Markets fall on inflation and growth concerns

Dow dropped 375 (but 330 above early lows), decliners over advancers 2-1 & NAZ fell 100.  The MLP index was steady in the 284s & the REIT index fell 2+ to the 357s.  Junk bond funds remained weak & Treasuries saw more selling which interest rates higher.  Oil rose fractionally to the 83s after a late day rally & gold was up 6 to 2345 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Mortgage rates climbed again this week, exacerbating the home affordability crisis that is stifling the housing market.  Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage jumped to 7.17% this week from 7.1% last week. The average rate on a 30-year loan was 6.43% a year ago.  The average rate on the 15-year fixed mortgage rose to 6.44% from 6.39% last week. One year ago, the rate on the 15-year fixed note averaged 5.71%.

Mortgage rates continue upward climb to 7.17%

Comcast (CMCSA) beat first-qtr earnings expectations as broadband drove revenue even as the company & its peers have seen customer growth slow.  For the qtr that ended Mar 31, EPS was 97¢ compared with $91¢ a year earlier.  Adjusted earnings before interest, taxes, depreciation & amortization, or EBITDA, slid 0.6% to roughly $9.4B.  Revenue grew 1.2% to $30.06B compared to the same period last year.  Revenue from the domestic broadband customers segment boosted that growth as rates increased, even as CMCSA lost 65K customers during the qtr.  The slowdown in buying & selling of houses due to high interest rates has led to a decline in new home internet connections.  Cable providers have also been hit with heightened competition for home broadband from wireless companies.  Pres Mike Cavanagh said that the market is “extremely competitive,” especially for “cost-conscious customers.”  Earlier this month, COMO said it would launch NOW, a prepaid & month-to-month low-cost internet & phone plan program.  The plan is designed to provide fixed wireless options at a low cost.  Company execs do not expect an improvement in the near term, particularly with the expected end of the federal gov's Affordable Connectivity Program (ACP) which offers a $30 discount on broadband services to qualifying low-income households, in Apr.  CMCSA wireless business saw a 21% increase in customers during the quarter to 6.9M total lines.  The company lost 487K cable TV customers during the qtr as consumers continued to cut the cord in favor of streaming.  The stock fell 2.34 (6%).

Comcast beats earnings estimates even as it sheds more broadband subscribers

Treasury yields rose after the first-qtr GDP report showed slowing growth & rising consumer prices.  The benchmark 10-year Treasury yield rose 5 basis points to 4.704%, while the rate on the 2-year Treasury rose 6.3 basis points to 5%.  At their session highs, the yields on both notes hit their highest levels since Nov.  The GDP report showed growth of 1.6%, which was lower than the 2.4% expected.  Along with the downbeat growth rate for the qtr, the report showed consumer prices increased at a 3.4% pace, well above the previous qtr's 1.8% advance.  This raised concern over persistent inflation & put into question whether the Federal Reserve will be able to cut rates anytime soon, even with the economy slowing.  The Fed is due to convene for its policy meeting next week.  Markets are widely expecting interest rates to remain unchanged then, with traders pricing in the first rate cut for Sep, according to CME Group’s FedWatch Tool.  However, investors will be closely watching for any fresh clues from policymakers about when they expect rates to be cut & how many reductions they expect to take place this year.

10-year Treasury yield leaps to highest level in more than 5 months after GDP report

Front  month gold for Apr gained $5 per troy ounce to $2329 today.  The largest 1 day $ & percentage gain since Fri, Apr 19, snaps a 3 session losing streak.  Gold was off 2.9% from its 52-week high of $2398 hit last Fri & up 28.2% from its 52-week low of $1816 hit Oct 5, 2023.  All prices are calculated based on the settlement price of the current front.

Comex Gold Settles 0.2% Higher at $2329

Oil erased earlier losses to top $83 a barrel as a weaker $ boosted commodities priced in the currency.  Strengthening equities markets also supported crude futures, which spent much of the session trading in a narrow range after a closely watched measure of US inflation soured sentiment.  Oil markets are still trying to find an equilibrium price due to the lack of geopolitical headlines & data releases.  Crude remains higher this year, aided by supply curbs from OPEC+ & tensions in the Middle East, although prices have pulled back from recent highs as geopolitical risks eased.  The options skews remain in a bearish tilt toward puts, while the world's biggest oil exchange-traded fund, the US Oil Fund, posted its largest daily outflow on record.  The demand outlook also remains clouded, with a weakness showing in some refined products.  Profit margins for turning crude into diesel in Asia were near the lowest level in nearly a year.  WTI for Jun rose 76¢ to settle at $83.57 a barrel & Brent for Jun settlement rose 99¢ to settle at $89.01 a barrel.

Oil Rises as Weaker US Dollar Vies With Slower Economic Growth

Today questions were raised about the health of the US economy in the face of persistently high interest rates.  US GDP growth came in at a 1.6% annualized pace in the first qtr, falling well short of expectations of 2.5%.  This comes amid ongoing debate about the path of the Federal Reserve's interest rate campaign.  Treasury yields rose after the GDP data, with the benchmark 10-year yield surging to its highest levels of the year, around 4.71%.  These are troubling times for investors.

Dow Jones Industrials