Markets edge higher, led by tech stocks

Dow went up 62 (below session highs), advancers over decliners about 2-1 & NAZ gained 190.  The MLP index fell 1+ to 250 & the REIT index rose 1 to the 374s.  Junk bond funds saw some buying & Treasuries essentially mixed.  Oil inched up pennies in the 69s after sharp recent decline & gold was off 1 to 2046 (more on both below).

AMJ (Alerian MLP Index tracking fund)

IBM (IBM), a Dow stock is angling hard for an AI comeback story & CEO Arvind Krishna is counting on a recent pivot to get it there.  Since May, the company has reintroduced the Watson brand as part of the company's larger strategy shift to monetize its AI products for businesses.  WatsonX is a development studio for companies to “train, tune and deploy” machine learning models.  Krishna says the product has already amounted to “low hundreds of millions of dollars” in bookings in the 3rd qtr, & could be on track for a B $s in bookings per year.  But IBM has steep competition in the enterprise AI realm.  Others have similar offerings.  And the company has long been critiqued for falling behind in the AI race, particularly when it comes to making money from its products.  Nearly 2 years ago, IBM sold its Watson Health unit for an undisclosed amount to private equity firm Francisco Partners.  Now, the company is in the midst of selling its weather unit, including The Weather Channel mobile app & websites, Weather.com, Weather Underground & Storm Radar, to the same firm, also for an undisclosed sum.  “I think that’s a fair criticism, that we were slow to monetize and slow to make really consumable the learnings from Watson winning Jeopardy, and the mistake we made was that I think we went after very big, monolithic answers, which the world was not ready to absorb,” IBM CEO Arvind Krishna said, adding, “Beginning that way was the wrong approach.”  I looked at the amount of data, I looked at the nature of automation needed in the demographic shifts that are going on & I looked at the sheer amount of work that we all have to do.  And you go look at the backlog that's sitting inside places, inside gov – the VA has 6 months worth of claims to process, insurance companies take months to get going for the tougher claims, you look at the backlog in customer service.  You look at all those things, & say, ‘This mixture of the data explosion and this need to get work done – which technology could help us address that?’ And just from my experience, you look across and you say, ‘The only one I can think of is artificial intelligence.’  That's why you get… a massive shift going on with people & with data, a big unmet need &d a technology that could possibly address it.  Now it's up to us as innovators, as inventors, as technologists to go make it happen.  The stock was off 8¢.

IBM was early to AI, then lost its way. CEO Arvind Krishna explains what’s next

Mortgage rates continued their descent this week in a trend accompanied by an uptick in home-purchase demand, but elevated home prices remain a barrier to many would-be buyers.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate for the benchmark 30-year fixed-rate mortgage fell to 7.03% this week, down from 7.22% last week but up from 6.33% a year ago.  The rate for a 15-year fixed mortgage also declined, averaging 6.29% after coming in last week at 6.56%.  One year ago, the rate on a 15-year fixed note averaged 5.67%.  Although mortgage applications have risen for 5 straight weeks, high mortgage rates have dampened consumer demand over the past year & severely limited inventory.  That is because sellers who locked in a low mortgage rate before the pandemic have been reluctant to sell with rates continuing to hover near a 2-decade high, leaving few options for eager would-be buyers.  As low inventory persists, home prices remain high, rising for the eighth straight month in Sep according to the latest S&P CoreLogic Case-Shiller index released last week.  Data from Redfin shows US home prices were up 3.4% year-over-year in Oct, while the number of homes for sale fell 9.9%.  According to the realty group, the median home price in Oct was $413K.  Many economists expect rates to continue to decline, but do not anticipate a quick remedy to the home affordability crisis.  "Looking ahead, we predict that sustained improvement in inflation will bring the mortgage rate down to 6.5% by the end of 2024," Realtor.com economist Jiayi Xu said.  "Nonetheless, as mortgage rates stay elevated, ongoing high housing costs indicate that the cooling trend in the nationwide housing market is likely to persist."

Mortgage rates fall again, but high home prices persist

US applications for jobless benefits ticked up last week, but the overall number of people in the US collecting unemployment benefits fell after hitting its highest level in 2 years last week.  Unemployment benefits claims rose by 1K to 220K last week, the Labor Dept reported.  That was in line with expectations.  About 1.86M were collecting unemployment in the latest  64K fewer than the previous week.  It's just the second time in 11 weeks that continuing claims have fallen.  Analysts say the continuing claims have been rising because many of those who are already unemployed may now be having a harder time finding new work.  That comports with a gov report earlier this week showing that US employers posted 8.7M job openings in Oct, the fewest since Mar of 2021.  Jobless claim applications are seen as representative of the number of layoffs in a given week.  Hiring has slowed from the breakneck pace of 2021 & 2022 when the economy rebounded from the COVID-19 recession.  Employers added a record 606K jobs a month in 2021 & nearly 400K per month last year.  The past 5 months, job gains have slipped to an average of 190K per month, down from an average of 287,000 in the first 5 months of the year.  Analysts forecast that US private non-farm job gains will come in around 173K when the gov issues its Nov jobs report tomorrow.  Labor's layoffs data also showed that the 4-week moving average of jobless claim applications, which flattens out some of weekly volatility,  ticked up by 500 to 220K.

Filings for Jobless Claims Tick up Modestly, Continuing Claims Fall

Gold closed lower early even as the $ moved lower.   Gold for Feb closed down $1 to settle at $2046 per ounce.  The metal closed at a record $2089 per ounce on Fri.  The rise came as the $ weakened, with the ICE dollar index last seen down 0.68 points to 103.48 as it dropped off a 3-week high.  Treasury yields were mixed.  The yield on the 2-year note was last seen down 3.4 basis points to 4.565%, while the 10-year note was unchanged at 4.109%.

Gold Closes Lower Even as the Dollar Weakens

Oil futures tallied a 6th straight session decline, with US prices marking back-to-back settlements below $70 a barrel.  Prices remain in a broadly bearish trend over the past 2 months as US production growth & demand headwinds have overshadowed geopolitical risk & ongoing efforts by OPEC+ to support prices.  Jan West Texas Intermediate crude fell 4¢ to settle at $69.34 a barrel after losing 4.1% yesterday.

Oil Futures Fall for a 6th Straight Session

Stocks were treading water ahead of the jobs & unemployment report tomorrow.  Oil keeps retreating.  WTI began last year around $76 & now it's down about 10%.  It's price performance should be a major influence for the stock market.

Dow Jones Industrials