Dow gained 190, advancers over decliners nearly 2-1 & NAZ went up 137. The MLP index was off 1+ to the 185s after yesterday's weakness & the REIT index recovered 5+ to the 405s. Junk bond funds inched higher & Treasuries remain in demand, lowering yields (more below). Oil was off 1+ to go under 105 (more below) & gold added 5 to 1843.
AMJ (Alerian MLP index tracking fund)
The number of Americans filing new claims for unemployment benefits edged down last week as labor market conditions remained tight, though some slowing is emerging. Initial claims for state unemployment benefits fell 2K to a seasonally adjusted 229K last week, the Labor Dept said. The forecast called for 227K applications for the week. Claims have been treading water since tumbling to more than a 53-year low of 166K in Mar amid signs of some cooling in the labor market. There have been reports of job cuts mostly in the technology & housing sectors, with the latter experiencing a moderation in activity as mortgage rates surge in response to rising inflation expectations & aggressive interest rate hikes from the Federal Reserve. The overall labor market, however, remains tight. There were 11.4M job openings at the end of Apr, with nearly 2 openings for every unemployed person. Economists say claims would need to rise above 250K to help bring labor demand & supply back into balance to tame wage inflation.
U.S. weekly jobless claims grind lower amid tight labor market
The yield on the benchmark on the 10-year Treasury note fell to its lowest level in almost 2 weeks as investors continued to assess the likelihood of a recession & the yield on the 10-year Treasury note was nearly 5 basis points lower at 3.111%, while the yield on the 30-year Treasury bond fell 2 basis points to trade at 3.224%. Earlier today, the 10-year fell below 3.1%. Yields move inversely to prices. The moves come after Federal Reserve Chair Jerome Powell told Congress that the central bank is “strongly committed” to cooling the soaring inflation rate. Market participants are increasingly concerned that aggressive monetary tightening could tip the world's largest economy into a recession. “At the Fed, we understand the hardship high inflation is causing,” Powell said to the Senate Banking Committee yesterday. “We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.” Several analysts raised their odds of a recession this week.
10-year Treasury yield slips to lowest level in nearly two weeks on recession fears
Oil prices added to losses from the previous session, dropping more than 2% as investors worried that aggressive US interest rate hikes could trigger a recession & dent fuel demand. US West Texas Intermediate (WTI) crude futures fell to $105 a barrel & Brent crude futures dropped to $110 a barrel. Both benchmarks tumbled around 3% yesterday to hit their lowest levels since mid-May. Investors remain concerned that central banks could push the world economy into recession with interest rate increases. The Federal Reserve is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn, central bank chief Jerome Powell said. Pres Biden has called on Congress to pass a 3-month suspension of the federal gasoline tax to help combat record prices at the pump. The average price for a gallon of gasoline slipped again yesterday, remaining below the $5 threshold for a 5th straight day.
Oil prices fall more than 2%, extending losses
While the number of unemployment claims continue in a low region, their rise in the last 3 months may prove significant. Powell is not likely to add muck in his testimony today after what was said yesterday. Meanwhile bargain hunters are looking for opportunities in a depressed stock market.
Dow Jones Industrials
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