Dow dropped 332 (session lows), decliners over advancers about 5-1 & NAZ lost 219. The MLP index added 1+ to the 252s & the REIT index sank 6+ to the 335s on high interest rates. Junk bond funds were little changed & Treasuries continues with demand for Treasuries, taking the yield on the 10 year Treasury up 4 basis points to 4.89%. Oil was up 1+ to the 88s & gold soared 27 to 1962 (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)
Federal Reserve
Governor Christopher Waller indicated the central bank can
afford to hold off on interest rate increases while it watches progress
unfold in its efforts to bring down inflation. With the Fed set to
meet again in 2 weeks, Waller said he is weighing recent data points
against each other to see whether the central bank is succeeding in
bringing down demand & slowing inflation, or if the economy continues
to show resilience & pushes harder on prices. “As
of today, it is too soon to tell,” he said. “Consequently, I believe we can wait, watch and see
how the economy evolves before making definitive moves on the path of
the policy rate.” The remarks come a day before Fed Chair Jerome Powell is set to deliver what could be a key policy speech in New York. In recent days, multiple Fed officials
have said rising Treasury yields are indicative that financial
conditions are tightening, possibly making additional rate hikes
unnecessary. The 10-year Treasury yield topped 4.9% today, a first since 2007. Indeed, Waller noted the backup in yields & said economic reports over the past several months have been
“overwhelmingly positive” regarding inflation. Widely watched indicators
such as the consumer price index & the Fed's preferred personal consumption expenditures price index show rolling core inflation on a 3-month basis, respectively at 3.1% & 2%, he noted. Waller has been one of the more hawkish Fed officials, meaning he favors higher rates & tighter policy. As a governor, he automatically gets a vote on the rate-setting Federal Open Market Committee. His remarks pointed to a near-term halt, without a commitment beyond that. “Should the real side of the economy soften, we will have more room to wait on any further rate hikes and let the recent run-up on longer-term rates do some of our work,” he added. “But if the real economy continues showing underlying strength and inflation appears to stabilize or reaccelerate, more policy tightening is likely needed despite the recent run up in longer term rates.”
Fed’s Waller says officials can ‘wait, watch and see’ before acting again
Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, reported quarterly earnings & revenue that topped expectations, despite volume falling for the 6th consecutive qtr. PG reported fiscal first-qtr EPS of $1.83, up from $1.57 a year earlier. Net sales rose 6% to $21.9B. Organic revenue increased 7% in the qtr,
helped by higher prices for PG's products. But volume shrank 1%. The metric excludes the impact of currency & pricing changes to reflect demand. For roughly 2 years, PG has been raising prices on its products like Tide detergent & Charmin toilet paper. “For
obvious reasons we don’t comment on the future direction of pricing,
but I will tell you that we’re happy with where we sit currently,” CEO
Jon Moeller said. The company also widened its outlook for fiscal 2024 revenue as it
anticipates that foreign exchange rates could be a larger drag than
previously expected. The company now projects revenue growth of 2-4%, rather than its prior forecast of 3-4%. PG reiterated
its full-year forecast for organic revenue growth, which strips out the
impact of acquisitions, divestitures & foreign currency & for EPS growth. But Schulten warned about economic conditions
that could weaken performance, like rising energy costs heading into
the winter, lower household savings rates & the health of the Chinese
market. The stock rose 3.72.
If you would like to learn more about PG, click on this link:
club.ino.com/trend/analysis/stock/PG_aid=CD3289&a_bid=6aeoso5b6f7
Procter & Gamble tops earnings, revenue estimates even as volume falls again
United Airlines (UAL) said more expensive jet fuel and a halt to the carrier's Tel Aviv
flights during the Israel-Hamas war will eat into its profits in the
last 3 months of the year. For
the current qtr, the carrier estimated adjusted EPS of $1.50-1.80 a share, below forecasts
of $2.06. UAL would then earn $9.55-9.85 a share, on an adjusted basis, down from its forecast
in Jul of $11-12, based on its projection for Q4. Jet fuel prices in major US airports are up nearly
25% since the start of summer. The company said its Q4 revenue will rise year over year
9%, if Israel flights remain suspended thru the end of the
year & 10.5% if the suspension lasts only thru Oct. Its costs,
excluding fuel, will likely rise 3.5-5% in Q4 from 2022. CEO Scott Kirby attributed the
increase to “much higher labor costs than anyone anticipated at the
start of the year,” delayed aircraft from manufacturers & air traffic
controller shortages. UAL posted Q3 EPS of $3.42 versus $2.86 a share a year earlier. Adjusting
for one-time items, EPS was $3.65. Revenue rose to $14.5B from $12.9B. The stock fell 3.88 (10%).
If you would like to learn more about UAL, click on this link:
club.ino.com/trend/analysis/stock/UAL_aid=CD3289&a_bid=6aeoso5b6f7
United Airlines tumbles 8% after warning pricier fuel, Middle East war will cut profits
Gold closed higher on safe-haven buying following an explosion at a Gaza hospital that raised fears of a widening war. Gold for Dec closed up $32 to $1968 per ounce, the highest since Sep 20. An explosion at a Gaza hospital yesterday was said to have killed hundreds but responsibility for the blast has not been determined. Hamas is blaming an Israeli missile strike while Israel said a failed Hamas rocket launch was behind the disaster, a view backed by US intelligence. Still, the blast came ahead of Pres Biden's Wed visit to Israel. He was also expected to meet with Arab leaders in Jordan, but those meetings were cancelled following the hospital explosion. Hezbollah, an Iranian-backed militia clashing with Israel at its border with Lebanon, called for a day of rage amid widespread protests held in other Middle Eastern & northern African countries & Iran called for an oil embargo on Israel.
Gold Rises on Safe-Haven Demand Following Gaza Hospital Explosion as Yields Climb to a 16-Year High
Oil futures climbed, with US prices settling at their highest in more than 2 weeks as a blast at a Gaza City hospital raised tensions throughout the Middle East. The oil price is responding to the aggressive comments from Iran & others after the apparent hospital bombing in Gaza, which raise the potential for a possible loss of oil supply from some exporters. Nov West Texas Intermediate crude rose $1.66 (1.9%) to settle at $88.32 a barre, the highest front-month finish since Oct 3.U.S. Oil Prices Settle at a more than 2-Week High on Middle East Risks
The war in the Mid East is already impacting the US economy. And that is bringing more unknowns in the future which are never welcomed by investors. As show below, Dow has been trending sideways at roughly 33-34K. At the same time oil & gold have been in demand. These conditions may last for some time.
Dow Jones Industrials
No comments:
Post a Comment