Dow jumped 428 near session highs again, advancers over decliners 5-2 & NAZ went up 156. The MLP index rose 2 to the 228s & the REIT index added 1 to the 372s. Junk bond funds fluctuated & Treasuries continued to be purchased. Oil recovered 2+ to go over 70 & gold was up 1 to 1970 (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)
Initial claims of unemployment for last week were unchanged from the prior week, though the Labor Dept said the 4-week moving average was the highest in more than a year. Initial claims of joblessness last week totaled 262K, unchanged from the prior week, for which claims were revised higher by 1K. The less-volatile, 4-week moving average, however, was up 9K from the prior week to total 247K. "This is the highest level for this average since November 20, 2021 when it was 249,250," the Labor Dept's report read. The number of people without a job over several weeks to May 27 totaled 1.6M, a decline of 16K from the prior week. This time last week, the figure was closer to 1.2M, however. Hiring is a concern for policymakers at the Federal Reserve. A strong labor market supports wages, which gives consumers more discretionary cash. That in turn leads to an uptick in demand, incentivizing inflation. Federal Reserve Chair Jerome Powell said inflation is "well above" the 2% target rate, while the labor market remains "robust." "There are some signs that supply and demand in the labor market are coming into better balance," he added.
First-time jobless claims static, but four-week average is troubling
The European Central Bank (ECB) announced it is taking its main rate up by 25 basis points to 3.5%, diverging from a US Federal Reserve decision to pause its own hikes yesterday. The central bank has raised rates since Jul 2022 in an attempt to bring down record-high inflation across the region. The latest inflation reading showed prices cooling down at a faster-than-expected pace, with headline inflation coming in at 6.1% in May & core inflation, which excludes volatile items, at 5.3%. This remains well above the ECB's target of 2% headline inflation. While markets widely expected this decision, investors argue that a lot of uncertainty remains about what the ECB might do beyond the summer. “The Governing Council’s future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary,” the ECB said. Despite the recent cooling in inflation, the ECB actually raised its headline & core expectations for this & next year. It now expects headline inflation at 5.4% this year, at 3% in 2024 & at 2.2% in 2025. The ECB also turned more negative about growth in the coming years, revising down its growth numbers to 0.9% this year & to 1.5% in 2024. An estimate done 3 months ago pointed to a GDP rate of 1% this year & of 1.6% in 2024. The € turned higher against the $, while European bond yields rose off the back of the announcement.
European Central Bank diverges from Fed, raising rates to highest in 22 years
Negotiations between UPS & the Teamsters
over a new contract for the roughly 350K unionized workers at UPS
are moving ahead as the threat of a potential strike later this summer
hangs over the economy. UPS'
role in the US economy has grown in recent years due to the rise of
e-commerce & an influx of deliveries during the pandemic, a trend
that has remained even as the economy reopened & supply chain
challenges abated. The company ships about 24M packages
per day & handles roughly 1/4 of all US parcel volume which UPS notes
is roughly equivalent to 6% of America's GDP. The
sheer volume of UPS deliveries couldn't be absorbed by FedEx (FDX) or the
Postal Service in the event of a strike, which would create delays & increase prices due to the lost capacity in the logistics system. As
Thomas Goldsby, a logistics chair in the Supply Chain Management
Dept at the University of Tennessee, said, "The python
can’t swallow the alligator, and that’s going to be felt by all of us." UPS has about 350K unionized employees
who are represented by the Teamsters under what is the largest
private-sector collective bargaining agreement in North America. That figure includes package delivery drivers & warehouse logistics workers around the country. The current Teamsters contract expires
on Jul 31, which raises the possibility of a strike beginning on
Aug 1 if the 2 sides are unable to finalize an agreement. Negotiations officially began on Apr 17. UPS said,
"UPS is focused on reaching a deal that is a win for our employees, the
Teamsters, UPS and our customers – and we’re committed to doing that
before the end of July. We continue to make meaningful progress on a
wide array of issues in our negotiations." The stock rose 4.12.
If you would like to learn more about UPS, click on this link:
club.ino.com/trend/analysis/stock/UPS_aid=CD3289&a_bid=6aeoso5b6f7
UPS, Teamsters in nail-biting negotiations as strike threat looms over economy
Gold futures gave up early declines to finish higher for a 2nd session in a row. Gold prices had a brief decline in electronic trading during late day trading following the Federal Reserve's hawkish pause in interest rate hikes. Gold prices have recovered a touch but still look a little soft, with a similarly hawkish outlook from the European Central Bank helping to keep a lid on gains. Gold for Aug rose $1 to settle at $1970 an ounce.
Gold Futures Finish Higher For A Second Session In A Row
Oil futures climbed, buoyed by some signs of higher oil demand from China & strength in US gasoline demand for the summer driving season. Jul West Texas Intermediate crude gained $2.35 (3.4%) to settle at $70.62 a barrel. Prices based on the front-month contract settled at their highest in a week.
U.S. Oil Futures Climb Back Above $70, The Highest Finish In A Week
Dow has risen 1600 since the end of May with only a few minor bumps along the way. Meanwhile the news has been largely uneventful along with generally hawkish comments from the FED. The stock market appears to be overbought currently & will be going into a long weekend after tomorrow's close.
Dow Jones Industrials
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