Dow eased up 48, advancers over decliners 3-2 & NAZ added 17. The MLP index was steady in the 225s & the REIT index fell 1+ to the 377s. Junk bond funds fluctuated & Treasuries had buying after recent selling which drove yields higher (more below). Oil dropped 2 to the 74s & gold was flattish at 1843.
AMJ (Alerian MLP Index tracking fund)
Intel's (INTC), a Dow stock, board of directors is reducing its quarterly div to support what the company calls "critical investments" in a volatile economy. INTC
will cut its quarterly div to 12.5¢ per share of its
common stock. The company said the decision to decrease the quarterly
div reflects the board's deliberate approach to capital allocation & is designed to create long-term value. The improved financial flexibility will support the critical
investments needed to execute INTC's transformation during this period
of macroeconomic uncertainty. Despite persistent inflation& economic downturn, INTC reaffirmed its Q1 business
outlook, including revenue of $10.5-11.5B. CFO David Zinsner said, "While we will continue to prudently manage
cash and capital outlays in the near term, we are setting the foundation
for significant operating leverage and free cash flow growth when we
emerge from this period of outsized investments." INTC's
capital allocation & reduced div hopes to deliver $3B in
cost savings throughout 2023, while targeting $8-10B
in annualized savings by the end of 2025. The stock fell 19¢.
If you would like to learn more about INTC, click on this link:
club.ino.com/trend/analysis/stock/INTC_aid=CD3289&a_bid=6ae5b6f7
Intel slashes dividend
St Louis Federal Reserve Pres James Bullard expressed confidence that the central bank can beat inflation & advocated for stepping up the pace in the battle. Bullard said that a more aggressive interest rate hike now would give the rate-setting Federal Open Market Committee a better chance to bring down inflation that, while falling some off the precarious levels of 2022, is still high. “It has become popular to say, ‘Let’s slow down and feel our way to where we need to be.’ We still haven’t gotten to the point where the committee put the so-called terminal rate,” he said. “Get to that level and then feel your way around and see what you need to do. You’ll know when you’re there when the next move could be up or down.” Those comments come a week after Bullard & Cleveland Fed Pres Loretta Mester both said they were pushing for a ½-percentage point rate hike at the last meeting, rather than the ¼-point move the FOMC ultimately approved. They said they would continue to favor a more aggressive move at the Mar meeting. Markets have been volatile in the wake of those remarks as well as a batch of inflation data that came in higher than expected, stoking fears that the Fed has more work to do to bring down prices. But Bullard said the more aggressive move would be part of a strategy that he thinks ultimately will be successful. “If inflation continues to come down, I think we’ll be fine,” he added. “Our risk now is inflation doesn’t come down and reaccelerates, and then what do you do? We are going to have to react, and if inflation doesn’t start to come down, you know, you risk this replay of the 1970s ... and you don’t want to get into that. Let’s be sharp now, let’s get inflation under control in 2023.” Despite the tougher talk and hot inflation data, markets still largely expect the Fed to go with the ¼-point move next month.
Fed’s James Bullard pushes for faster rate hikes and sees ‘good shot’ at beating inflation
Treasury yields fell as investors awaited the release of
the Federal Reserve's latest meeting minutes & assessed the outlook
for monetary policy. The yield on the 10-year Treasury yield was down 4 basis points at 3.914% after hitting its highest level since Nov earlier in the day & the 2-year Treasury yield was last trading at 4.66%, down 4 basis points. Investors considered what the Fed's next policy moves might be,
including regarding interest rates, after various Fed officials hinted
that further increases could be on the horizon. Many are hoping
for fresh clues, when the minutes from the central bank's
last meeting on Jan 31 & Feb 1 are due to be published later today. The Fed
hiked interest rates by 25 basis points then, though several central
bank officials confirmed they were in favor of a 50 basis point increase. It was the 8th consecutive rate hike as the Fed's fight against persistently high inflation continued. Yields & prices move in opposite directions. One basis point is equivalent to 0.01%.
Treasury yields fall as investors await Fed meeting minutes
While INTC did not have a high yield formerly, it is rare to see a div cut for any Dow stock. Meanwhile investors are absorbing Bullard's comments ahead of the Fed minutes which will be released later today.Dow Jones Industrials
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