Markets mixed with Dow reaching its eighth straight win

Dow rose 125, advancers over decliners over advancers 4-3& NAZ was off 5.  The MLP index declined 3+ to 280 & the REIT index dipped 1+ to the 369s.  Junk bond funds remain mixed & Treasuries continued to be sold, raising yields.  Oil was off 1 to the 78s & gold soared 34 to 2375 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Consumer sentiment slumped as inflation expectations rose, despite otherwise strong signals in the economy, according to a closely watched survey.  The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in Apr & well off the forecast for 76.  The move represented a one-month decline of 12.7% but a year-over-year gain of 14.2%.  Along with the downbeat sentiment measure, the outlook for inflation across the 1-5 year horizons increased.  The one-year outlook jumped to 3.5%, up 0.3 percentage point from a month ago to the highest level since Nov.  Also, the 5-year outlook rose to 3.1%, an increase of just 0.1 percentage point but reversing a trend of lower readings in the past few months, also to the highest since Nov.  “While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” said Joanne Hsu, the survey's director.  “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavorable direction in the year ahead.”  Other indices in the survey also posted substantial declines.  The current conditions index fell to 68.8, down more than 10 points, while the expectations measure fell to 66.5, down 9.5 points.  Both pointed to monthly drops of more than 12%, though they were higher from a year ago.  The report comes despite the stock market riding a strong rally & gasoline prices nudging lower, though still at elevated levels.  Most labor market signals remain solid, though jobless claims last week hit their highest level since late Aug.

Consumer sentiment tumbles as inflation fears surge

The number of household staples Americans can buy for a $100 bill has been eroded by nearly a 3rd over the past 5 years, according to data pointing to the pressure consumers are facing due to the compounding effects of high inflation.   NielsenIQ's 2024 Consumer Outlook shows the cost of fast-moving consumer goods (FMCG) including groceries & other necessities like toiletries has soared by 31% since 2019, & indicates the problem will get worse, as wage growth is expected to lag behind the consumer price index (CPI) this year.  To put it in perspective, the Daily Mail, which first reported on the data, noted that in 2019, a shopper with $100 to spend could purchase a 32-item cart full of items like milk, bathroom tissue & cereal.  But today, a customer with the same amount would have to put 10 of those items back on the shelf to stay on budget.  Calculations from Moody's 'Analytics chief economist Mark Zandi show Americans are paying on average $784 more each month compared with the same time 2 years ago, & $1069 more compared with 3 years ago, before the inflation crisis began.  Inflation has remained above the Federal Reserve's 2% target rate for years, ravaging household budgets.  The CPI ballooned from 1.4% in Jan 2021 to a peak of 9.1% in Jun 2022, & the last reading in Mar came in at 3.5%.  The price hikes over the past handful of years are adding up, not just on consumer goods but on other necessities.  From Jan 2021 to Mar 2024, overall inflation (seasonally adjusted) increased 18.9%.  During the same period, all food costs rose 21%, while shelter costs were up 20.5% & energy costs went up 36.9%.

Inflation reduces buying power as $100 goes a lot less far these days

Moderna (MRNA) said the Food & Drug Administration (FDA) as delayed the approval of its vaccine for respiratory syncytial virus to the end of May due to “administrative constraints” at the agency.  The FDA was expected to make a decision on the RSV shot on Sun.  The agency has not informed MRNA of any issues related to the vaccine's safety, efficacy or quality that would prevent its approval.  Investors are watching the upcoming approval closely as MRNA tries to rebound from the rapid decline of its Covid business last year.  If cleared, the RSV shot would become the company's 2nd product to launch in the US after its once-blockbuster Covid vaccine.  It would also be the 3rd RSV vaccine to enter the market last year.  MRNA said its RSV vaccine is still on track to be reviewed by an advisory panel to the Centers for Disease Control & Prevention during a meeting on Jun 26-27.  That panel will vote on recommendations for the shot’s use and intended population, which is necessary before it enters the market.  MRNA has been testing the shot in older adults, who are more vulnerable to severe cases of RSV.  The virus kills 6-10K seniors every year & results in 60-120K hospitalizations, according to CDC data.  “Moderna is very grateful to the FDA for their continued efforts and diligence,” said Dr Stephen Hoge, pres of MRNA, said.  “We look forward to helping the agency complete the review of our application, and to the June [advisory] meeting.”  The approval would demonstrate the versatility of its messenger RNA platform beyond treating Covid.  The biotech company is using that technology to tackle a range of diseases.  Those include RSV, cancer & a highly contagious stomach bug known as norovirus.  The stock

Moderna says FDA delayed RSV vaccine approval to end of May

Gold traded higher for a 2nd day, regaining ground lost to a price correction after the precious metal set a record high last month.  Gold for Jun was last seen up $34 per ounce to $2374 per ounce, still below the Apr 19 record of $2413 but recovering from the month low of $2302 on Apr 30.  The rise comes on hopes the Federal Reserve will begin cutting interest rates this year, lowering the carrying cost of owning gold.  Higher than expected US initial jobless-claims data released yesterday raised hopes the central bank will soon be able to turn dovish, though inflation has yet to return to its 2% target.  The $ edged higher, making gold more expensive for intl buyers.  The ICE dollar index was last seen up 0.04 points to 105.27.  However treasury yields also rose, bearish for gold since it offers no interest.  The 2-year note was last seen paying 4.87%, up 4.4 basis points, while the yield on the 10-year note was up 4.2 basis points to 4.502%.

Gold Higher Midafternoon, Regaining Lost Ground as Weak U.S. Data Raises Rate-Cut Hopes

West Texas Intermediate (WTI) crude oil closed lower, giving up early gains that came on signs of improving demand from China as the prospect of US interest-rate cuts diminish.  WTI crude oil for Jun delivery closed down $1 to settle at $78.26 per barrel after falling off a session high of $79.96, while Jul Brent crude, the global benchmark, was last seen down 90¢ to $82.98.  Demand concerns took hold during the session amid expectations the Federal Reserve will delay introducing the stimulus of rate cuts until at least Decr, according to the CME Fedwatch tool, as comments from members of the central bank's policy committee turn hawkish on the prospect of cuts.  The drop came even as China, the #1 oil importer, yesterday released bullish economic data, showing imports & exports rose by 1.5% in the first qtr, though much of the growth came in the first 2 months of the period & slowed in Mar.  OPEC+ will stage a ministerial meeting on Jun 1 to decide whether to extend into the summer 2.2M barrels per day of voluntary production cuts that are set to expire at the end of the qtr.  An extension would squeeze inventories & keep prices high during the high-demand summer season.

Gold Higher Midafternoon, Regaining Lost Ground as Weak U.S. Data Raises Rate-Cut Hopes

Stocks lost some steam after consumer sentiment hit a 6-month low.  Also, Federal Reserve Governor Michelle Bowman said she believes interest rates need to stay where they are "for a bit longer," echoing similar sentiments made by other Fed officials in recent weeks.  Dow finished up 837 this week, closing near its recent record high while safe haven gold is also close to its record made 3 weeks ago.

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