Markets advanced on hopes the Federal will cut rates iin June

Dow added 93, advancers over decliners about 3-1 & NAZ went up 35.  The MLP index was off 1 to the 279s & the REIT index rose 3+ to 391.  Junk bond funds inched higher & Treasuries were little changed keeping yields flattish.  Oil slid lower in the 78s & gold advanced another 15 to 2180.

AMJ (Alerian MLP Index tracking fund)

US employers added 275K jobs in Feb & the unemployment rate ticked higher, the Labor Dept reported.  The forecast expected a gain of 200K jobs & the unemployment rate to hold steady at 3.7%.  Growth was driven by the hiring of health care and government employees, along with food services.  On the flip side, the manufacturing sector cut 4K positions.  Average hourly earnings, a key measure of inflation, increased 0.1% for the month & climbed 4.3% from the same time one year ago.  Strong job growth combined with rising wages is fueling inflation, according to some economists.  The data may not be enough for the Federal Reserve, which is looking for inflation & the economy to slow, to begin its rate-cutting cycle, which would also come heading into the 2024 presidential election.  Earlier this week, Fed Chair Jerome Powell reiterated policymakers' stance to bring down inflation in order to cut rates.  "The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%," he said in remarks prepared for testimony before the House Financial Services Committee.  Higher rates have consumers paying more for things such as auto loans & credit cards.  As an example, the average percentage rate (APR) for credit cards is 24.6%, as tracked by Lending Tree.  Currently, the market is expecting the first rate cut to come in June, as tracked by the CME's FedWatch Tool.

US economy adds 275,000 jobs in February, unemployment rate ticks higher

Federal Reserve Chair Jerome Powell indicated that interest rate cuts may not be too far off if inflation signals cooperate.  In remarks to the Senate Banking Committee, the central bank leader didn't provide a precise timetable of when he sees easing happening, but noted that the day could be coming soon.  “We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction,” Powell said in response to a question about rates & inflation.  He said the cuts would be so the Fed doesn't “drive the economy into recession rather than normalizing policy as the economy gets back to normal.”  Powell spoke at a time when financial markets have swung considerably in their expectations on Fed policy.  At the beginning of the year, futures traders were betting the Fed would start in Mar & keep going until it had cut 6 or 7 times this year.  The outlook now is for the first cut to come in Jun, with 4 reductions totaling a full percentage point by the end of 2024.  Inflation data recently has indicated the pace of price increases is continuing to slow, though the consumer price index rattled markets when it came in higher than expected for Jan.  Still, Powell noted in congressional testimony this week that inflation is progressing lower, though not at the point yet where the Fed is ready to cut.  “I think we’re in the right place,” Powell said of the current policy stance.

Powell says the Fed is ‘not far’ from the point of cutting interest rates

Costco (COST) missed revenue expectations for its holiday qtr, despite reporting year-over-year sales growth & strong e-commerce gains.  In the 3-month period that ended Feb 18, EPS was $3.92 compared with $3.30 a year earlier.  Revenue for the qtr increased from $55.2B in the year-ago period.  Comparable sales for the company increased 5.6% year over year & 4.3% in the US.  Excluding changes in gas prices & foreign currency, the metric increased 5.8% overall & 4.8% in the US.  Sales of food & sundries, a category that includes snack foods & beverages, were up by mid single digits in the qtr, CFO Richard Galanti said.  Fresh foods were up high single digits & nonfoods were up mid single digits.  Ancillary businesses, which includes more service-related purchases like travel, were up by low single digits.  The food court, pharmacy & optical centers were top performers in the qtr & gas was down low single digits as the price per gallon fell.  More shoppers came to COST & they spent more on their shopping trips during the qtr.  Traffic increased 5.3% across the globe & 4.3% in the US.  Costco has 875 warehouses, including 603 in the US & Puerto Rico.  It also has clubs in about a dozen other countries, including Canada, Mexico, Japan & China.  Surprisingly the stock tumbled 50 to 735.

Costco misses holiday-quarter revenue expectations despite online growth

Gold climbed, rising for an 8th straight day on hopes for rate cuts, central bank buying & renewed investor interest.  Meanwhile Dow has been going sideways for more than a week, led by uneven reports from retailers.  Both of these indicators will not be strong for very long.

Dow Jones Industrials