Markets reverse early losses with Mideast in focus

Dow finished up 197 after opening in the red, advancers over decliners 2-1 & NAZ gained 52.  The MLP index remained in demand, up 4+ to 245 & the REIT index recovered 4+ to the 336s.  Junk bond funds crawled higher & Treasuries were closed today.  Oil climbed 3+ to the 86s & gold soared 27 to 1872 (more on both below).

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Oil prices jumped about 4% as the Israel-Hamas conflict extended into its 3rd day following a surprise attack on Israel by Palestinian militants Hamas.  Global benchmark Brent traded 3.9% higher at $87.85 a barrel, while the US West Texas Intermediate futures rose 4.1% to $86.19 per barrel.  While there is a surge in crude prices, analysts believe it will be a knee-jerk reaction, & likely temporary. “For this conflict to have a lasting and meaningful impact on oil markets, there must be a sustained reduction in oil supply or transport,” said Vivek Dhar, Commonwealth Bank's director of mining & energy commodities research. “Otherwise, and as history has shown, the positive oil price reaction tends to be temporary and easily trumped by other market forces,” he wrote.  The conflict does not directly put any major source of oil supplies in danger, he added.  Neither side is a major oil player. Israel boasts 2 oil refineries with a combined capacity of almost 300K barrels per day.  According to the Energy Information Administration, the country boasts “virtually no crude oil and condensate production.”  By a similar strand, the Palestinian territories produce no oil, data from EIA shows.   However, the conflict sits at the doorstep of a key oil producing & export region for global consumers & oil-rich Iran looms large as the market's immediate concern.  There are concerns the conflict could spill into the region. “There’s also a risk of the conflict escalating regionally. If Iran is sucked into it, there could also be supply issues, though we’re not at that stage yet,” Eurasia Group's director of energy, climate & resources Henning Gloystein said

Oil prices jump 4% in the wake of Hamas attack on Israel

Tesla (TSLA) reported its sales of China-made electric vehicles decreased 10.9% year over year for the month of Sep, according to a report from the China Passenger Car Association.  The report said the automaker sold 74K China-made EVs during the month.  Sales for the Model 3 & Model Y vehicles made in China were down 12% from Aug to Sep. It exports many of the cars it makes in China.  News of the sales dip comes a week after the company announced 3rd-qtr vehicle deliveries that came in below deliveries & production from the previous qtr.  “A sequential decline in volumes was caused by planned downtimes for factory upgrades, as discussed on the most recent earnings call,” the company said.  “Our 2023 volume target of around 1.8 million vehicles remains unchanged.”  3rd-qtr earnings will be reported on Oct 18.  The stock was up 34¢.
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Tesla stock dips after China EV sales fall 11%

Rep lawmakers are under mounting pressure to settle on a candidate to replace Kevin McCarthy as speaker of the House of Representatives this week after the worst attack on Israel in 5 decades.  A senior Biden administration official said that the paralysis in the House could complicate US efforts to support Israel.  “There probably is a role for Congress here, and without a speaker of the House, that is a unique situation we’re going to have to work through,” the official said.  McCarthy was ousted by conservative Reps last week, the first time a House speaker was deposed in a no-confidence vote in US history.  GOP lawmakers have struggled to coalesce around a replacement for McCarthy.  House Majority Leader Steve Scalise & Judiciary Committee Chair Jim Jordan are viewed as the top candidates.  Jordan & Scalise have voiced unequivocal support for Israel in the wake of the devastating weekend surprise attack by the militant group Hamas on towns that border the Gaza Strip.  McCarthy said that there is nothing the House can do until the body elects a speaker:  “I don’t know if that happens quickly,” McCarthy said.  House Reps are expected to vote for a candidate to replace McCarthy on Wed.  The GOP has a conference meeting scheduled for later today & a candidate forum tomorrow.

Israel-Hamas war ratchets up pressure on Republicans to select House speaker in coming days

Safe havens including gold & $ rallied as Israel retaliated following Hamas's bloody invasion of southern Israel over the weekend.  Many investors were concerned about the potential for escalation & protracted conflict in one of the most politically fraught regions of the world.  Gold futures expiring in Dec surged 1% to $1863 per ounce, while the ICE U.S. Dollar Index, a gauge of the buck's strength against a basket of rivals, rose 0.5% to 106.52.  Seeing gold & the $ rallying in tandem has been a rare occurrence over the past 18 months, since a stronger $ has tended to weigh on prices of the yellow metal & other commodities.  Other currency-market havens also rose despite the $'s strength, including the ¥, which was marginally higher, while the Swiss franc strengthened against its main rival, the €.  Trading in Treasuries was closed today.

Gold, U.S. Dollar Rally As Investors Flock To Havens As Israel-Hamas War Escalates

Oil futures rallied more than 4%, lifting US prices to their highest finish in nearly a week.  Palestinian militant group Hamas attacked Israel over the weekend raising worries about disruptions to oil supplies in the Middle East region.  The violence will keep upward pressure on oil prices, at least in the short term.  There's speculation that Iran aided Hamas in the planning of the attack.  The question now is whether the Saudis will release oil to cool the markets or argue that the fundamentals are not changed by the war & they don't want to flood the market.  Nov West Texas Intermediate crude added $3.59 (4.3%) to settle at $86.38 a barrel.

Oil settles more than 4% higher as Israel-Hamas war raises risk to oil in the Middle East

Markets took the news on the war in Israel in stride.  However that calm attitude can change quickly during a war.  Both the the consumer price index & producer price index are scheduled to be released on Thurs.

Dow Jones Industrials