Dow went up 336 from renewed buying in the last hour, advancers over decliners about 3-1 & NAZ gained 239. The MLP index finished little changed but above 220 & the REIT index was up 3 to the 368s. Junk bond funds fluctuated & Treasuries saw selling, raising yields. Oil slumped 3+ to go below 71 (near its lows in the last year) & gold retreated 5 to 1911 (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)
Moody's Investors Services, a credit rating system, put several banks on review for a potential downgrade following the collapse of Silicon Valley Bank (SVB). The Federal Deposit Insurance Corporation (FDIC) announced the closure of SVBk on Fri amid a run on the bank, a move that raised concerns about the potential of future bank collapses. Following that collapse, Moody's placed First Republic Bank (FRC), Zions (ZION), Western Alliance (WAL), Comerica (CMA), UMB Financial (UMBF) & Intrust Financial on review, meaning the banks are now perceived as more risky investments by lenders. "Today's rating action reflects First Republic Bank's high reliance on more confidence sensitive uninsured deposit funding, its high amount of unrealized losses in its available-for-sale and held-to-maturity securities portfolios, as well as a low level of capitalization relative to peers," the firm said of the FRC rating. "If it were to face higher-than-anticipated deposit outflows and liquidity backstops proved insufficient, the bank could need to sell assets, thus crystallizing unrealized losses," Moody's added of FRC. The firm also stated that the banks have significant amounts of deposits that are above the FDIC's insurance threshold of $250K. Following the SVB failure, federal regulators announced on Sun that New York-based Signature Bank was being shut down to reportedly protect the financial system & consumers. Moody's downgraded the rating of Signature Bank & withdrew future ratings after its collapse.
Six banks flagged for concerning credit ratings after SVB failure
Tyson’(TSN) will close 2 chicken plants in May, affecting nearly 1700 employees. “While
the decision was not easy, it reflects our broader strategy to
strengthen our poultry business by optimizing operations and utilizing
full available capacity at each plant,” TSN said. In its latest qtr, TSN's chicken business underperformed expectations as its operating income was halved compared with the year-ago period. The
company's plants in Van Buren, Arkansas, & Glen Allen, Virginia, will
close May 12. Demand will be shifted to other TSN facilities. TSN
said it is helping affected employees apply for open jobs & offering
relocation assistance to other plants. The Glen Allen plant has 692
employees, while the Van Buren facility has 969 workers. The meat giant is the latest food supplier to lay off workers in an effort to cut costs. The stock was up 4¢.
If you would like to learn more about TSN, click on this link:
club.ino.com/trend/analysis/stock/TSN_aid=CD3289&a_bid=6ae5b6f7
Tyson Foods to close two chicken plants, lay off 1,700 workers
Boeing (BA), a Dow stock, said it has reached a deal to sell 78 of its 787 Dreamliner
planes to 2 Saudi airlines, the latest large order for the wide-body
jets in the past few months. The jetliners will go to Saudi
Arabian Airlines (Saudia) & a new airline, called Riyadh Air, which
Crown Prince Mohammed bin Salman announced over the weekend. Saudia
ordered 39 of the planes, with options for 10 more, & Riyadh Air will
get 39 of the 2 largest models of the planes, with options for 33
more. BA
did not disclose a timeline for deliveries of the planes. The White
House said the order is worth almost $37B, although that figure
does not take discounts that airlines usually receive, especially for
large orders, into account. “This will support the country’s goal
of serving 330 million passengers and attracting 100 million visits by
2030,” Riyadh Air said. The sale shows a pickup in demand for wide-body aircraft, planes that
are used for long-distance flights & fetch a higher price than the
more-common narrow-body jets. The stock rose 3.15.
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA_aid=CD3289&a_bid=6ae5b6f7
Boeing sells 78 Dreamliner planes to Saudi airlines
Gold prices ended lower, retreating from a 5-week high as Treasury yields & the $ jumped after 3 days of sharp declines, while traders digested the release of the US inflation report which shows pressure on prices continued to cool in Feb. Gold futures for Apr fell by $5 to end at $1910 per ounce. Gold pulled back today as safe-haven demand for the yellow metal cooled after US authorities intervened Sunday to quell fears about regional bank viability. Gold was on the backfoot too, testing the $1900 per ounce level as safe haven demand eased, having surged by almost 6% from last week's lows. Traders were also assessing the Feb CPI report which shows the inflation cooled modestly last month, in line with expectations. Consumer prices rose 0.4% in Feb & the annual rate of inflation slowed again. The core rate of inflation, which omits food & energy, rose a sharper 0.5%. The forecast called for a 0.4% monthly gain. The inflation report potentially offers the Federal Reserve leeway to approve a smaller increase in interest rates next week as it also gauges the fallout from the failure of Silicon Valley Bank. US bond yields soared today with the yield on the 2-year Treasury note jumped 23 basis points to 4.25% & its largest one-day gain since 2009. Yesterday, the 2-year Treasury yield saw its biggest drop since 1987 as SVB's fallout upset interest-rate hike calculations. The ICE US Dollar Index a gauge of the greenback's strength against a basket of rivals, was nearly flat at 103.59.
Gold settles slightly lower after U.S. CPI data shows inflation eased again in February
Oil futures fell sharply, logging their lowest close of 2023 as traders were unable to shake recession fears after another round of hot US inflation data & continued worries over the banking sector after the collapse of California’s Silicon Valley Bank. West Texas Intermediate crude for Apr fell $3.47 (4.6%) to finish at $71.33 a barrel. May Brent crude, the global benchmark, declined $3.32 (4.1%) ending at $77.45 a barrel on ICE Futures Europe. Both WTI & Brent saw the lowest close for a front-month contract since Dec 9. Oil logged back-to-back losses, unable to join a bounce for equities & bank shares as worries around the banking system appeared to fade. Instead, jitters over the potential for a significant economic downturn continued to hang over the market. Looking ahead, the supply side of current fundamental backdrop remains fairly steady; however, fading optimism surrounding China's economic recovery & still-elevated recession fears are leaving risks skewed to the downside. The oil market is acting like a recession is inevitable or at the very least, we are seeing serious deleveraging of oil contracts. With more reports that signal more robust demand in China & with the $ pulling back, oil should be holding up against all this economic turmoil. OPEC+, in its monthly report, left its forecast for demand in global oil-demand growth in 2023 unchanged at 2.3M barrels a day to 101.9M barrels a day. OPEC+ said expectations for growth in demand from China was offset by revisions lower for the US & Europe.
Oil ends at 2023 low as SVB collapse, inflation data stoke recession fears
Worries, worries, worries just won't go away. The bank business still has a lot of problems to work out & recession fears have resurfaced. These are very difficult times for investors. However, buying in the last hour gave the Dow a significant rise after it pulled back in PM trading.
Dow Jones Industrials
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