Dow went up 128 although off its highs in early trading, advancers over decliners about 3-1 & NAZ advanced 328 on strong tech earnings. The MLP index stayed in the 283s & the REIT index was up 2 to the 359s. Junk bond funds were higher along with the rise in the stock market & Treasuries rose which reduced yields. Oil was around even in the 83s & gold added 4 to 2347.
AMJ (Alerian MLP Index tracking fund)
An inflation measure closely watched by the Federal Reserve rose faster than expected in Mar as high prices continue to weigh on Ms of Americans. The personal consumption expenditures index showed that consumer prices rose 0.3% from the previous month, according to the Labor Dept, in line with expectations. On an annual basis, prices climbed 2.7%, higher than both the 2.6% forecast & the 2.5% reading recorded the previous month. In another sign that progress on inflation is stalling, core prices, which strip out the more volatile measurements of food & energy, climbed 0.3% from the previous month & 2.8% from the previous year. Those figures are both higher than what was seen in the previous month. "Progress on inflation certainly appears stalled. Prices grew in March at the same relative pace as in February," said Elizabeth Renter, data analyst at NerdWallet. "The good news is this: They didn’t further accelerate. The not great news: If you’re waiting for the Fed to cut rates, and you still haven’t pulled up a seat, get comfortable." While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously said that core data is actually a better indicator of inflation. Both the core & headline numbers point to inflation that is still running well above the Fed's preferred 2% target. Prices for goods climbed 0.1% over the course of Mar despite a 1.2% jump in energy costs, while services prices were up 0.4%. That means the typical family is spending about $237K over the course of 18 years to raise a child, & that is excluding the cost of college. Other figures included in the report showed that consumer spending rose jumped 0.8% in Mar, unchanged from the previous month, suggesting that Americans continuing to open their wallets despite steeper prices. Many economists anticipate that spending will slow further in the coming months as consumers continue to grapple with expensive goods, high interest rates & the resumption of federal student loan payments.
Fed's favorite inflation gauge rises faster than expected in March
Microsoft (MSFT), a Dow stock, issued fiscal 3rd-qtr results that outdid expectations. Total revenue grew 17% year over year in the qtr, which ended on Mar 31. EPS was $2.94, up from $2.45 in the year-ago qtr. With
respect to guidance, finance chief, Amy Hood, called for
$64B in revenue for the fiscal 4th quarter, below the $64.5B estimate. Hood's forecast implies an operating margin of
42.3%, ahead of the estimate for 41.5%. “Currently,
near-term AI demand is a bit higher than our available capacity,” Hood added. MSFT has been increasing its capital expenditures to secure Nvidia (NVDA) graphics processing units for training & running artificial intelligence models. During the fiscal 3rd qtr, MSFT's Intelligent Cloud
segment, including the Azure public cloud, Windows Server, Nuance &
GitHub, generated $26.7B in revenue. That's up 21% &
more than the $26.3B estimate. Revenue from Azure & other cloud services grew
31%, compared with 30% in the previous qtr. Analysts
had expected 28.8%, while the consensus was 28.6%. Inside
of the Azure growth, 7 percentage points were related to AI, up from 6
points of impact in the previous qtr. MSFT provides cloud
services for the ChatGPT chatbot from startup OpenAI, & companies have
been increasingly adopting Azure AI services to develop their own
capabilities for summarizing information & writing documents. MSFT stock climbed 12+ to the 409s.
Microsoft cloud growth accelerates on back of AI push
Alphabet
(GOOG) shot up after the company posted better-than-expected first-qtr results & greenlit its first-ever div & a $70B buyback. The
company reported revenue of $80.5B, a 15% increase
from a year earlier & the fastest growth rate since early 2022,
surpassing the $78.6B in sales expected. EPS of $1.89 eclipsed the $1.51 in earnings. GOOG
announced that its board authorized a div of 20¢ per share to
be paid on Jun 17 &
said it intends to pay future quarterly cash divs. In addition, the company said
the board also approved the repurchase of an additional $70B in
stock. The company exceeded expectations for YouTube advertising revenue & Google Cloud revenue. The stock jumped 15 (9%).
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