Dow dropped 339, decliners over advancers 3-2 & NAZ retreated 153. The MLP index went up to the 216s & the REIT index lost 10+, falling to the 368s. Junk bond funds remained weak & Treasuries were hit with limited selling. Oil was up 1 to the 73s & gold gave back 19 to 1939 (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)
Around 204K people applied for first-time unemployment benefits last week, according to the latest data from the Bureau of Labor Statistics. That's down from the previous week’s total jobless claims & only slightly below the pre-pandemic weekly average of 218K. Continuing claims, which are filed by people who have received unemployment benefits for more than one week, decreased to 1.69M last week, from 1.72M in the prior week. The data indicates continued resilience in the labor market despite inflation-fighting efforts by the Federal Reserve intended to cool the economy & which would ordinarily have a negative impact on the job market, resulting in layoffs. Many economists & investors fear the Fed's aggressive actions, which have included 7-straight jumbo rate hikes, could throw the economy into a recession. But so far, the labor market appears impervious. The forecast was expecting 225K initial claims. Weekly jobless claims are volatile, especially around the holidays, & frequently subject to revision.
Weekly jobless claims fall to lowest level since September
Long-term mortgage rates inched up for the 2nd week in a row while mortgage applications tumbled. Freddie Mac's latest Primary Mortgage Market Survey shows the average rate for the benchmark 30-year fixed note increased to 6.48%, up from 6.42% last week. At this time last year, the long-term rate sat at 3.22%. The fixed rate for a 15-year fixed note also rose to 5.73%, up from last week's average of 5.68%. At this time last year, 15-year notes averaged 2.43%. "Mortgage application activity sunk to a quarter-century low this week as high mortgage rates continue to weaken the housing market," said Sam Khater, Freddie Mac's Chief Economist. "While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023." The housing market cooled significantly last year as the Federal Reserve continued to crank up its key lending rate in an effort to cool the economy & tame stubbornly-high inflation.George Ratiu, senior economist at Realtor.com, says real estate markets now "are firmly in the winter season" with elevated home prices & higher rates continuing to create a barrier for many would-be homebuyers. Although home prices fell sharply in Nov from the summer peak, home values were still up by double-digits from last year in 79 of the top 150 largest metros. "With the 30-year mortgage rate at 6.4%, the buyer of a median-priced home is looking at a monthly payment that is 60% higher than last year," Ratiu said. "We may have to wait until the start of the spring shopping season for more clarity on the direction of housing markets this year, especially as both buyers and sellers are pulling back from the marketplace."
Mortgage rates tick higher as applications plummet
The surge in Covid-19 cases in China is impacting the completion of manufacturing orders. Logistics managers are warning clients that because of the spike in infections, factories are unable to complete orders — even with US manufacturing orders from China already down 40% due to an unrelenting demand collapse. Orders for ocean bookings continue to be softer according to SONAR Data. “With 1/2 or even 3/4 [of the] labor force being infected and not able to work, many China manufacturers can not operate properly but produce less than their optimal outputs,” Asia-based shipping firm HLS wrote to clients. “The container pickup, loading, and drayage (trucking) are also affected as all businesses are facing the impacts of COVID. We expect a very soft volume after the Lunar New Year because a lot of factories have slowed production due to the increasing infection, and have to cancel or delay the bookings for the 2nd half of January and also early February.” HLS also noted that “All indications that the Chinese cities are experiencing infection peaks is based on the surge of infected family members, friends, and colleagues, the long lines at the fever clinics at hospitals across the country.” 3 major ports across China are experiencing supply chain delivery problems because of Covid. For the Port of Shanghai, the world's #1 container port, the report warned that “Cancellations are increasing as many factories can’t operate properly due to a lot of workers getting infected with Covid.” The same warning was also highlighted for the Port of Shenzhen, the 4th-largest container port in the world & the city that is home to Apple (AAPL), a Dow & NAZ stock, manufacturers. “The booking cancellation is increasing as many factories can’t operate properly due to a lot of workers getting invested with Covid,” the report added.
China’s new Covid surge is crippling the world’s most important factories and biggest ports
Gold futures finished lower, posting their first loss in 5 sessions, as traders booked profits in the wake of the metal's rise to its highest price since Jun. Gold for Feb fell $18 (1%) to settle at $1840 per ounce. Prices for the most-active contract settled yesterday at $1859, the highest finish since Jun 10. Precious-metals traders took profits in gold after it traded at multi-month highs at the start of 2023. A stronger $ also helped to weigh on prices. Gold prices have retraced from their recent highs for 2 reasons. First, it is the strength of the $ index which is pushing the price of the shining metal lower & 2nd, after the massive run in prices, it is normal for traders to book some profit off the table,
Gold prices end lower after a 4-session rise to their highest since June
US oil futures finished higher,
recouping some of the losses they suffered during a 2-session
decline. Data from the Energy Information Administration revealed a smaller-than-expected weekly rise in US crude
supplies & declines in gasoline & distillate stockpiles. The US
benchmark WTI crude for Feb
rose 83¢ (1.1%) to settle at $73.67 a barrel.
U.S. oil futures end higher after a 2-session drop in prices
Dow Jones Industrials
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