Dow climbed 205 (session highs), advancers over decliners about 2-1 & NAZ was up 199. The MLP index added 1+ to the 233s & the REIT index went up 4+ to the 399s. Junk bond funds were little changed & Treasuries had limited selling, bringing higher yields. Oil added 1 to the 81s & gold declined 11 to 1931 (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 US homes rose for the 3rd straight month in Dec as high mortgage rates continued to decline, offering some relief for prospective homebuyers. New single-family home purchases rose 2.3% to a seasonally adjusted annual rate of 616K units, the Commerce Dept reported. The forecast called for new home sales, which account for a small percentage of total sales, to hit 617K last month. "The new home sales market continues to face headwinds from rising costs, affordability challenges and ongoing supply-side headwinds," said Odeta Kush, the deputy chief economist at First American. "Prices will need to continue to adjust down and builders will likely continue incentives to entice buyers."
New home sales rise for third straight month as mortgage rates fall
Inflation may be cooling. But, for most Americans, the price of a cup of coffee or a bag of groceries hasn't budged. In the months ahead, the big question is whether consumers will start to feel relief, too. Over the past few months, many of the key factors that fueled a 4-decade high in inflation have begun to fade. Shipping costs have dropped. Cotton, beef & other commodities have gotten cheaper. And shoppers found deeper discounts online & at malls during the holiday season, as retailers tried to clear through excess inventory. Consumer prices fell 0.1% in Dec compared with the prior month, according to the Labor Dept, marking the biggest monthly drop in nearly 3 years. But
cheaper freight & commodity costs won’t immediately trickle down to
consumers, in part due to supplier contracts that set prices for months
in advance. Prices are still well above
where they were a year ago. The headline consumer price index, which
measures the cost of a wide variety of goods & services, is up 6.5% as
of Dec, according to Labor Dept data. Some price increases are eye-popping. The cost of large Grade A eggs has more than doubled, while the price tags for cereal & bakery products have climbed 16.1%. “There
are some prices, some goods for which prices are falling,” said Mark
Zandi, chief economist of Moody's Analytics. “But broadly, prices aren’t
falling. It’s just that the rate of increase is slowing.” Retailers,
restaurants, airlines & other companies are deciding whether to pass
on price cuts or impress investors with improved profit margins.
Consumers are getting pickier about spending & economists are
weighing whether the US will enter a recession this year.
Inflation is cooling, but prices on many items are going to stay high for months
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market remains tight despite higher interest rates. Initial claims for state unemployment benefits dropped 15K to a seasonally adjusted 190K for last week, the Labor Dept reported. The forecast was for 214K claims for last week. Part of the surprise drop in claims likely reflected continuing challenges adjusting the data for seasonal fluctuations at the start of the year. Thru the seasonal volatility, claims have remained at levels consistent with a tight labor market, even as layoffs have accelerated in the technology industry & interest rate-sensitive sectors like finance & housing. Outside the technology industry, economists say companies are generally reluctant to send workers home after difficulties finding labor during the pandemic. They expect companies to cut back on hiring before resorting to layoffs. The Federal Reserve's Beige Book reported that “many firms hesitated to lay off employees even as demand for their goods and services slowed and planned to reduce headcount through attrition if needed.”
U.S. weekly jobless claims unexpectedly fall
Gold prices ended lower, pulling back from their highest
levels in 9 months & posting their first decline in 6 sessions,
after a stronger-than-expected US GDP report. Gold prices for Feb fell by $12 (0.7%) to settle at
$1930 per ounce after settling at the highest level yesterday for a
most-active contract in 9 months.
Gold Futures Mark First Fall In 6 Sessions After A Stronger-Than-Expected GDP Report
Oil futures finished higher a day after US prices posted a modest rise. China's reopening is bullish for commodities, full stop. Oil traders are also looking ahead to a committee meeting of major oil producers set to discuss developments in the market on Feb 1, as well as the EU's ban on Russian oil products on Feb 5. US benchmark West Texas Intermediate crude for Mar climbed by 86¢ (1.1%) to settle at $81.01 a barrel.
U.S. oil futures score back-to-back gains
Buyers in the PM gave the averages solid gains. Recessions thoughts have not gone away. The article above on inflation is important. While CPI inflation has slowed, prices are still higher than they were. And consumer are adjusting to the new levels. The pain from higher prices has not gone away even if increases have cooled. Gold & Treasuries are still in demand by nervous investors because the Fed will be raising interest rates.
Dow Jones Industrials
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