanctions, and on possible further measures.” Lagarde noted that inflation had increased “significantly and will remain high over the coming months, mainly because of the sharp rise in energy costs.” Looking ahead, Lagarde said the ECB's monetary policy would depend on incoming economic data & its “evolving assessment of the outlook.” She added that the ECB's Governing Council would take “whatever action is needed to fulfill the ECB’s mandate to pursue price stability and to contribute to safeguarding financial stability.” The interest rate on the ECB's main refinancing operations & the interest rates on the marginal lending facility & the deposit facility remains unchanged at 0.00%, 0.25% & -0.50% respectively. “Any adjustments to the key ECB interest rates will take place some time after the end of the Governing Council’s net purchases under the APP and will be gradual,” the bank said.
ECB confirms the end of its bond buying in the third quarter as inflation surges
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