Dow sank 366 near session lows, decliners over advancers 3-1 & NAZ finished up 47. The MLP index fell 3+ to the 243s & the REIT index tumbled 6+ to the 319s. Junk bond funds drifted lower & Treasuries were pretty much flattish keeping yields little changed. Oil rebounded up 1+ to the high 84s & gold finished up 18 to 2016 as the Israeli war intensifies (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)
Mortgage rates continued their upward trajectory this week, inching closer to 8% yet again as purchase demand sputters. Freddie Mac reported that the average rate for the benchmark 30-year fixed mortgage has now hit 7.79%, up from 7.63% last week & from 7.08% a year ago. The rate for a 15-year mortgage also climbed, averaging 7.03% after coming in last week at 6.92%. One year ago, the rate on a 15-year fixed note averaged 6.36%. This is the 7th week in a row that rates have risen, marking the longest stretch of consecutive increases since spring 2022, Freddie Mac said. "Rates have risen two full percentage points in 2023 alone and, as we head into Halloween, the impacts may scare potential homebuyers," Freddie Mac chief economist Sam Khater said. "Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory." With mortgage rates at their highest level in more than 2 decades, more would-be buyers are balking at the cost of a house payment. At the same time, more would-be sellers are opting to keep their homes rather than move & take on an interest rate that may be twice their current rate. Economists project 2023 will mark the slowest year for home sales since 2008, when the housing bubble burst. Redfin estimates there will only be roughly 4.1M sales of existing homes across the nation by year's end due to persistently high mortgage rates & elevated home prices amid low inventory, which are causing prospective buyers to reconsider their plans. The real estate brokerage also reported that 16.3% of home purchase agreements in the US were canceled last month, the highest rate in nearly a year. Data released last week by the Mortgage Bankers Association showed mortgage applications also tumbled in Sep to the lowest level since 1995.
Mortgage rates jump again, home purchases now at 'virtual standstill'
Chevron (CVX) posted 3rd-qtr profit that missed estimates by a wide margin,year-ago
levels. Oil earnings have slumped from record year-ago levels as crude
prices eased & higher costs crimped refining & chemical profits. Results remain strong by historical standards but are well off year-ago
levels. EPS was $3.48 compared to $5.78 last year. Adjusted EPS was $3.05, compared to the expected $3.75, according to LSEG data. The earnings miss came after the company warned that maintenance in
its oil & gas production & refining businesses would hurt results. Profit
from pumping oil & gas fell about 38% to $5.76B in the qtr
from $9.3B a year ago. But volume rose to 3.1M barrels of
oil & gas per day (boed) on its acquisition of PDC Energy. It pumped
3.0M boed a year ago. Oil prices recently rebounded from a mid-year slump as tighter supplies drove up crude prices. Its refining business posted an operating profit of $1.68B,
down from $2.53B a year ago. Gains by its US refining business
were offset by weakness overseas, where margins & inputs fell. The stock dropped 10.33 (7%).
If you would like to learn more about CVX, click on this link:
club.ino.com/trend/analysis/stock/CVX_aid=CD3289&a_bid=6aeoso5b6f7
Chevron's profit slumps, shares fall
Contract negotiations between the United Auto Workers (UAW) & General Motors (GM) reconvened after intense talks occurred last
night & into the morning, according to sources familiar with the
discussions. The potential deal is being based on a tentative agreement the union reached Wed with Ford Motor (F) & appears to be nearing the finish line. Both
GM CEO Mary Barra & UAW Pres Shawn Fain participated in the
marathon bargaining, however the union leader was doing so virtually,
said the sources. Fain was attempting to simultaneously negotiate with GM & Chrysler parent Stellantis (STLA),
which were hosting talks with the union roughly 30 minutes from one
another. STLA, including North American COO Mark Stewart, also
held extensive talks overnight. STLA
also could be closing in on a deal after the sides also negotiated into
the early morning, however issues still remained. The sides are
scheduled to reconvene currently. GM stock dropped 1.33 (5%).
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM_aid=CD3289&a_bid=6aeoso5b6f7
GM, UAW may be nearing a labor deal after marathon negotiating session
Gold closed at the highest in nearly 3 months, as treasury yields fell off early gains after the US reported the Federal Reserve's preferred inflation measure rose as expected last month, while US airstrikes on Iranian targets in Syria & intensifying Israeli attacks on Gaza heightened concerns over a spreading conflict in the Middle East. Gold for Dec closed up $1 to $1998 per ounce, the highest since Jul 31. The metal also traded above the $2000 mark during the session for the first time since that date. The rise comes as Israel stepped up ground attacks as it readies an invasion of the Gaza Strip to wipe out the Hamas militant group following terror attacks on Oct 7 that killed hundreds of civilians. Concerns over the war spreading to other Middle East countries were not eased after the US launched overnight airstrikes on Iranian targets in Syria following attack on US forces in Iraq & Syria. The US reported the Sep core personal consumption expenditures price index, the Federal Reserve's preferred inflation measure rose 0.3%, matching expectations, but above the 0.1% rate in Aug. Treasury yields rose following the data, but surrendered early gains. The yield on the US 2-year note was last seen unchanged at 5.046%, while the 10-year note was paying 4.842%, down 0.5 basis points.
Gold Closes Higher as US Airstrikes in Syria and Expanding Attacks on Gaza Raise Worries of a Spreading War
West Texas Intermediate (WTI) crude oil closed higher as the risk premium rose after the US carried out airstrikes in Iranian targets in Syria following attacks on US military sites in Iraq & Syria, while Israel intensifies ground attacks on Gaza, raising worries of a spreading war in the Middle East. WTI crude for Dec closed up $2.22 to settle at $85.54 per barrel, while Dec Brent crude, the global benchmark, was last seen up $2.66 to $90.59. Secretary of Defense Lloyd Austin said the attacks were "narrowly tailored strikes in self-defense (and) were intended solely to protect and defend U.S. personnel in Iraq & Syria. They are separate and distinct from the ongoing conflict between Israel and Hamas, and do not constitute a shift in our approach to the Israel-Hamas conflict." Still, they come as Israel steps up ground attacks on Gaza prior to an invasion of the strip to wipe out the Hamas militant group following terror attacks on Oct 7 that killed hundreds of civilians. The country is facing significant pressure to limit casualties to Gaza's 2M civilians, even as it continues to withhold water, power, fuel & food to the territory. There are also concerns that other Middle East nations could enter the conflict.
WTI Oil Rises After US Airstrikes on Iranian Targets in Syria and Iraq Raise Concerns over a Widening Middle East War
Gold is back in demand on increased war fears in the MidEast. Meanwhile the Fed has its big meeting next week. While no increase in in interest rates are expected, comments about the future for the future will a lot of interest as usual. Dow was even in the first ½ of the week. Then it was all downhill after that. For this ugly week Dow dropped 710 & is struggling to hold above 32K. Not good!!Dow Jones Industrials
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