Dow jumped 327 (near session highs), advancers barely ahead of decliners & NAZ was off 32. The MLP index added 4+ to the 226s & the REIT index was off 3+ to 370. Junk bond funds traded higher & Treasuries saw more buying which reduced yields. Oil continued strong, finishing up 4+ to about 81, & gold recovered 34 to 2000 (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)
A surprise production cut by OPEC members is expected to pump up gasoline prices just ahead of the busy summer driving season. The cuts of up to 1.15M barrels per day could cause gas prices to rise by at least 26¢. Today, regular gasoline average roughly $3.50. If this prediction holds, it could mean gasoline prices will climb above $4 per gallon as summer nears. US oil prices soared above $80 per barrel on the developments. Minus the move from OPEC, prices should increase 10-15¢ anyway when refineries change the gasoline blend during the summer driving season. This comes at a time when consumers are being hammered by high inflation, which rose 6% year over year in Feb. Further complicating matters, though, is hurricane season, less than 60 days away, which could disrupt oil production, & drive up the price of gas even more, according to Lipow Oil Associates President Andy Lipow. "A major storm making landfall along the Gulf Coast, where 15% of the nation’s oil production and over 45% of the nation’s refinery capacity is located, can result in a significant supply disruption sending prices even higher," Lipow previously said. Oil production rose to 12.5M barrels per day in Jan, which is the highest level since Mar 2020, according to data from the Energy Information Administration.
Gas prices could hit $4 a gallon after OPEC production cut
General Motors (GM) Q1 US sales rose 18% from a year ago, to just over
600K vehicles delivered, as it continued its rebound from the supply
chain problems that limited global auto production in 2021 & early
2022. “We gained significant market share in the first quarter,
pricing was strong, inventories are in very good shape, and we sold more
than 20,000 EVs in a quarter for the first time,” GM North America
chief Steve Carlisle said. Most
of those electric vehicles were Chevrolet Bolts, but GM did sell 968 of
its brand-new Cadillac Lyriq EVs, built on the company's
next-generation Ultium EV architecture. GM has been working to ramp up
its production of its Ultium-based electric vehicles, with new
high-volume Ultium-based models including an electric Chevrolet Equinox crossover due later in 2023. GM
confirmed that it expects to build 50K EVs inH1 & “double that” in H2 of the year, as Lyriq
production ramps up & shipments of the electric version of the
Chevrolet Silverado pickup begin later this spring. With analysts increasingly concerned about high vehicle prices, GM noted
that new versions of its affordable Chevrolet Trax & Trailblazer &
Buick Encore crossovers will be arriving at dealers over the next
several months. All 3 will have starting prices below $30K, GM
said. The stock fell 41¢.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM_aid=CD3289&a_bid=6ae5b6f7
General Motors’ U.S. sales jump 18% in the first quarter
US home prices rose in Feb for the first time in 7 months as lower mortgage rates reignited consumer demand, the latest sign of recovery in the housing market. Median home prices climbed 0.2% in Feb from a month earlier,
compared with a 3.4% decline in Jan, mortgage analytics firm Black
Knight said, marking the strongest one-month gain
since May of last year. Home prices are now just 2.6% below the peak notched last Jun. "The
purchase market increased when rates declined in the early part of the
month, and borrowers were quick to take advantage of limited inventory,"
said Andy Walden, VP of enterprise research. "In many areas of the country, that dynamic – low inventory and a
modest rise in demand – led to an uptick in home prices." For months, higher mortgage rates have dampened consumer demand & brought down home prices. But as rates have slowly fallen from a peak of 7%, the housing market has shown early signs of stirring back to life. The
rise in home prices in Feb came amid a sharp decline in mortgage
rates. Freddie Mac reported that rates on the 30-year fixed mortgage
fell to about 6.09% at the beginning of the month before turning higher & climbing to 6.65%. Rates have declined again in the wake of 2 bank failures after the federal regulators stepped in to shore up
confidence within the financial system. Another problem confounding potential homebuyers is a lack of supply that has pushed the price of homes even higher. "The
unfortunate reality is that the scarce supply of inventory that’s the
source of so much market gridlock isn’t getting any better," Walden
said. "Without a significant shift in interest rates, home prices or
household income, this is a self-fulfilling dynamic that is quite likely
to continue for some time." The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten policy and slow the economy.
Home prices unexpectedly jump for the first time in months
Gold settled back above the $2000 mark as the $ & bond yields fell on expectations a surprise cut in OPEC+ production will spur inflation, dimming hopes the Federal Reserve will cut interest rates this year. Gold for Jun closed up $14 to settle at $2000 per ounce. The rise comes after OPEC+ made an unexpected 1.1M barrel per day cut to production to support prices & reduce global inventories, raising the cost of oil & adding inflationary pressure as the Fed & other central banks raise interest rates to slow their economies to check rising prices. The $ was last seen down 0.31 points to 102.2, making gold more affordable for intl buyers. Bond yields also, with the 10-year Treasury note down 3.9 basis points to 3.432%, while the 2-year note was down 2.1 basis points to 4.007%.
Gold Rises Back Above US$2,000 as OPEC+ Cuts Seen Fending off Lower Interest Rates
US crude prices finish 6.3% higher at $80.42 a barrel, the highest closing price since Mar 6, following a decision by Saudi Arabia & other OPEC-plus members to cut production by 1.1M barrels a day to offset weak US & global demand. The move to reduce supply came as data from the Institute for Supply Management reported US manufacturing activity contracted for a 5th consecutive month in Mar & as diesel fuel demand continues to run about 10% below year-ago levels. By reducing supply levels now, the OPEC-plus group may be trying to avoid a situation similar to that in US natural gas markets, which is burdened with inventories 21% above normal & the lowest prices in several years.
WTI Oil Finishes at a 4-Week-High on OPEC
The report above mentions US manufacturing activity was weak last month, that is why OPEC cut oil production. The US economy is less than robust & early signals are that GDP growth will be slightly negative for the rest of the year. But Dow had a good day today. Go figga!!
Dow Jones Industrials
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