Dow was off 103, advancers over decliners 4-3 & NAZ slid back 136. The MLP index edged up 1+ to the 278s & the REIT index was off 1 to the 379s. Junk bond funds were little changed & Treasuries had only limited selling, bringing slightly higher yields. Oil inched up pennies to the 81s & gold lost 1 to 2166.
AMJ (Alerian MLP Index tracking fund)
From consumer & wholesale prices to longer-term public expectations, reports this week served up multiple reminders this week that inflation isn't going away anytime soon. Data across the board showed pressures increasing at a faster-than-expected pace, causing concern that inflation could be more durable than policymakers had anticipated. The bad news began Mon when a New York Federal Reserve survey showed the consumer expectations over the longer term had accelerated in Feb. It continued Tues with news that consumer prices rose 3.2% from a year ago & then culminated yesterday with a release indicating that pipeline pressures at the wholesale level also are heating up. Those reports will provide a lot for the Fed to think about when it convenes Tues for a 2-day policy meeting where it will decide on the current level of interest rates & offer an updated look on where it sees things heading longer term. The latest jolt on inflation came yesterday when the Labor Dept reported that the producer price index, a forward-looking measure of pipeline inflation at the wholesale level, showed a 0.6% increase in Feb. That was double the estimate & pushed the 12-month level up 1.6%, the biggest move since Sep 2023. Earlier in the week, the Bureau of Labor Statistics said the consumer price index increased 0.4% on the month and 3.2% from a year ago, the latter number slightly higher than forecast. While surging energy prices contributed substantially to the increase in both inflation figures, there also was evidence of broader pressures from items such as airline fares, used vehicles & beef. In fact, at a time when the focus has shifted to services inflation, goods prices leaped 1.2% in the PPI reading, the biggest increase since Aug 2023. Taken together, the stubbornly high prices appear to have taken their toll on both consumer expectations and behavior. While substantially lower than its mid-2022 peak, inflation has proved resilient despite the Fed's 11 rate hikes totaling 5.25 percentage points & its moves to cut its bond holdings by nearly $1.4T. The New York Fed survey showed that 3 & 5-year inflation expectations respectively moved up to 2.7% & 2.9%. While such surveys often can be especially sensitive to gas prices, this one showed energy expectations relatively constant & reflected doubt from consumers that the Fed will achieve its 2% mandate anytime soon. On a policy level, that could mean the Fed may hold rates higher for longer than the market expects. Traders in the fed funds futures market earlier this year had been pricing in as many as 7 cuts totaling 1.75 percentage points; that since has eased to 3 cuts.
Home foreclosures rose again in Feb as Americans continue to grapple with the ongoing cost-of-living crisis. That is according to a new report published by real estate data provider ATTOM, which found that there were 33K properties in Feb with foreclosure filings, which includes default notices, scheduled auctions & bank repossessions. That marks an 8% increase from the prior year, although it is down 1% from the previous month. "The annual uptick in U.S. foreclosure activity hints at shifting dynamics within the housing market," said ATTOM CEO Rob Barber. "These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices." However, the number of foreclosure completions fell in 28 states in Feb. Lenders repossessed 3.4K properties in Feb, down 14% from the previous month & 11% from the prior year. The biggest declines took place in Georgia, where completed foreclosures fell 52% & in New York, with a decline of 41%. Still, foreclosures surged in other states. In South Carolina, foreclosures surged 51%, while Missouri saw a 50% jump & Pennsylvania a 46% increase. Foreclosures in Texas rose 7%, & in Indiana they climbed 0.8%. Although foreclosures are rising, they remain well below the levels recorded during the 2008 financial crisis. But the problem could soon get worse as high home prices, mortgage rates & property taxes bite Americans. Housing affordability is the worst it's been in decades, thanks to a spike in home prices & mortgage rates. Combined, the 2 have helped to push the typical salary required nationwide for homeownership up to $106K – a stunning 61% increase from the $59K required just 4 years ago, according to Zillow. Even though mortgage rates are nearly double what they were 3 years ago, home prices have hardly budged. That is largely due to a lack of available homes for sale.
Home foreclosures are soaring nationwide
Adobe (ADBE) fell after the company reported first-qtr results that beat estimates but delivered a light quarterly revenue forecast. The
design software company posted adjusted EPS of $4.48,
above the $4.38 expected. Revenue of $5.18B exceeded the $5.14Bs estimated. For
the current qtr, ADBE expects adjusted EPS of $4.35- $4.40, while analysts were expecting $4.38. It said revenue will
total $5.25-5.30B, slightly below the $5.31B
estimated. The company also announced a $25B share buyback. ADBE launched an artificial intelligence assistant for its Reader & Acrobat applications that can help users digest information from long PDF documents. The stock tumbled 83+ (15%) to the 487s.
Adobe shares drop 13% on weak quarterly revenue guidance
Investors are weighing how the Fed will handle this week's new inflation data. At the same time there are more indications that all is not well in the economy.Dow Jones Industrials
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