Dow retreated 96, advancers over decliners 5-4 & NAZ went up 59. The MLP index inched up to the 273s & the REIT index was even. Junk bond funds had limited buying & Treasuries saw a little selling bringing higher yields. Oil gained 1+ to the high 78s & gold was flattish at 2039 (more on both below).
AMJ (Alerian MLP Index tracking fund)
Home prices rose for the 11th consecutive month in Dec, as housing inventory remained painfully low. Prices increased 5.5% nationally in Dec when compared with the previous year. That is up from the 5% annual increase recorded the prior month. On a monthly basis, prices fell 0.4%, according to the index. The 10-city composite, which encompassed Los Angeles, Miami & New York, rose 7% annually, compared with an increase of 6.3% in Nov. The 20-city composite, which also tracked housing prices in Dallas & Seattle, posted an annual gain of 6.1%, which also marks an increase from the 5.4% figure recorded the previous month. There was a major discrepancy in the price gains in the 20 cities: San Diego reported an 8.8% annual gain in Dec, followed by Los Angeles & Detroit, each with an 8.3% increase. Portland, Oregon, saw the smallest gain in Dec, with home prices climbing just 0.3% from the prior year. However, it marked the first time in 2023 that all 20 cities reported a year-over-year gain. "While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages," said Brian Luke, head of commodities, real & digital assets at S&P DJI. The interest-rate-sensitive housing market entered a deep freeze last year in the wake of the Federal Reserve's aggressive interest-rate hike campaign. However, prices have quickly recovered as buyers adjust to higher mortgage rates & compete for a limited supply of homes. The problem is unlikely to be resolved anytime soon. With mortgage rates hovering near the highest level in 2 decades, sellers who locked in a low rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers. Available home supply is still down a stunning 34.3% from the typical amount before the COVID-19 pandemic began in early 2020, despite a recent drop in mortgage rates, according to a separate report published by Realtor.com.
Home prices hit a new all-time high in December
Americans' attitudes toward the economy soured in Feb after a 3-month streak of improving moods, according to The Conference Board's latest consumer survey. The survey's index fell in February to 106.7, down from a reading of 110.9 in Jan. Americans became less worried about rising food & gas prices, but more concerned about the job market. “The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000,” Dana Peterson, chief economist at The Conference Board, said. “Confidence deteriorated for consumers under the age of 35 and those 55 and over, whereas it improved slightly for those aged 35 to 54.” Americans' outlook for the economy in the following months, including their expectations for income & business conditions, declined this month, slipping below a threshold that “often signals recession ahead,” according to the report. Inflation expectations for the year ahead edged lower this month to 5.2%, well below a peak of 7.9% in mid-2022 when inflation was running at its fastest pace in 4 decades. While the survey showed waning concerns over inflation, it captured rising worries over the job market. A similar survey by the University of Michigan released earlier this month showed that Americans' moods held steady in Feb, though a 2nd estimate is due later this week. Respondents of the survey also expressed some concerns over “the US political environment,” Peterson said. “The [job] market is still strong, it’s just much less strong than a year ago when job swapping for higher pay was easy,” Robert Frick, corp economist with Navy Federal Credit Union, said. “And now the contentious election season is coming closer into view, and national elections strongly influence perceptions of the economy.”
US consumer confidence soured in February for the first time in three months
Orders for long-lasting US manufactured goods fell by the most in nearly 4 years in Jan, while business investment on equipment appeared to have eased, signs that the economy lost momentum at the start of the year. Concerns about the economy's outlook, especially the labor market, & the upcoming presidential election were uppermost in consumers' minds in Feb resulting in confidence retreating after 3 straight monthly increases. The decline in confidence reported by the Conference Board was despite inflation expectations over the next 12 months falling to the lowest level in almost 4 years. The reports joined a stream of weak data, including retail sales, housing starts & manufacturing production. Some of the softness has been blamed on freezing temperatures last month as well as difficulties adjusting the data for seasonal fluctuations at the start of the year. Nonetheless, economists are not forecasting a recession this year. Orders for durable goods, items ranging from toasters to aircraft meant to last 3 years or more, plunged 6.1% last month amid a sharp drop in commercial aircraft bookings, the Commerce Dept's Census Bureau said. That was the largest decline since Apr 2020, when the economy was reeling from the first wave of COVID-19 infections.
US Durable Goods Orders Fall More Than Expected in January
Gold closed with a gain on mixed US treasury yields continues while the $ moved lower. Gold for Apr closed up $5 to settle at $2044 per ounce. The rise comes as treasury yields were mixed as expectations for US interest-rate cuts in the near term dim, with Federal Reserve officials unwilling to risk seeing inflation rise by trimming rates too soon. The yield on the 2-year note was last seen down 1.0 basis points to 4.704%, while the 10-year note was up 2.1 basis points to 4.303%. The $ weakened, making gold more affordable for intl buyers. The ICE dollar index was last seen down 0.06 points to 103.77.
Gold Closes Higher on Mixed Treasury Yields and a Weaker Dollar
West Texas Intermediate (WTI) crude oil closed higher after a report said OPEC+ may extend voluntary production cuts set to expire at the end of Mar into the 2nd qtr & could extend them thru 2024. WTI crude oil for Apr delivery closed up $1.29 to settle at $78.87 per barrel, while Apr Brent crude, the global benchmark, closed up $1.12 to $83.65. A report said OPEC+ is considering extending the voluntary cuts thru the 2nd qtr, while 2 sources said the group could keep the cuts in place thru the year, tightening supply during the high-demand summer months. The cartel is meeting early next month to review 2nd-qtr production targets & has been expected to keep the cuts in place thru the end of Jun.WTI Crude Oil Closes Higher on Report OPEC+ to Extend Voluntary Quota Reductions
Little was accomplished in trading today. I have followed oil for many years & learned about it while many know little or even nothing. West Texas Intermediate (WTI) had wild gyrations during the Covid period, even going over $100 for a short time. However in the last couple of years it has been trending sideways in the 70s. It is an exciting commodity & is especially important for the global economy because just about every business uses it. Now that the inflation topic is important, it gets more attention. As a commodity is subject to wild & unforeseen price swings. Investors need to keep abreast of its price changes.Dow Jones Industrials
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