Dow was up 81 (but 300 below highs at the opening), decliners over advancers 3-2 & NAZ slid back 8. The MLP index hardly budged in the 277s & the REIT index declined 3+ to the 361s after the jump in Treasury yields. Junk bond funds were mixed & Treasuries were heavily sold driving yields substantially higher. Oil fell fractionally to go below 85 & gold pulled back 10 to 2363 following its recent run.
AMJ (Alerian MLP Index tracking fund)
Americans picked up the pace on spending in Mar even as they continued to face high interest rates & steeper prices for everyday goods. Retail sales, a measure of how much consumers spent on a number of everyday goods including cars, food & gasoline, jumped 0.7% in Mar, the Commerce Dept said. That is much higher than the 0.3% increase forecast. Excluding the more volatile measurements of gasoline & autos, sales climbed 1% last month. The Mar advance is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck. Consumers continued to spend at gas stations, grocery stores, building material & garden stores, bars & restaurants & health & personal care stores. They also continued to open their wallets when online shopping, with spending at non-store retailers jumping 2.7% from the previous month. However, they pulled back their spending at electronics & appliance stores, miscellaneous retailers, clothing stores, furniture stores & sporting goods, hobby, musical instrument & book stores. Sales rose in 8 of 13 retail categories. A solid job market & big wage increases have helped to buoy consumer spending in recent months, despite high inflation. However, many economists have been predicting that consumers will grow more cautious as student loan payments resume & high interest rates continue to work their way thru the economy. On top of that, more Americans are relying on their credit cards to cover necessities. Credit card debt surged to a new record at the end of 2023, while delinquencies are also on the rise.
Tesla (TSLA) is preparing to lay off more than 10% of its global workforce
following weak first qtr deliveries & increasing competition in
the electric vehicle (EV) market. A leaked internal email from CEO Elon Musk said that the automaker is
looking to cut costs & increase productivity after years of rapid
growth that have led to duplication in some roles & functions in
certain areas of the company, tech publication Electrek reported. The world's most valuable automaker employs about 140K workers worldwide. The reported staffing reduction will affect about 15K employees. The lay-offs come after Electrek reported that TSLA had told managers
to identify critical team members, paused some stock rewards, canceled
some worker's annual reviews & reduced production at Gigafactory
Shanghai. Earlier this month, it was reported that its quarterly deliveries declined
for the first time in nearly 4 years & fell short of estimates. TSLA announced at the time that it delivered
roughly 387K vehicles in the first qtr – well below expectations
of 443K & an 8.5% decrease compared to the first qtr of
last year. The automaker has also faced an escalating price war in China, a key market for the EV maker, as low-cost competitors like BYD forced it to reduce prices & cut into its margins. A report earlier this month said that TSLA was abandoning its
long-touted plans to produce a budget-friendly starter car, purportedly
called Model 2, that was expected to start at $25K. The stock dropped 6 to 165.
Tesla to lay off more than 10% of workforce, report says
Treasury yields jumped as investors reacted to a hotter-than-expected retail sales report & rising geopolitical tensions. The yield on the 10-year Treasury rose by more than 11 basis points at 4.614% & the 2-year Treasury yield last added nearly 7 basis points, sitting at 4.95%. Yields & prices move in opposite directions & 1 basis point equals 0.01%. Traders considered the potential market impact of growing tensions in the Middle East after Iran launched several hundred missiles & drones on Israel over the weekend. Market expectations about when the first rate cut will take place moved back following last week's inflation data, with traders now anticipating the first rate cut to come in Jul or Sep rather than Jun, CME Group's FedWatch tool showed.
10-year Treasury yield jumps above 4.6% after hot retail sales, Iran attack
Treasury yields jumped to fresh highs this year after stronger-than-expected retail sales for Mar. However optimism is fading while Treasury yields rally after the attack by Iran on Israel this weekend. Gold had some selling although it is still up an impressive 300 YTD.Dow Jones Industrials
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