Markets slide while gold extends its rally to new records

Dow went up 56 but below early highs, decliners over advancers 3-1 & NAZ was off 14.  The MLP index slid 2 to 281 & the REIT index declined 4+ to 355.  Junk bond funds were little changed & Treasuries had limited selling, raising yields slightly.  Oil crawled up pennies in the 85s & gold rose 13 to 2396.

AMJ (Alerian MLP Index tracking fund)

The International Monetary Fund (IMF) slightly raised its global growth forecast, saying the economy had proven “surprisingly resilient” despite inflationary pressures & monetary policy shifts.  The IMF now expects global growth of 3.2% in 2024, up by a modest 0.1 percentage point from its earlier Jan forecast & in line with the growth projection for 2023.  Growth is then expected to expand at the same pace of 3.2% in 2025.  The IMF's chief economist, Pierre-Olivier Gourinchas, said the findings suggest the global economy is heading for a “soft landing,” following a string of economic crises, & that the risks to the outlook were now broadly balanced.  “Despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose,” he added.  Growth is set to be led by advanced economies, with the US already exceeding its pre-Covid-19 pandemic trend & with the euro zone showing strong signs of recovery.  But dimmer prospects in China & other large emerging market economies could weigh on global trade partners, the report said.  China, whose economy remains weakened by a downturn in its property market, was cited among a series of potential downside risks facing the global economy.  Also included were price spikes prompted by geopolitical concerns, trade tensions, a divergence in disinflation paths among major economies & prolonged high interest rates.  To the upside, looser fiscal policy, falling inflation & advancements in artificial intelligence were cited as potential growth drivers.  Central banks are now being closely watched for a signal on the future path of inflation, with opinion diverging on either side of the Atlantic as to when the Federal Reserve & the ECB will cut rates.  Some analysts have recently forecast a possible Fed rate hike as stubborn inflation & rising Middle East tensions weigh on economic sentiment.  The IMF said it sees global headline inflation falling from an annual average of 6.8% in 2023 to 5.9% in 2024 & 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.

IMF upgrades global growth forecast as economy proves ‘surprisingly resilient’ despite downside risks

Jjohnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, first-qtr adjusted earnings that topped  expectations as sales in its medical devices business surged.  Meanwhile, the total revenue for the period was largely in line with estimates.  The medtech division provides devices for surgeries, orthopedics & vision.  The company is benefiting from a rebound in demand for nonurgent surgeries among older adults, who deferred those procedures during the Covid pandemic.  CFO Joseph Wolk said that consumers may be pulling back in other areas but “don’t want to compromise when it comes to their health, their mobility, their ability to live a fulfilling life.”  He added that the company has seen elevated procedure levels after the pandemic, & “we haven’t seen any backtracking of that.”  The company posted $21.4B in total sales for the first 3 months of 2024, up more than 2% from the same qtr in 2023.  EPS was $2.20 during the qtr, that compares with a net loss of 19¢ per share, for the year-earlier period.  At the time, JNJ recorded costs tied to its talc baby powder liabilities & the spinoff of its consumer health unit Kenvue.  Excluding certain items for the first qtr of 2024, adjusted EPS was $2.71.  JNJ also narrowed its full-year guidance for the year.  The company expects sales of $88.0-$88.4B.  That compares with a previous forecast of $87.8-$88.6B.  JNJ expects adjusted EPS of $10.57 - $10.72.  That compares to a previous guidance of $10.55 - $10.75 per share.  JNJ said it will increase its quarterly div to $1.24 per share, up 4.2% from $1.19 per share.  That marks the company's 62nd year of consecutive div increases.  The stock fell 2.74.

Johnson & Johnson tops quarterly profit estimates as medical device sales jump

Bank of America (BAC) reported first-qtr earnings that topped estimates for profit & revenue on better-than-expected interest income & investment banking.  EPS fell 18% to $6.7B (76¢ a share) excluding a $700M FDIC assessment, EPS was 83¢.  Revenue slipped 1.6% to $25.98B as net interest income declined from a year earlier.  Net interest income, or the difference between what the company earns from loans & investments & what it pays customers for their deposits, was $14.2B, topping the $13.9B estimate.  Total deposits of $1.95T climbed roughly 1% from the 4th qtr, while loans were essentially unchanged at $1.05T.  CFO Alastair Borthwick said that NII will likely dip in the 2nd qtr to about $14B on drops in wealth management & markets interest income, & could grow in the 2nd ½ of the year.  NII has been declining in recent qtrs as funding costs have climbed along with the rise in interest rates.  The stock fell 1.64.

Bank of America tops estimates on better-than-expected interest income, advisory

Stocks attempted to extend their gains, but the bulls lacked conviction & markets are back on defense.  Meanwhile yields are at their 2024 highs & gold is roaring ahead.  Dow already has fallen 2000 in Apr while gold is surging to record highs.  This could be a difficult qtr for stocks.

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