Markets jump as gold nosedives to below 2400

Dow soared 259 (off 200 from session highs), advancers over decliners 3-1 & NAZ advanced 169.  The MLP index  was up 2+ to the 282s & the REIT index added 2+ to 356s.  Junk bond funds crawled higher & Treasuries had a little selling, bringing slightly higher yields.  Oil was off chump change to the high 82s & gold plunged 69 to 2344 (more on both below).

AMJ (Alerian MLP Index tracking fund)

The yield on the 10-year Treasury rose as investors looked to economic data in the week ahead that could provide fresh hints about the state of the economy & the outlook for interest rates.  The yield on the 10-year was up by 2 basis points to 4.647% & the 2-year Treasury yield was last 2.6 basis points lower at 4.97%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors awaited fresh economic data as uncertainty about the outlook for the US economy & Federal Reserve monetary policy persisted.  Several key data points are slated for later this week, including the personal consumption expenditures price index for Mar, which is due Fri.  The PCE is the Fed’s favored inflation gauge & could inform policymakers' thinking about what could lie ahead for interest rate cuts ahead of the next Fed policy meeting on Apr 30-May 1.  Markets have pushed out their expectations for when the Fed will start lowering rates, following recent economic data that reflected sticky inflation & resilience from the economy, as well as comments from central bank officials.  Policymakers including Chair Jerome Powell last week indicated that there was no urgency for rates to be cut & that the timeline for rate cuts would depend on how the economy develops.  The Fed has now entered the blackout period before its next meeting.

10-year Treasury yield rises as investors look to key economic reports this week

Verizon (VZ), a Dow stock, lost fewer-than-expected wireless subscribers in the first qtr thanks to its flexible plans & streaming bundles offering discounted pricing for services.  It lost 68K monthly bill-paying wireless phone subscribers in Jan-Mar, a seasonally soft period for the industry after the holiday qtr.  That compared with an estimated loss of 100K & a loss of 127K in the first qtr of 2023.  Its consumer business saw its best first-qtr performance since 2018, with 158K wireless retail postpaid phone net losses, compared with 263K losses a year ago.  “We are on track to meet our financial guidance and to deliver positive consumer postpaid phone net adds for the year,” CEO Hans Vestberg said.  The firm reported revenue of $33B for the qtr, compared with an estimate of $33.2B, as phone upgrade levels continued to drift lower.  VZ reported EPS of $1.15, beating the estimate of $1.12.  The stock fell 1.87.

Verizon reports fewer quarterly subscriber losses on flexible plan demand

Crude oil futures edged lower after Iran said it would not escalate the conflict with Israel.  The West Texas Intermediate contract for May gained 8¢ to $83.21 a barrel, while Jun Brent futures fell 27¢ to $87.02 a barrel.  US crude oil & Brent fell 3% last week after 2 benchmarks are up about 16% & 13% this year, respectively.  Iranian Foreign Minister Hossein Amirabdollahian said the country does not plan to respond to Israel's retaliatory strike launched on Fri.  “As long as there is no new adventurism by Israel against our interests, then we are not going to have any new reactions,” Amirabdollahian said.  Traders have dismissed fears that tit-for-tat strikes between Iran & Israel will escalate into a war, with the market focus likely to shift back to supply & demand fundamentals this week.  “The market reaction to the rise of geopolitical temperature in the region was yet another example that it is only reasonable to expect a protracted oil price rally in case of blocking the Strait of Hormuz or if Saudi Arabia is directly drawn into the conflict,” Tamas Varga, an analyst with oil broker PVM, said.

U.S. crude oil hovers above $83 after Iran says it will not escalate conflict with Israel

Gold traded sharply lower as geopolitical worries ease, cutting the need for the metal's safe haven.  Gold for Jun was last seen down $66 to $2347 per ounce, dropping off a record close of $2413 on Fri.  The drop comes as worries war would spread in the Middle East faded after Israel offered a restrained response to Iran's missile & drone attack earlier this month, while investor risk appetite is slowing ahead of Fri's release of US PCE data, the Federal Reserve's preferred inflation measure.  The ICE dollar index was last seen down 0.3 points to 106.13.  Treasury yields edged down, with the 2 year note last seen paying 4.976%, down 2.3 basis points, while the yield on the 10-year note was down 0.2 basis points to 4.624%.

U.S. crude oil hovers above $83 after Iran says it will not escalate conflict with Israel

West Texas Intermediate (WTI) crude oil closed with a loss on a deflating risk premium & adequate supply.  WTI crude for May delivery closed down 29¢ to settle at $82.85 per barrel, while Jun Brent crude, the global benchmark, was last seen down 35¢ to $86.94.  The drop follows on Israel's muted retaliation last week to a missile & drone attack from Iran this month that caused only minor damage, easing fears of a wider Middle East war that could disrupt oil supplies.  Today's drop also comes as spring demand remains light, with the Energy Information Administration reporting the 4th-straight rise in US oil inventories, even as 2.2M barrels of voluntary production cuts from OPEC+ continue.  The cartel will meet in early Jun to decide whether to unwind the cuts or extend them into the 3rd qutr.  The IMF last week noted Saudi Arabia needs oil prices of at least $96.20 per barrel to balance its budget after cutting its production to 9.3M barrels per day, suggesting the lead OPEC member will look to push the cartel to continue restraining output to support high prices.

WTI Crude Oil Closes with a Loss on a Weakening Risk Premium and Adequate Supply

The bulls finally returned after being away for more than a week.  Their concerns over a spreading regional war in the Middle-East have faded.  Gold was sold from in an overbought market & that money went into risky assets (i.e. stocks) today.  Earnings reports will drive the stock market followed by the PCE on Fri.  This could be a very wild week in for the stock market if today is any indication.

Dow Jones Industrials