Markets wobble while looking for direction

Dow was off 22, decliners slightly ahead of advancers & NAZ declined 81.  The MLP index edge up 1+ to the 276s & the REIT index stayed in the 351s.  Junk bond funds remained a little higher & Treasuries continued to see selling which raised yields.  Oil stayed about even in the 82s & gold added 6 to 2395 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Google (GOOG) terminated 28 employees, according to an internal memo, after a series of protests against labor conditions & the company's contract to provide the Israeli gov & military with cloud computing & artificial intelligence services.  The news comes one day after 9 of its workers were arrested on trespassing charges Tues night after staging a sit-in at the company's offices in New York & Sunnyvale, California, including a protest in CEO Thomas Kurian's office.  Some of the arrested workers in New York & Sunnyvale said that during the protest they were locked out of their work accounts & offices, placed on administrative leave & told to wait to return to work until being contacted by human resources.  Yesterday evening, a memo sent by Chris Rackow, GOOG's VP of global security, said that “following investigation, today we terminated the employment of twenty-eight employees found to be involved. We will continue to investigate and take action as needed.”  The protests were led by the “No Tech For Apartheid” organization, focused on Project Nimbus — GOOG & Amazon's joint $1.2B contract to provide the Israeli gov & military with cloud computing services, including AI tools, data centers & other cloud infrastructure.  “This evening, Google indiscriminately fired over two dozen workers, including those among us who did not directly participate in yesterday’s historic, bicoastal 10-hour sit-in protests,” No Tech For Apartheid said, adding, “In the three years that we have been organizing against Project Nimbus, we have yet to hear from a single executive about our concerns. Google workers have the right to peacefully protest about terms and conditions of our labor. These firings were clearly retaliatory.”  GOOG stock rose 58¢.

Google terminates 28 employees after multicity protests

The number of Americans filing new claims for unemployment benefits was unchanged at a low level last week, pointing to continued labor market strength that is driving the economy.  Labor market resilience, together with elevated inflation have led financial markets & some economists to expect that the Federal Reserve could delay cutting interest rates until Sep.  A few economists doubt that the central bank will lower borrowing costs this year.  Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 212K for last week.  Economists had forecast 215K claims in the latest week.  Claims have been bouncing around in a 194K-225K range this year.  Unadjusted claims declined 6756 to 208K last week.  Filings in California jumped by 3K & there were also notable increases in claims in Connecticut, Georgia & Oregon.  These were more than offset by a decline of 4551 in filings in New Jersey. 

US weekly jobless claims unchanged at low levels

Alaska Airlines (ALK) forecast 2nd-qtr & full-year earnings well ahead of estimates with execs predicting a strong peak travel season, despite a first-qtr loss stemming from a midair blowout of a door plug on a nearly new Boeing 737 Max 9 in Jan.  ALK received $162M from Boeing (BA) for the Jan 5 accident, which caused the Federal Aviation Administration to briefly ground the planes.  ALK expects additional compensation from the manufacturer.  The carrier lost $1.05 a share in the first qtr, down from a net loss of $1.11 a share a year earlier.  ALK CEO Ben Minicucci stood by BA on it's earnings call but reiterated that he expects BA to fall short on its airplane delivery plan to the carrier this year.  “We remain committed partners but we will hold Boeing to the highest bar for quality out of the factory and to that end we have enhanced our in-person oversight of our 737 production line,” Minicucci said.  “Alaska [Airlines] needs Boeing, our industry needs Boeing and our country needs Boeing to be a leader in airplane manufacturing,” he said.  ALK forecast adjusted EPS of $2.20 - $2.40, above the $2.12 analysts expected.  For 2024, the carrier expects EPS of $3.25 - $5.25, well above the average of $4.36.  Revenue was $2.2B for the first qtr, slightly above the estimated $2.19B forecast expected & 2% above last year.  Adjusting for one-time items, EPS posted a net loss of 62¢ a share in the 2nd qtr, less than the $1.05 per-share loss analysts were expecting.  ALK stock rose 1.72.

Alaska Airlines forecast tops estimates after loss from Boeing Max grounding

Safe-haven gold gained as persistent tensions in the Middle East added to the metal's appeal despite robust economic data from the US that raised prospects of fewer interest rate cuts.  Spot gold firmed 1% at $2384 per ounce.  Prices touched an all-time high of $2431 last Fri.  US gold futures settled 0.4% higher at $2398.  In the Middle East, Israel has signaled it will retaliate to a volley of attacks from Iran despite calls for restrain from Western countries but has not said how.  Bullion's upside came despite data showing US weekly jobless claims were unchanged at low levels last week.  Strong US economic data & hawkish rhetoric from Fed officials have prompted investors to drastically rethink the chances of the Federal Reserve cutting rates any time soon.  Higher interest rates reduce the appeal of holding non-yielding gold.  Bullion's upside came despite data showing US weekly jobless claims were unchanged at low levels last week.  Higher interest rates reduce the appeal of holding non-yielding gold.

Gold Surges as Escalating Middle East Tensions Boster Demand

West Texas Intermediate (WTI) crude oil closed higher, posting a small gain following three losing sessions that came as the geopolitical risk premium eased while rising US inventories are seen as a signal of weak demand.  WTI crude oil for May delivery closed up 4¢ to $82.73 per barrel, while Jun Brent crude, the global benchmark, was last seen down 35¢ to $86.94.  The commodity is shedding a risk premium accorded since the start of Apr, when Israel launched an attack on Iran's embassy in Syria that killed senior military leaders.  Iran's response over the weekend, launching hundreds of drones & missile to attack Israel that were mostly shot down, caused minor damage & Israel has so far not retaliated, easing fears of a spreading Middle East war.  A larger than expected 2.7M barrel rise in US oil inventories reported yesterday by the Energy Information Administration added concerns over flagging demand.

WTI Crude Oil Closes with a Small Gain Even as Concerns Over a Wider Middle Easy War

Traders are getting used to the idea that rate cuts will be slower than previously expected.  That's the price of a strong economy, although strength remains unclear with a number of weak readings.  Meanwhile safe haven gold continues to be in record territory.

Dow Jones Industrials