Dow jumped 386 near session highs, advancers over decliners a big 5-1 & NAZ gained 226. The MLP index rose 1+ to the 229s & the REIT index shot up 5+ to the 38ts. Junk bond funds were in demand along with stocks & Treasuries saw heavy buying, causing yields to decline. Oil finished up 1+ to the 79s after UAE denies it is leaving OPEC & gold was up 18 to 1858 (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)
The Federal Reserve says inflation remains uncomfortably high & that additional interest rate hikes are necessary to wrestle it under control. "The committee is strongly committed to returning inflation to its 2% objective," the Fed said in its semi-annual report
to Congress. The nation's central bank indicated
that "ongoing increases in the target range will be appropriate in order
to attain a stance of monetary policy that is sufficiently
restrictive." The report, which provides lawmakers with an
update on monetary policy & economic developments, comes just a few
days before Fed chair Jerome Powell testifies on Capitol Hill. Central bankers are in the midst of the most aggressive campaign
since the 1980s to crush stubbornly high inflation. Although the
consumer price index has slowly fallen from a high of 9.1% notched in
Jun, it remains about 3 times higher than the pre-pandemic average. Officials voted
in Feb to raise the benchmark interest rate a ¼ percentage
point to 4.50-4.75% & signaled that a "couple more"
increases are on the table this year. That followed a ½-point
increase at their Dec meeting & 4 consecutive 75-basis-point
moves before that. The Fed's rate-setting committee meets later
this month. Markets widely expect the Fed to continue raising rates at a ¼-point pace, but a slew of hotter-than-expected economic data
reports in recent weeks, including the blowout Jan jobs report & disappointing inflation data that pointed to the pervasiveness of
high consumer prices, has raised the specter of a higher peak rate or
steeper increases. Fed officials have acknowledged that rates may need to go higher than expected & remain elevated for longer. "My
overall judgment is it will be a long battle against inflation, and
we’ll probably have to continue to show inflation-fighting resolve as we
go through 2023," St Louis Fed Pres James Bullard said in
Feb. "I wouldn’t rule anything out for that meeting or any meeting
in the future."
Fed signals more interest rate hikes needed to fight sticky inflation
Intl oil benchmark Brent crude dropped on the back of a
report that the UAE is internally discussing leaving
OPEC, the powerful 13-member oil producer alliance. Amid
a gradually growing rift between longtime close allies Saudi Arabia &
the UAE, the latter is now debating withdrawing from OPEC. This would have a significant impact on the oil producer group's global
clout, as well as allow the UAE to pursue its own oil production plans
that suit its interests. Abu Dhabi has for some time wanted to increase
its crude output to boost its revenue but has been limited by OPEC+
production agreements dominated by the group's kingpin & largest
producer, Saudi Arabia. The idea isn't new; the UAE has reportedly debated leaving the oil
alliance for years. But the topic has been revived recently as
disagreements with Riyadh grew. The ruptures have manifested themselves in both countries’ divergent aims in the now 8-year-long war in Yemen, in competing for foreign investment, & more recently in state visits, or lack thereof, that have appeared as snubs. A dispute over oil production levels in July of 2021 temporarily froze OPEC's ability to lay out its plans for the markets, sending crude prices upward. Abu
Dhabi had demanded that its own “baseline” for crude production, the
maximum volume it’s recognized by OPEC as being able to produce, be
raised because this figure then determines the size of production cuts & quotas it must follow as per the group's output agreements. Members
cut the same percentage from their baseline, so having a higher baseline
would allow the UAE a greater production quota. UAE denied the report & traders took oil prices higher in the last hour of trading. However, oil remains volatile.
Oil prices turn positive after report UAE is considering leaving OPEC
Nordstrom (JWN) reported lower sales & profits for the holiday qtr, although earnings topped expectations. The
company said it expects sales to decline in the new fiscal year,
reflecting in part its decision to wind down its Canadian operations. “We
entered Canada in 2014 with a plan to build and sustain a long-term
business there. Despite our best efforts, we do not see a realistic path
to profitability for the Canadian business,” CEO Erik Nordstrom said. JWN
has struggled with slower sales, more markdowns & scrutiny from a
prominent activist investor. Revenue was $4.32B vs $4.34B expected EPS
fell to 74¢ from $1.23 a year earlier. For the new fiscal year, JWN expects revenue to fall 4-6%. It also projected EPS of 20-80¢ for the year. Michael
Maher, interim CFO, said JWN factored a more
challenging economic backdrop & higher costs into its year-ahead
forecast. “We
expect that elevated inflation and rising interest rates will continue
to weigh on consumer spending, especially in the first half of the
year,” he said. “We also anticipate continuing
inflationary pressure on our expenses especially labor and
transportation costs.” He added the outlook included an
approximately 2.5-percentage-point negative impact from the wind-down of
its operations in Canada, a business that drove about $400M in
sales in the fiscal 2022 year. The stock rose 48¢.
If you would like to learn more about JWN, click on this link:
club.ino.com/trend/analysis/stock/JWN_aid=CD3289&a_bid=6ae5b6f7
Nordstrom profit beats the Street as retailer starts closing Canada operations
Gold futures settled sharply higher to book their first weekly gain in 5 weeks & their biggest weekly advance since mid-Jan, as the $ pulled back after recent gains. Gold for Apr rose $14 (0.8%) to settle at $1854 an ounce, with the most-active contract up nearly 2.1% for the week. That was the largest weekly gain for the yellow metal since mid-Jan. Analysts said the $ continues to call the tune for gold, with the ICE US Dollar Index, a measure of the currency against a basket of major rivals, down 0.2% on Fri. The index is down 0.4% for the week, trimming its year-to-date advance to 1.2%. The $'s bounce in Feb had weighed on gold. A stronger $ can be a weight on commodities priced in the unit, making them more expensive to users of other currencies.
Gold books first weekly gain in over a month as U.S. dollar pulls back
It was a belated response by oil longs though not entirely surprising, given the outsized exports for last week. Crude prices jumped 2% & over 4% on the week in a catch-up to record crude exports reported by the EIA for last week. West Texas Intermediate settled at $79.68 a barrel, up $1.52 (1.9%). For the week, the US crude benchmark gained 4.4%. Brent crude settled at $85.83, up $1.08 (1.3%). The global crude benchmark was up 3.7% on the week. Crude prices started the week with a stumble, then gained momentum on positive factory data from top oil importer China. Hawkish rate hike talks & inflation concerns kept the market from breaking out after the Energy Information Administration (EIA) reported on Wed that US crude exports hit a record high of 5.629M barrels last week.
Oil Up 4% on Week After Dollar Slide, Belated Response to U.S. Exports
Comments in the Fed's report to Congress were accepted by the bulls & they were finally able to take the Dow higher. But it's been a long time & headwinds for the stock market have not gone away. For the week, Dow was up over 570.
Dow Jones Industrials
No comments:
Post a Comment