Markets hesitate while investors wait for guidance from the Fed

Dow dropped 205, decliners over advancers about 3-1 & NAZ went up 18.  The MLP index stayed in the 282s & the REIT index was flattish in the 373s.  Junk bond funds were mixed & Treasuries had limited buying which lowered yields.  Oil was off pennies in the 77s & gold gained 5 to 2332.

Dow Jones Industrials 

General Motors (GM) announced a new $6B stock repurchase authorization has been approved by its board. The new buyback authorization comes as an accelerated $10B share repurchase program announced in Nov 2023 is expected to be completed by the end of this month.  “We are very focused on the profitability of our [internal combustion engine] business, we’re growing and improving the profitability of our EV business and deploying our capital efficiently. This allows us to continue returning cash to shareholders,” GM CFO Paul Jacobson said.  The new authorization will allow GM to opportunistically repurchase shares after the completion of the existing reauthorization.  A timeframe for completion of the program was not announced. The announced buyback plans come amid uncertainty surrounding the adoption of all-electric vehicles, which GM has bet heavily on & stalling customer demand for new vehicles.  “The investments GM made in its brands and product portfolio over the last several years, and the company’s operating discipline, are delivering consistently strong revenue growth, margins and free cash flow,” Jacobson said.  The stock rose 93¢.

GM board approves new $6 billion share buyback authorization

Apple (AAPL), a Dow stock, fully embraced artificial intelligence yesterday, as company execs explained the features & reasoning behind AAPL Intelligence, the company's new AI software suite.  But AAPL's Worldwide Developers Conference launch event was carefully crafted to distinguish the iPhone maker from current AI leaders at a panel discussion.  Software chief Craig Federighi & AI chief John Giannandrea said that AAPL has a different approach to the technology than its Silicon Valley rivals.  Unlike companies that are building AI for a broad range of products, AAPL is instead focused only on the devices it sells & the personal data that AI could use.  AAPL revealed a more limited approach that eschews future-focused thinking about the potential of the technology in favor of small tasks that can be done now without burning up battery life.  “We think AI’s role is not to replace our users but to empower them,” Federighi said.  Apple’s AI may be the first that its over 2B users interact with.  If its AI features are favored over cloud-based competition from Microsoft (MSFT), a Dow stock, or Google (GOOG).  It could change how Bs of $s in AI infrastructure per year is built & shift the direction of products that use the technology.  AAPL stock advanced 9.56 (5%),  MSFT stock was off 37¢ & GOOG stock fell 95¢. 

Apple execs explain why its AI is different from competitors

Treasury yields fell as the Federal Reserve began its 2-day policy meeting.  The yield on the 10-year Treasury was down 2 basis points at 4.447% & the 2-year Treasury yield was last at 4.857% after falling by 3 basis points.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  The Fed is widely expected to keep interest rates unchanged this month, with the first rate cut being priced in for later this year.  Questions remain about when this cut could take place & if it will be followed by more cuts.  Investors will be closely watching comments & guidance from the Fed for fresh hints about the policy outlook.  Also, tomorrow the consumer price index for May is due to be released.  It will be followed by the month's producer price index on Thurs.  Many investors will be hoping for the data to show that the economy is cooling, as this could suggest the Fed will cut interest rates sooner.

U.S. Treasury yields fell Tuesday as the Federal Reserve began its two-day policy meeting

A string of inconclusive data has fueled skepticism about the likelihood of 3 rate cuts in 2024, as discussed by the Fed in Mar.  Many investors now predict just 1 reduction before the year's end.  The Fed policy meeting kicking off today is heavily expected to end with borrowing costs kept at their 2-decade high.  Investors will still watch out for hints on when a shift to cuts will come.