Markets surge as data shows the labor market continues to cool

Dow shot up 331 (near session high), advancers over decliners better than 2-1 & NAZ gained only 43.  The MLP index was little changed in the 284s & the REIT index gained 7+ to 371.  Junk bond funds saw limited buying & Treasuries was in demand which lowered yields.  Oil rose chump change in the 79s & gold advanced 22 to 2344 (more on both below).

AMJ (Alerian MLP Index tracking fund)

General Motors (GM) believes it can regain market share in China after hitting a roughly 20-year low last year amid changing market conditions & increased domestic competition, GM Pres Mark Reuss said.  The longtime GM exec said new all-electric & plug-in hybrid electric vehicles, as well as the redesign of its Buick brand, will help the automaker turn around operations in the region.  GM's market share in China, including its joint ventures, has plummeted from roughly 15% as recently as 2015 to 8.6% last year, the first time it has dropped below 9% since 2003.  Earnings from operations hav also fallen, down 78.5% since peaking in 2014.  Reuss also touted the competitiveness of GM's Chinese joint venture partners such as Wuling Motors.  GM first established operations in China in 1997.  “You can look at it any way you want from a larger geopolitical standpoint, but for us in China, this has been a great advantage for us to be partnered so deeply for so many years with our JV partners there,” Reuss said.  “We have an advantage there with Buick and Wuling, and it goes both ways.”  GM's market share declines in China are the result of growing competition from gov-backed domestic automakers fueled by nationalism & a generational shift in consumer perceptions of the automotive industry and electric vehicles.  The company, along with other American-based automakers, is managing geopolitical tensions between China & the US.  GM's US-based brands such as Buick & Chevrolet have seen Chinese sales drop more than those of its joint venture.  The joint venture models accounted for about 60% of GM's 2.1M vehicles sold last year in China.  The stock went up 26¢.

GM can regain market share in China after hitting 20-year low, executive says

Mortgage rates dipped slightly this week for the first time since Mar, but remain above 7% as a home affordability crisis maintains its grip on the housing market.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage declined to 7.09% this week from 7.22% last week.  The average rate on a 30-year loan was 6.35% a year ago.  The average rate on the 15-year fixed mortgage dropped to 6.38% from 6.47% last week.  One year ago, the rate on the 15-year fixed note averaged 5.75%.

Mortgage rates tick down to 7.09%

Warner Bros Discovery (WBD) reported first-qtr results, missing expectations on both the top & bottom lines despite strength in its streaming unit.  WBD — which owns streaming service Max, a portfolio of cable TV networks including TNT & Discovery & a film studio — said revenue fell 7% to $9.96B compared with the same qtr last year.  WBD posted a net loss attributable to the company of $966M, 40¢ per share, an improvement from the year-ago qtr when it reported a loss of $1.07B, 44¢ per share.  The company said total adjusted earnings before interest, taxes, depreciation & amortization were down roughly 20% during the first qtr to $2.1B, noting its Suicide Squad: Kill the Justice League video game generated significantly lower revenue.  WBD said that it added 2M direct-to-consumer streaming subscribers during the qtr, bringing its total to 99.6M.  That segment earned an adjusted $86M during the qtr, an improvement of $36M from the prior-year qtr.  It also saw revenue increase “modestly” to $2.46B from the prior-year qtr.  Advertising revenue for streaming proved to be a bright spot, increasing 70%, boosted by higher engagement on Max in the US due in part to subscriber growth in the streaming service's ad-lite tier & the launch of sports on the app.  WBD has been working to reduce its debt load, which now stands at $43.2, stemming from the merger of Warner Bros & Discovery in 2022.  Yesterday the company said it repaid $1.1B in debt during the qtr & also announced a $1.75B cash tender aimed at further reducing its debt.  The stock gained 11¢.

Warner Bros. Discovery misses first-quarter estimates despite streaming growth

Gold advanced after the latest jobless claims pointed to more signs of a cooling labor market, boosting convictions that the Federal Reserve will be able to start cutting interest rates this year.  Initial claims increased by 22K to 231K last week according to Labor Dept data, the highest level since Aug.  The forecast called for 212K applications.  Treasury yields & the $ pushed lower after the print, sending bullion higher by as much as 0.9% before paring some of the gains.  Bullion prices have held in a narrow range for the last couple of weeks as traders weigh the outlook for US monetary policy & tensions in the Middle East.  While the metal has eased from a record high set in mid-Apr, it's still up about 12% this year.  Inflation data due next week will offer further insight into the US economy.  Fed Bank of Boston Pres Susan Collins signaled yesterday that rates will likely need to stay at a 2-decade high for longer than previously thought to reduce price pressures.  Investors are also monitoring developments in the Middle East, with any further escalation potentially bolstering gold's appeal as a haven.  Pres Biden said he would halt additional shipments of offensive weapons to Israel if the country launched a ground invasion of the Gazan city of Rafah.  While gold prices have climbed this year, holdings in global exchange-traded funds have fallen to the lowest since 2019.  Last month, ETF inflows registered in Asia & North America were offset by outflows in Europe, according to the World Gold Council.  Spot gold was up 0.5% at $2319 an ounce.

Gold Edges Higher as US Data Paves Way for Fed Rate Cuts

West Texas Intermediate (WTI) crude oil closed higher, moving up on tight supply amid solid demand as a day-prior report showed a drop in US oil inventories.  WTI oil for Jun closed up 27¢ to settle at $79.26 per barrel, while Jul Brent crude, the global benchmark, was last seen up 10¢ to $83.68.  The rise comes after the Energy Information Administration yesterday said US oil inventories fell by 1.4M barrel per day last week, easing concerns over light demand ahead of the start of the US driving season that begins over the Memorial Day holiday.  The close is within the range Canadian oil execs expect WTI to average over the next 3-5 years, according to an ATB Financial poll reported by Canadian Press.  The poll says the group expects WTI to average above $75.99 over that period.  Geopolitical concerns remain a focus after pres Biden said the US will pause supplying bombs & artillery shells to Israel to prevent the country continuing to push into the city of Rafah in Gaza in order to limit civilian casualties in the crowded city.  Ceasefire talks are continuing in Egypt with little progress reported.  A weaker $ also supported prices, as the US reported initial jobless claims rose by 231K last week, above expectations for a rise of 214K claims & the highest since Aug.  The ICE dollar index fell following the report, last seen down 0.27 points to 105.27.

WTI Closes Higher on Signs of Higher Demand and a Weaker Dollar

At the opening stocks were higher & never looked back.  Then there was additional buying in the PM, making for a special day for stocks.  After a dreary month in Apr, Dow is up over 1500 so far in May.  A possible slowdown in the economy & a few more months of very high interest rates are not deterring investors from buying stocks.

Dow Jones Industrials