Markets slip lower while waiting for inflation data later in the week

Dow finished off 93 with a little selling into the close, decliners over advancers 2-1 & NAZ dropped 110.  The MLP index fell 3+ to the 205s & the REIT index was off 2+ to the 342s.  Junk bond funds remained weak & Treasuries were closed for the holiday.  Oil pulled back 1+ to 91 & gold tumbled 32 to 1676 (more on both below).

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Chicago Federal Reserve Pres Charles Evans said the central bank is holding fast in its commitment to bring down inflation even if it means people losing their jobs.  Speaking 3 weeks before the Fed is expected to approve its 4th consecutive 0.75 percentage point interest rate increase, the central bank official said he hopes to minimize economic damage.  “Ultimately, inflation is the most important thing to get under control. That’s job-one,” Evans added.  “Price stability sets the stage for stronger growth in the future.”  Markets will get a fresh look at producer & consumer price indexes later this week.  Both have been showing cost-of-living increases near their highest levels in more than 40 years.  On the employment front, the Bureau of Labor Statistics reported Fri that nonfarm payrolls increased 263K in Sep, while the unemployment rate fell to 3.5%, tied for the lowest level since late 1969.  However, Fed officials including Chair Jerome Powell have warned that they expect “some pain” from the Fed's inflation-fighting efforts that could include higher levels of joblessness.  “If unemployment goes up, that’s unfortunate. If it goes up a lot, that’s really very difficult,” Evans said.  “But price stability makes the future better.”

Fed’s Evans says fighting inflation is the top priority even if that means job losses

The national average pump price for a gallon of gasoline rose 12¢ over the past week to hit $3.91 today according to AAA, fueled by high demand & tight supplies.  The recent announcement from OPEC+ stated the group of oil-producing nations would slash output by 2M barrels per day led to the price of oil creeping above $90 a barrel for the first time in several weeks, contributing to rising costs at the pump.  However, AAA points to other factors that are also at play.  Some regions in the US have also been hit harder than others due to refinery disruptions, after supplies were severely limited on the West Coast due to recent maintenance on a ½ dozen refineries.  The upper Midwest also saw pump prices spike after a deadly fire at refinery in Toledo, Ohio.  "Gas prices in California are finally cooling off, as more refineries come back online after undergoing maintenance and the switch to cheaper winter blends takes effect," AAA spokesperson Andrew Gross said.  "High West Coast prices have played a major role in the recent climb in the national average for gas," Gross continued.  "Reversing this trend may help take some pressure off of pump prices."

Gas prices rise and hit $3.91 per gallon

Top officials in the US, EU & at the UN expressed shock & horror over Russia's coordinated missile strikes on civilian areas in Ukraine's major cities, including its capital, Kyiv.  Pres Biden said the attacks “once again demonstrate the utter brutality” of Russian Pres Vladimir Putin's war on Ukraine.  UN Secretary-General Antonio Guterres was “shocked” by the attacks, saying that they represented an escalation of the war.  The full number of casualties from the attacks is not yet clear, but Ukraine's State Emergency Services said there were at least 11 dead & 89 injured.  In addition to the human toll, the strikes damaged significant parts of the Ukrainian energy grid, prompting the nation's energy ministry to announce it would halt exports of electricity to the EU starting tomorrow.  “Today’s missile strikes, which hit the thermal generation and electrical substations, forced Ukraine to suspend electricity exports from Oct. 11, 2022 to stabilize its own energy system,” the ministry said.  Russia's missile strikes came just 2 days after a blast destroyed part of Russia's Kerch Bridge, the only bridge linking Russia to the Crimean peninsula, which Moscow illegally annexed in 2014.  Russian Pres Vladimir Putin confirmed he ordered the strikes on Ukrainian cities, which were carried out by long-range missiles, in response to the bridge attack & vowed a “harsh response” to any acts threatening Russia.

Russian strikes on Ukrainian cities draw condemnation; Kyiv to halt electricity exports to EU

Gold ended lower, easing back after both metals posted 2 consecutive weekly gains, as investors bid up the $ in anticipation of a Sep inflation report due out later in the week.  Gold for Dec fell $34 (2%) to settle at $1675 an ounce.  Prices of gold moved lower yet again as precious-metals traders anticipate that the US inflation data set for release on Thurs could increase the pressure on the Federal Reserve to continue hiking interest rates aggressively -- potentially delivering another 75 basis point rate hike at the central bank's Nov meeting.  The broader outlook for gold remains one where central banks across the world look set on a course of a series of interest rate hikes to try & bring stubbornly high inflation back down towards their target figures.. The impact of these ever increasing rates has been to make gold a less desirable commodity to hold with its lack of yield making other interest-paying assets such as bonds more attractive in its place.  The consumer-price index for Sep due Thurs & economists expect the annualized inflation rate will slow to 8.1% from 8.3% last month, while the month-over-month rate is expected to accelerate to 0.2% from 0.1% in Aug.  The ICE US Dollar Index, a gauge of the $'s strength against a basket of rivals, rose 0.2% to 113.04.

Gold, silver end lower after logging back-to-back weekly gains

Oil futures settled lower as weak economic data from China fed concerns over a slowdown in energy demand.  US benchmark West Texas Intermediate crude for Nov fell $1.51 (1.6%) to settle at $91.13 a barrel.  Prices for the commodity gave back a portion of Fri's 4.7% gain.

Oil futures settle lower after weak economic data from China

Not much going on today on this semi holiday.  Extremely high inflation & nagging thoughts about a serious recession are very troublesome for investors.  The dreary Dow chart below tells it all.

Dow Jones Industrials