Dow rose 46, decliners over advancers 5-2 but NAZ declined 155. The MLP index was even in the 249s & the REIT index continued weak, off 3+ to the 322s. Junk bond funds slid lower & Treasuries ran into selling again driving yields higher. Oil fell almost 1 to the high 82s & gold added 2 to 1988.
AMJ (Alerian MLP Index tracking fund)
The head of the International Monetary Fund dubbed the worsening Israel-Hamas conflict as another cloud on the horizon of an already gloomy economic outlook. “What we see is more jitters in what has already been an anxious world,” Managing Director Kristalina Georgieva said at the Future Investment Initiative Institute (FII) conference in Riyadh. “And on a horizon that had plenty of clouds, one more — and it can get deeper.” Georgieva said that the economic fallout from the war, now in its 3rd week, would be “terrible” for the sides involved, as well as have significant repercussions for the region. Those include negative impacts on trade & tourism. “It is terrible in terms of economic prospects for the epicenter for the war,” she added. ”[There will be] negative impact on the neighbors: on trade channels, on tourism channels, cost of insurance.” Georgieva noted that countries including Egypt, Lebanon & Jordan were already feeling the ramifications. “Uncertainty is a killer for tourists inflows. Investors are going to be shy to go to that place,” she continued. She did not reference the economic implications of the conflict for the wider global economy, but noted that the outlook was already stagnant. Georgieva's assessment that the war is adding to a sense of “a more jittery world, more anxiety in the world” was felt by other senior business figures at the FII conference. Dubbed “Davos in the desert,” the event typically focuses on economic & investment prospects around the Middle East region. This year, it has been overshadowed by Israel's ongoing offensive against the Gaza Strip, following the Oct 7 terror attacks carried out by Palestinian militant group Hamas against Israel. The hostilities came as Israel had been making moves to normalize diplomatic ties with its neighbors, including Saudi Arabia. Georgieva said the IMF’s first priority was “the tragic lost of life” caused by the offensive & called for a resolution as soon as possible. “The sooner there is a resolution, the better,” she said.
IMF chief says Israel-Hamas war is a new cloud on the world’s economic horizon
Microsoft (MSFT) beat estimates for fiscal first-qtr
results in all segments, driven particularly by strength in its cloud-computing & PC businesses. Revenue rose 13% to $56.5B in the qtr, compared with the estimate of $54.5B,
according to LSEG data. Revenue from the Intelligent Cloud unit, which houses the
Azure cloud-computing platform, grew to $24.3B, compared with the estimate of $23.5B. Azure revenue
rose 29%, higher than a 26.2% growth estimate from market research firm
Visible Alpha. The
company does not break out the absolute revenue figure for Azure, the
part of its business best situated to capitalize on booming
interest in artificial intelligence. Investors are looking at how generative AI services may benefit
MSFT, which secured an early lead with investments in startup
OpenAI, owner of the popular ChatGPT service. Many of those AI services are not yet widely available. Brett
Iversen, MSFT's VP for investor relations, said much of
the sales growth from customers rekindling
their use of MSFTs cloud in anticipation of using those services. "What
AI is doing ... is opening up either new conversations or extending
existing conversations or getting us back in touch with customers that
we maybe weren't doing as much with," Iverson said. EPS was $2.99, above estimates of $2.65. Search & news advertising revenue excluding traffic
acquisition costs increased by 10%. Sales of its Windows operating system & other products in the segment grew to $13.7B, compared with the estimate of $12.8B. The stock jumped 10.23 (3%) on the news.
If you would like to learn more about MSFT, click on this link:
club.ino.com/trend/analysis/stock/MSFT_aid=CD3289&a_bid=6aeoso5b6f7
Microsoft shares rise as Wall Street heralds ‘strong execution,’ wider AI rollout
Treasury yields rose, with the yield on the 10-year rate hovering below 5% & near multiyear highs, as investors considered the state of the economy. The yield on the 10-year Treasury was up by 7 basis points at 4.912% & the yield on the 2-year Treasury was hovering near the flatline at 5.1%. Yields & prices move in opposite directions. One basis point equals 0.01%. The yield on the 10-year Treasury crossed the 5% mark Mon, reaching levels last seen in 2007, before pulling back again slightly, while remaining near levels last seen over a decade ago. That came as Pershing Square's Bill Ackman said that he covered his bet against long-term Treasuries as he believes investors may soon seek safety in bonds as geopolitical concerns mount. Investors have been closely following the Israel-Hamas war & assessing its impact on the global economy, especially the energy sector. However, there has not been a significant run on Treasuries since the war began, a common phenomenon during times of geopolitical crisis. The yield on the 10-year Treasury has been steadily climbing in recent weeks & has hit several multiyear highs this month. Investors have been considering the outlook for interest rates ahead of the Federal Reserve's next policy meeting on Oct 31 & Nov 1. Several Fed officials have suggested that higher Treasury yields will create tighter financial conditions, which could slow the economy. That could mean the Fed does not need to hike rates & prompted many investors to believe rates will be left unchanged next week.
Treasury yields rise as investors assess state of economy
Dow Jones Industrials
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