Markets edge higher while waiting for economic data

Dow gained 80, advancers over decliners 3-2 & NAZ went up 57.  The MLP index was off 1+ to 80 & the REIT index was even in the 376s.  Junk bond funds crawled higher & Treasuries had limited selling which raised yields slightly (more below).  Oil slid a little lower in the 81s & gold added 2 to 2178.

AMJ (Alerian MLP Index tracking fund)

Sales of new US single-family homes unexpectedly fell in Feb after mortgage rates increased during the month, but the underlying trend remained strong amid a chronic shortage of previously owned houses on the market.  The report from the Commerce Dept also showed the median new house price last month was the lowest in more than 2½ years, while supply was the highest since Nov 2022.  Builders are ramping up construction, while offering price cuts & other incentives as well as reducing floor size to make housing more affordable.  New home sales slipped 0.3% to a seasonally adjusted annual rate of 662K units last month, the Commerce Dept's Census Bureau said.  The sales pace for Jan was revised up to 664K units from the previously reported 661K units.  The forecast for new home sales, which account for 13.1% of US home sales, called for a rise to a rate of 675K units.  New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.  They, however, can be volatile on a month-to-month basis.  Sales advanced 5.9% on a year-on-year basis in Feb.  The new homes market has defied 525 basis points worth of interest rate hikes from the Federal Reserve since Mar 2022, bolstered by a dearth of previously owned houses for sale.  The overall housing market has likely turned the corner, with home resales surging to a one-year high in Feb.  Nonetheless, supply remains inadequate, keeping house prices elevated & homeownership out of the reach of many.  The average rate on the popular 30-year fixed-rate mortgage jumped to 6.94% in late Feb, before retreating to just below 7.0% by mid-Mar, according to data from mortgage finance agency Freddie Mac.  The central bank is expected to start cutting rates sometime this year. 

US new home sales fall; median price lowest in more than 2-1/2 years

Cocoa hit a record as supply constraints fuel prices higher.  Futures for May delivery were up 3.9% at $10,030 per metric ton, marking the first time the commodity breaks above the $10K mark.  Cocoa has been on a tear this year, soaring nearly 138%.  Difficult weather conditions & disease have impacted production in West Africa, which produces about 70% of the world's cocoa.  The 2 largest producers, Ivory Coast & Ghana, have been hit by combination of heavy rain, dry heat & disease recently.  Late last year, heavy rain & the spread of black pod disease in the 2 countries impacted farming, according to a Nov report from the Intl Cocoa Organization (ICCO).  Poor road conditions also made it difficult to bring the available beans to port, according to the report.  “As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market,” the ICCO added.  Arrivals at ports in the Ivory Coast & Ghana have declined 28% and 35% respectively since the start of the season compared to the same period last year, according to a Feb ICCO report.  Hershey (HSY) has forecast flat earnings growth for the year due to rising cocoa prices.  The company reported 4th qtr net income of $349M, a decrease of about 12% compared to the same period in the prior year.  “As we look at those record cocoa prices, certainly it’s a dynamic market and those are a challenge but we have lived through market volatility and fluctuation in input costs before,” CEO Michele Buck said in Feb.  “We have a good hedging strategy and we have really good price visibility on those inputs into 2024,” she said.  The stock rose 2.04.

Cocoa prices hit $10,000 per metric ton for the first time ever

The 10-year Treasury yield rose slightly as investors weighed the previous day's data points & looked ahead to key inflation figures later in the week.  The benchmark rate was up 1 basis point at 4.263% & the yield on the 2-year Treasury yield was nearly 3 basis points higher at 4.61%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Today's moves come as investors continue to assess the strength of the US economy, when the Federal Reserve might start to cut interest rates — & how many times it could do so this year.  Economic data released today showed that orders for long-lasting goods in the US rose by 1.4% last month, higher than the 0.8% rise economists had anticipated.  However, the latest consumer confidence index surprised expectations to the downside, indicating that optimism in the US economy waned in Mar.  The latest reading of the Fed's favorite inflation gauge, the personal consumption expenditures price index, is due to be released Fri & will be closely watched by markets.

10-year Treasury yield ticks lower as investors weigh economic data

After a very long & impressive rise, the stock market is in a holding pattern.  If interested, this is a good time to buy chocolate candy before the next round of price hikes.

Dow Jones Industrials