Markets slip lower as stocks fall back from the November rally

Dow finished down 41, decliners over advancers 5-4 & NAZ declined 117.  The MLP index eased lower to 260 & the REIT index added 2+ to the 376s.  Junk bond funds had limited buying & Treasuries saw more selling, raising yields.  Oil was fractionally lower the the 73s & gold tumbled 40 to 2049 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Retailers are cheering after shoppers spent big on gifts & decor in the days after they gobbled up turkey & stuffing.  But the strong showing does not necessarily mean those companies will have blowout success in their all-important holiday qtr.  Online spending shot up by nearly 8% year over year to $38B during the 5-day period from Thanksgiving Day to Cyber Monday, according to Adobe Analytics.  A record high of 200.4M shoppers went to retailers' stores & websites over the same period, according to a survey by the National Retail Federation (NRF).  And Ulta Beauty (ULTA) & Foot Locker 's (FL) shares rose this week, after the companies reported better-than-expected earnings & a strong start to holiday spending on sneakers, makeup & more.  But some unique factors may have driven those early sales, including wider adoption of online shopping, deeper discounting levels & cooler temperatures in many parts of the US.  That’s raised questions about whether consumers' appetite to spend will continue throughout the critical retail season, or taper off into a more pronounced lull between Black Friday & the final rush before Christmas.  ULTA is in one of the hottest categories for retail, as beauty continues to defy weaker discretionary spending trends.  Yet even ULTA CEO Dave Kimbell was quick to point out that retail's biggest weeks are ahead.  He said ULTA & its beauty competitors will have higher promotional levels than a year ago, as they cater to budget-minded customers.  He said ULTA & its beauty competitors will have higher promotional levels than a year ago, as they cater to budget-minded customers.  The NRF has tempered expectations, too, relative to recent years.  The industry’s major trade group predicts 3-4% year-over-year growth in holiday-related spending from Nov 1 - Dec 31.  That's roughly in line with the average annual growth before the boom of the pandemic years.  NRF CEO Matt Shay said the season is on track to meet that estimate, even after shoppers blew past the trade group’s turnout expectations for the 5-day Thanksgiving weekend.  ULTA stock jumped 14.73 (3%) & FL rose 16¢.

Why a strong Black Friday may not mean a blowout holiday season for retailers

The average price of gas dipped to $3.24, only a 2¢ drop from the week prior, according to the latest report from AAA.  Pump prices on average are 26¢ less than a month ago & 26¢ less than a year ago.  The decrease in gas prices may lose momentum following a recent uptick in oil prices.  Reduced demand for gas has helped keep pump price increases in check, AAA said.  "The current streak of daily pump prices either falling or staying flat started on September 19," AAA spokesperson Andrew Gross said.  "It appears this run is in jeopardy, and we may see prices edge a bit higher. But if the cost of oil eventually hits reverse and dips again, pump prices will likely follow suit. So stay tuned."  The West Texas Intermediate (WTI), an oil price benchmark, increased by $1.45 to $77.86 at the close of Wed's formal trading session.  Gas demand fell from 8.48 to 8.21M barrels per day last week, according to new data from the Energy Information Administration (EIA).  Oil prices climbed due to worries that OPEC+ will uphold its production reduction agreement thru next year, AAA noted.

Gas prices’ downward trend continues – for now: AAA

Spotify (SPOT) shares rose after the music streaming service said it is laying off 17% of its workforce, in a dramatic move aimed at reducing its costs & adjusting for a slowdown in growth.  In an email sent to staff, CEO Daniel Ek said that SPOT was taking “substantial action to rightsize our costs,” adding that the company took on too many employees over the years 2020 & 2021, when capital was cheap & tech companies could invest significant sums into team expansion.  The latest round of cuts equates to roughly 1500 jobs.  “Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business – one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” Ek said in an internal memo.  “While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”  The stock shot up 13.44 (7%).

Spotify jumps after saying it will cut 17% of workforce — read the full memo from CEO Daniel Ek

Gold retreated from a record high as the $ & treasury yields moved higher.  Gold for Feb closed down $47 at $2042 per ounce.  The price of the metal rose to its highest ever on Fri as weak US manufacturing data again showed the US economy is slowing & firmed expectations the Federal Reserve's cycle of raising interest rates & could soon begin easing, sending the $ & interest rates lower.  Gold prices surged as markets saw a dovish repricing of the Fed with Powell's pushback to rate cut pricing remaining modest, potentially supporting an extension into 2024.  The $ regained some ground, with the ICE dollar index last seen up 0.53 points to 103.8.  Treasury yields also rose, raising the carrying cost of owning gold.  The 2-year note was last seen up 11.2 basis points to 4.658%, while the 10-year note was last seen paying 4.287%, up 8.6 basis points.

Gold Falls Off of its Record High as the Dollar and Yields Rise

Oil futures posted a 3rd-straight session decline, with US prices settling at their lowest since mid-Nov.  Oil prices have remained under pressure on concerns over slowing demand, as well as some skepticism that the OPEC+ output cuts will hold & the fact that US production continued to break new records.  Jan West Texas Intermediate crude fell $1.03 (1.4%) to settle at $73.04 a barrel & prices based on the front-month contract settled at their lowest since Nov 16.

U.S. Oil Futures Settle At Lowest Since Mid-November

Dow was under water all day, lower in the AM but buyers returned in the PM to trim most of the early loss.  Uncertainty about the future of interest rates is the dark cloud which makes investors nervous.  In addition, the sharp advance in the price of safe haven gold is worrisome.  More economic data is coming this week.

Dow Jones Industrials