Markets struggle to advance while oil and Treasury yields fall

Dow rose 56, decliners over advancers 5-4 & NAZ went up 121.  The MLP index fell 2+ to the 249s & the REIT index was off 3+ to the 339s.  Junk bond funds inched higher & Treasuries had very heavy buying, sharply reducing yields.  Oil sank 3+ to the 77s & gold retreated 14 to 1974 (more on both below).

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US crude prices fellow below $78 a barrel to hit the lowest point since Jul as weak global economic data overshadowed concerns that the Israel-Hamas war could erupt into a broader regional conflict.  West Texas Intermediate was down $2.98 (3.58%) at $77.93 a barrel, while Brent fell $3.00 (3.52%) to $82.18, both their lowest prices since Jul.  The drop comes after China reported mixed economic data.  Beijing's crude oil imports rose by volume & value in Oct, but the country's overall exports fell more than expected, indicating softening global demand.  The world's 2nd largest economy reported a 6.4% drop in exports in $ terms for Oct compared to the same period a year ago, worse than the 3.3% drop predicted.  China's exports have fallen for 6 consecutive months now, as a higher interest rates put downward pressure on the global economy.  Minneapolis Federal Reserve Pres Neel Kashkari lowered expectations that the central bank might cut rates.  “We have to get inflation back down to 2% over a reasonable period of time. Ultimately the economy will tell us how much is needed to get there and I just don’t know,” Kashkari said.  The data out of China offset the impact of Saudi Arabia's & Russia's oil output cuts, which lifted oil prices higher earlier in the week.  Riyadh & Moscow confirmed on Sun that they would keep those cuts in place thru at least the end of the year.  Oil prices had spiked in the week following Hamas' devastating terrorist attacks on Israel on concerns that the war could escalate into a broader regional conflict that disrupts oil supply.  Prices have fallen since mid-Oct as worries of the conflict spreading in the immediate term have eased.

U.S. crude oil prices fall below $78 a barrel to their lowest since July

Salesforce (CRM), a Dow stock, announced  that the business software maker's Dreamforce conference for customers and partners will remain in San Francisco for one more year.  The statement comes months after Marc Benioff, the company's co-founder & CEO, said the Dreamforce event that was planned for 2023 might be the last one in the city.  Other technology companies have chosen to move their events elsewhere as media outlets have played up homelessness, drug use & theft in parts of the city.  CRM did wind up holding Dreamforce before a crowd of about 40K this year & Benioff pointed to clean sidewalks & attendees feeling safe.  Police officers & others had reportedly pushed unhoused people to migrate elsewhere.  The crowd was much smaller than it was in 2019, when 171K people participated.  This year's conference, featuring OpenAI CEO Sam Altman & other guests, was slated to produce more than $89M in economic activity.  Now the city can boast about it sticking around for at least 1 more year on Sep 17-19.  “We signed an extensive agreement with the city that outlined the key pieces we knew we needed!” Benioff said.  The stock rose 4.45 (2%).
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Salesforce CEO says Dreamforce is staying in San Francisco after reaching deal

Chicago Federal Reserve Pres Austan Goolsbee said a soft landing is still on the table as the central bank seeks to combat inflation without hurting the economy significantly.  “Because of some of the strangeness of this moment, there is the possibility of the golden path ... that we got inflation down without a recession,” Goolsbee said.  “If that happened ... it would just be a continuation of what we’ve already seen this year, which is unemployment up very modestly, while inflation has come down a lot. ... That’s our goal.”  The Fed kept interest rates steady last week, the 2nd consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes.  Core inflation, per the personal consumption expenditures price index, is currently running at 3.7% on an annual basis, still well above the Fed's 2% annual target.  Goolsbee emphasized that the decline in price pressures so far has already been a great achievement.  “The fastest drop in the inflation rate in any year was 1982,” Goolsbee added.  “We’ll see what happens over the next couple of months. We might equal the fastest dropping inflation in the last century. So we’re making progress on the inflation rate.”  The economy has held up well so far amid the tightening measures over the past year & a ½.  Gross domestic product expanded at a 4.9% annualized rate in the 3rd qtr, stronger than even elevated expectations.  Goolsbee stressed that accomplishing such a “golden path” against a historic surge in inflation won't be an easy task.  “Unusually for a soft landing of this magnitude, there has never been an inflation rate drop, to get inflation down as much as we’re getting it down without a big recession. That’s basically never happened,” he said.   “Let’s shoot to try to manage that.”

Fed’s Goolsbee says ‘golden path’ of a huge drop in inflation without a recession is still possible

Gold prices fell early today on a rising $ & high treasury yields, as safe-haven buying fades as concerns over a wider Middle East war ease.  Gold for Dec closed down $15 to $1973 per ounce.  The drop comes as the $ & high treasury yields steer investment elsewhere while profit taking also serves to weaken the metal's prices.  The surge higher in Treasury yields again triggered additional profit taking in gold.  However treasury yields were down later today, with the yield on the 2-year note was last seen down 1.7 basis points to 4.907%, while the 10-year note was paying 4.554%, down 9.5 basis points.  The $ rose, making gold more expensive for intl buyers.  The ICE dollar index was last seen up 0.32 points to 105.53.

Gold Falls on Profit Taking, a Rising Dollar and High Treasury Yields

Oil futures declined, with US prices settling at their lowest in 3½ months.  Concerns about the economic outlook trumped the prospect of Russia & Saudi Arabia pushing their production cuts into 2024.  Weaker than expected Chinese exports for Oct have fed into concerns that the global economy is languishing in stagflation territory, with little prospect of an upturn.  Dec West Texas Intermediate crude fell $3.45 (4.3%) to settle at $77.37 a barrel.  That was the lowest front-month contract finish since July 21.

U.S. oil prices settle at their lowest since July

WTI began last year at about 76.  Today is barely higher.  That's called a flat market over a 2 year term.  Meanwhile yields have advanced & Dow is lower.  There are also 3 wars in that time span if Sudan is counted.  A lot of problems that investors are trying to forget.  That won't be easy.

Dow Jones Industrials