Dow finished 48 higher after starting out lower, decliners over advaners 5-4 & NAZ retreated 239. The MLP index declined 2+ to the 208s & the REIT index went up 4+ to 430. Junk bond funds remained lower & Treasuries were in very heavy demand while stocks were being sold. Oil dipped below 110 & gold gained 15 to 1863 (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)
Sales of new single-family houses in the US dropped significantly more than expected last month to the lowest level in two years as rising construction costs, home prices, interest rates & supply chain woes continue to batter the industry. The Census Bureau's latest data shows the pace of new home sales fell by 16.6% in Apr from the month before at a seasonally adjusted rate of 591K. The forecast anticipated a dip of 1.7%. The drop is 26.9% lower than a year ago & the lowest since Apr 2020 & this is the 4th straight month new home sales have declined. "April’s dismal new home sales data shows an industry besieged by higher construction costs, supply chain disruptions and by higher mortgage rates that are giving many potential buyers cold feet," said Robert Frick, corp economist at Navy Federal Credit Union. "Given the pipeline for bringing new homes to market is stretched so thin, we shouldn’t expect home building to add much to housing stock for the foreseeable future," he added. The Census Bureau reported that the median sales price of new homes hit $450K last month. With interest rates now upward of 5%, the rising cost of homeownership is pricing more would-be buyers out of the market. "One year ago, 25% of new home sales were priced below $300,000," explained Odeta Kushi, deputy chief economist at First American. "In April of this year, only 10% of new home sales were priced below $300,000." Inventory of new homes was also up last month, according to gov data. "New home months' supply jumped to 9 months, up from 6.9 months in March and the highest since 2010," Kushi noted, predicting, "Builders will likely slow construction in the months ahead."
New home sales plunge as interest rates, building costs batter industry
Abercrombie (ANF) shares fell after the retailer reported an
unexpected loss for its fiscal Q1, with freight & product
costs weighing on sales. ANF also slashed its sales
outlook for fiscal 2022, anticipating that economic headwinds will
remain at least thru the end of the year. ANF
now sees revenue to be flat to up 2%, compared with its earlier
forecast of 2-4% growth. The forecast called for a year-over-year
increase of 3.5%. CEO
Fran Horowitz said that the company will manage its
expenses “tightly” & search for opportunities to offset the higher
logistics costs in the near term. She added that ANF plans to keep
investing in marketing, technology & customer experiences. ANF reported a net loss for its fiscal Q1 of $14.8M (32¢ per share) compared with net income of $42.7M (64¢ a share) a year earlier. Excluding
one-time items, EPS lost 27¢. Analysts had
expected EPS 8¢. Sales rose 4% to $813M from $781M a year earlier which was more than the $799M expected. That reflected a 3% drop in sales for its Hollister banner. Sales of its namesake label rose 13%. But inventories ballooned to $563M as of Apr 30, up 45% from a year ago. Horowitz said that ANF is preparing for a “much more
normalized” back-to-school shopping season after the pandemic kept many
students at home the past couple years. The stock plunged 7.70 (29%).
If you would like to learn more about ANF click on this link:
club.ino.com/trend/analysis/stock/ANFa_aid=CD3289&a_bid=6ae5b6f
Abercrombie & Fitch shares fall 30% after posting a loss, weak outlook
Ukraine said Russia's assault on the eastern part of the country is continuing, with 38 towns hit in the Luhansk & Donetsk areas, damaging civilian infrastructure. Ukraine remains top of the agenda at the World Economic Forum in Davos & Ukrainian Pres Volodymyr Zelenskyy addressed leaders of the business & political world at the summit yesterday. He said the world is at a “turning point” & must decide whether it would allow Russia’s “brute force” to win. Russian politicians, business leaders & academics are absent from the event this year. Meanwhile, a Russian soldier was sentenced to life in prison in the conflict's first war crimes trial. As the war drags on, the UZN said that more than 6.5M Ukrainians have become refugees. Russia's parliament passed a bill giving prosecutors powers to shut foreign media bureaus in Moscow if a Western country has been “unfriendly” to Russian media, following the closure of some Russian state news outlets in the West. The bill, passed in the first reading by the lower house of parliament (Duma) also prohibits the distribution of articles or other materials from media that have been closed by the prosecutor's office. It needs to undergo 2 more readings, be reviewed by the upper house of parliament & signed by Pres Vladimir Putin to become law.
NATO is stronger than Russia, alliance chief says; Moscow looks ready to sever ties with the West
Gold futures scored a 4th straight daily gain as US economic data pointed to economic headwinds being produced by high inflation. Gold for Jun rose $17 (1%) to settle at $1865 an ounce.. A pair of surveys released today—the S&P flash US services index & flash US manufacturing index—showed that US businesses in May expanded at the slowest pace in several months, reflecting the effects of high inflation, continuing supply shortages & some softening in customer demand. Gold, which bounced after hitting a 3-month low in early May, has benefited as the 10-year Treasury yield pulled back from a 3½-year high above 3.2% in recent weeks, as a selloff in equities spurred demand for safe-haven assets. The $, as measured by the ICE US Dollar Index, meanwhile, has retreated from a roughly 20-year high. Investors will be keeping an eye on tomorrow's release of minutes from the Federal Reserve's 2-day gathering in May, to help gauge whether Fed Chair Jerome Powell's more temperate postmeeting tone reflects a narrow or broad consensus of Committee members. At issue is whether there is a willingness to reassess policy once the fed-funds rate gets to 2%, as a potential counterweight to those aggressively pushing for 3-3.5% rate by year-end.
Gold shines with 4th straight gain, as economic data points to U.S. weakness
Oil futures ended slightly lower after Energy Secretary Jennifer Granholm was reported saying the Biden administration hasn't ruled out a ban on petroleum exports. West Texas Intermediate crude for Jul fell 52¢ (0.5%) to end at $109.77 a barrel. Jul Brent crude, the global benchmark rose 14¢ to settle at $113.56 a barrel. Oil has found support on optimism around plans to unwind lengthy lockdowns in Shanghai, China's largest city, but uncertainty lingers over crude demand from the world's largest oil importer as Beijing increased quarantine efforts in an effort to halt a COVID-19 outbreak. Chinese Vice Premier Sun Chunlan called the situation in Beijing manageable but that containment efforts can't ease. Tight US supplies of gasoline & diesel have sent prices for both to records, though gasoline futures were in retreat today. Demand for gasoline is expected to increase as summer driving season kicks off with the Memorial Day weekend. Investors continue to monitor efforts by the EU to agree to a plan to phase out imports of Russian oil & other energy in response to demand by Hungary for increased EU support to help it transition to other sources.
U.S. oil ends slightly lower with Biden administration seen still weighing export ban
Stocks were sold at the opening, but buyers returned & kept bidding stocks higher so Dow cold finish with a modest gain. However tech stocks on NAZ did not benefit from the mini rally. The US economy continues too face major headwinds as demand for home building has diminished, hurt by higher prices & interest rates on mortgages. Today's rebound looks good, but it did not signal the economy is out of the woods.
Dow Jones Industrials
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