Dow fell 223 after s midday rally faded & sellers returned in day trading, decliners over advancers 2-1 & NAZ fell 49. The MLP index drifted down 1 to 220 & the REIT index was off 4+ to 441 on worries about higher interest rates. Junk bond funds slid lower & Treasuries saw heavy selling continue, bringing higher yields. Oil slid back fractionally to the 114s after a strong start & gold declined 13 to 1844 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
US consumer confidence dipped in May after a slight increase the month before in the latest signal that Americans expect inflation to stick around for a while. The Conference Board's Consumer Confidence Index indicated the May index dropped to 106.4 from 108.6 in Apr. The Expectations Index – which assesses consumers' short-term outlook for income, business & labor market conditions – also declined, dropping to 77.5 to 79. "Inflation remains top of mind for consumers, with their inflation expectations in May virtually unchanged from April’s elevated levels," said Lynn Franco, senior director of economic indicators at The Conference Board. "Looking ahead, expect surging prices and additional interest rate hikes to pose continued downside risks to consumer spending this year." "With the Expectations Index weakening further, consumers also do not foresee the economy picking up steam in the months ahead," Franco added. "They do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run." The latest data from the Labor Dept shows inflation soared to 8.3% annually in Apr, remaining near a 4-decade high as the result of a combination of Ts of $s in gov stimulus, elevated consumer demand, supply chain disruptions from the COVID-19 pandemic & Russia's war in Ukraine.
Consumer confidence takes inflation hit
After more than 2 years of largely staying home due to the pandemic, most Americans are ready to hit the road. Yet inflation & record-breaking gasoline prices are weighing on would-be vacationers, even more than Covid concerns, according to a report by Morning Consult. Roughly 60% of Americans said they would take more trips this year compared with last year, although higher prices are now causing travelers to scale back their plans & go shorter distances, the survey, commissioned by the American Hotel & Lodging Association (AHLA), found 1/3 are likely to cancel altogether. Gasoline prices have run up sharply heading into the peak summer driving season, following Russia's invasion of Ukraine, & show no signs of slowing down. The national average for unleaded gas hit another new high of $4.62 per gallon today prices are up more than 50% compared with last year. Analysts say gasoline prices usually peak by mid-May, but this year prices at the pump could continue to rise into Jul & reach about $5 a gallon or more. Now, 90% of Americans consider the price of gas in their decisions about whether to travel in the next 3 months. The same share also say inflation is a factor in their upcoming plans. Meanwhile, 78% now say that Covid infection rates are a consideration in deciding about summer travel. “The pandemic has instilled in most people a greater appreciation for travel, and that’s reflected in the plans Americans are making to get out and about this summer,” said Chip Rogers, AHLA's CEO. “But just as Covid’s negative impact on travel is starting to wane, a new set of challenges is emerging in the form of historic inflation and record high gas prices.”
Record high gas prices and inflation top summer travel concerns, overtaking Covid, survey finds
Despite rising interest rates on mortgages, home prices
surged a record 20.6% year-over-year in Mar, up from 20%
year-over-year in the previous month, according to the latest data from
S&P CoreLogic's Case Shiller national home price index. The 10-city composite jumped 19.5%
year-over-year, compared to 18.7% in the previous month & the
20-city composite soared 21.2% year-over-year, up from 20.3% in the
previous month. Before seasonal adjustment, the US national index posted a 2.6%
month-over-month increase in Mar, while the 10-City & 20-City
Composites grew 2.8% & 3.1%, respectively. On a seasonally adjusted
basis, the US national index rose 2.1% month-over-month, while the
10-City & 20-City Composites posted gains of 2.2% & 2.4%,
respectively. Though every region showed impressive gains, prices were strongest in the South (29.8%) & Southeast (29.6%). Mar's figures marked the highest year-over-year price change in more
than 35 years of data for the national & 20-city composite indexes. "The strength of the Composite indices suggests very broad strength in
the housing market, which we continue to observe," S&P DJI managing
director Craig Lazarra said. "All 20 cities saw double-digit price
increases for the 12 months ended in March, and price growth in 17
cities accelerated relative to February’s report. March’s price increase
ranked in the top quintile of historical experience for every city, and
in the top decile for 19 of them." The latest data comes as the Federal Reserve has begun hiking interest rates in an effort to tame infection.
Home prices soared in record March: Case-Shiller
Gold futures lost ground, with the yellow metal suffering a 2nd straight monthly loss after a surge by the $ in May. Gold for Aug fell $8 (0.5%) to close at $1848 an ounce, leaving it with a 3.1% monthly fall based on the most actively traded contract. Both gold & yields were moving higher after Federal Reserve Gov Christopher Waller said he was in favor of 50 basis point rate increases over the next “several meetings.” That’s in comparison to Fed Chair Jerome Powell, who has said ½-point moves were on the table for ½-point moves at the next 2 meetings followed by reflection & a possible slowdown to ¼-point increases. “I support tightening policy by another 50 basis points for several meetings,” he said. “I am not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2% target. And, by the end of this year, I support having the policy rate at a level above neutral so that it is reducing demand for products and labor, bringing it more in line with supply and thus helping rein in inflation,” said Waller, who has been among the most hawkish Fed officials. The ICE US Dollar Index was flat. The index was on track for a 1.2% monthly fall after hitting a nearly 20-year high in early May. The yield on the 10-year Treasury note was up 6 basis points near 2.80% today. The yield jumped above 3.2% in intraday trade, a 3½-year high, in early May before pulling back over the past 3 weeks. Pres Biden met with with Powell today. In a guest column, Biden said he would stand aside & let the Fed do its job, but also put the blame for rising prices on the institution. The latest inflation data shows prices rising at a pace not seen in about 40 years, though both the consumer-price index & the PCE price index have eased from their peaks.
Gold suffers second straight monthly loss
The price of WTI crude oil futures settled at $114.67, down 40¢, after the high price reached $119.98. The low price extended to $114.15. The move to the upside earlier today was propelled by the EU announcement that they would embargo Russian oil by the end of the year (with some caveats). However the gains were later paired on reports that some OPEC members were working toward the idea of suspending Russia's participation in oil production deal. Exempting Russia from OPEC+ would allow other producers to pump significantly more crude. The move to the upside today traded at the highest level since Mar 9.
WTI crude oil futures settle at the $114.67
The Dow was in the red all day, however trading was very choppy. Comments about rake hikes by the Fed will affect the stock market. For the month, the rally in late May by the Dow gave it a tiny increase, but it's still down 3350 YTD.
Dow Jones Industrials
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