Dow fell 45 & finished under 35K, decliners over advancers 3-2 & NAZ was up 9. The MLP index declined 2+ to 248 & the REIT index was even at 355. Junk bond funds inched higher & Treasuries remained in demand, bringing lower yields. Oil continued weak, down a big 3+ to the high 72s & gold soared 22 to 1986.
AMJ (Alerian MLP Index tracking fund)
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Inflation may be cooling, but the average American is still shelling out a lot more money for everyday necessities. The typical US household needed to pay $205 more a month in Oct to purchase the same goods & services it did one year ago because of still-high inflation, according to new calculations from Moody's Analytics chief economist Mark Zandi. Americans are paying on average $680 more each month compared with the same time 2 years ago. The analysis suggests that while inflation has fallen from the highs of mid-2022, many families have yet to see material relief. The Labor Dept reported that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries & rents, was unchanged in Oct from the previous month. Prices climbed 3.2% on an annual basis. But when compared with Jan 2021, shortly before the inflation crisis began, prices remain up a stunning 17.6%. Inflation has created severe financial pressures for most US households, which are forced to pay more for everyday necessities like food & rent. The burden is disproportionately borne by low-income Americans, whose already-stretched paychecks are heavily impacted by price fluctuations. The consumer price index is still running well above the typical pre-pandemic rate, & the cost of necessities like food, gasoline, rent & child care remain far more expensive than they were just one year ago. Americans saw some reprieve in Oct as the cost of gasoline plunged & the price of used cars & trucks ticked lower, but many other price gains proved more persistent. Shelter costs, which were the largest contributor to core inflation last month, rose 0.3% on a monthly basis & are up 6.7% over the past year. Rising rents are concerning because higher housing costs most directly & acutely affect household budgets.
Inflation is falling, but Americans are still paying an extra $680 a month due to high prices
Mortgage rates fell for the 3rd week in a row, signaling a downward trend some economists predict will continue. Freddie Mac reported that the average rate on the benchmark 30-year fixed mortgage fell to 7.44% from 7.5% the previous week, but remains markedly higher than the 6.61% average during the same week last year. The average rate on the 15-year note fell to 6.76%, down from 6.81% the week prior. A year ago, the rate on a 15-year mortgage was at 6.38%. "For the third straight week, mortgage rates trended down, as new data indicates that inflationary pressures are receding," said Sam Khater, Freddie Mac's chief economist. "The combination of continued economic strength, lower inflation and lower mortgage rates should likely bring more potential homebuyers into the market." The Mortgage Bankers Association (MBA) reported that mortgage applications rose 2.8% last week from the week prior, marking the 2nd straight week of gains & the highest level in 5 weeks. Still, application volume remains down 12% compared with the same time last year. Demand for refinancing also inched higher last week, rising 2% from the previous week, according to the MBA's survey. Compared with the same time last year, refinance applications are up 7%. Meanwhile, the Labor Dept reported earlier this week that the consumer price index was unchanged in Oct from the previous month, with prices climbing 3.2% on an annual basis. National Association of Realtors chief economist Lawrence Yun issued a statement predicting mortgage rates would continue to decline. "Mortgage rates are plunging with the news of inflation calming," Yun said. "The interest rate rises should be over, and the Fed will have to consider cutting interest rates seriously," he added. "In the meantime, the bond market is reacting as if the Fed will be cutting interest rates next year. Mortgage rates look to head towards 7% in a few months and into the 6% range by the spring of 2024."
Mortgage rates decline for 3rd consecutive week
Macy’s (M) topped quarterly expectations, as inventory & margin
improvement helped offset a 7% year-over-year decline in sales. CEO Jeff Gennette said the company has seen
steady business across key categories for the holiday season, especially
beauty. He said Macy's sees factors that could work in its favor
during the holidays. Its inventory levels are roughly flat to a year
ago, giving the company flexibility to buy more or less of merchandise
depending on what shoppers want. Customers have an extra weekend to shop
this year before Christmas. And after warmer weather in parts of the
country, Macy's has started to see shoppers respond to cooler
temperatures by buying winter gear. In the 3-month period ended Oct 28, EPS fell to
15¢ from 39¢ a year earlier. Excluding certain items, EPS was 21¢ & revenue fell from $5.23B in the year-ago period. Macy's
also adjusted its full-year guidance. It raised the low end of its
expected sales of $22.9B from $22.8B. For
comparable, or same-store sales, the company said it expects a decline
of up to 7%, an improvement from its previous estimate of a 7.5% drop at
most. For full-year adjusted EPS, Macy's now projects a tighter
range of $2.88-3.13, versus an earlier estimate of $2.70-3.20. The guidance implies higher profit expectations for the 4th qtr
than what had projected. The stock went up 71¢ (6%).
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club.ino.com/trend/analysis/stock/M_aid=CD3289&a_bid=6aeoso5b6f7
Macy’s stock pops as inventory, margin improvement help profit beat estimates
Gold closed higher as the $ & treasury yields weakened after the US reported initial jobless claims rose more than expected last week. Gold for Dec closed up $23 to settle at $1987 per ounce. The US reported initial jobless claims rose to 231K last week, above the forecast for a rise of 222K. The higher than expected result may indicate the Federal Reserve's efforts to slow the economy thru higher interest rates is having an effect on what had been a robust labor market. The $ fell following the report, the latest in a series of economic data showing the US economy is slowing & inflation is falling, with the CME Fedwatch tool showing a 94.5% probability the central bank will leave interest rates unchanged at its meeting next month. The ICE dollar index was last seen down 0.1 points to 104.29. Treasury yields also eased, lowering the carrying cost of owning gold. The 2-year note was last seen paying 4.842%, down 8.9 basis points, while the yield on the 10-year note was down 8.2 basis points to 4.446%.
Gold Closes with a Gain as the Dollar and Treasury Yields Fall as Initial Jobless Claims Rise More Than Expected
Oil futures fell by 5% as concerns over a potential slowdown in energy demand following downbeat US economic data contributed to a drop in prices to their lowest settlement since Jul. US industrial output fell 0.6% in Oct, builder confidence in Nov fell to its lowest since Dec 2022, & while the Philadelphia Fed said its gauge of regional business activity improved in Nov, it remained in contractionary territory. Dec West Texas Intermediate crude declined by $3.76 (4.9%) to settle at $72.90 a barrel. That was the lowest front-month finish since Jul 6.
Oil prices settle at their lowest since July
After the short but significant rally, it was time for stocks to rest. Dow remained inn the red for most of the session. In addition, some are questioning what the Fed will do while high inflation & interest rates persist. Even Walmart (WMT) & Target (TGT) sounded a holiday warning today.Dow Jones Industrials
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