Markets rise carefully as they try to shake off sluggish start to June

Dow went up 140, decliners over advancers 3-2 & NAZ slid back 28.  The MLP index stayed in the 273s & the REIT index rose 3+ to the 375s.  Junk bond funds fluctuated & Treasuries continued to be in demand which reduced yields.  Oil fell about 1 to the low 73s (below 76 when 2022 started) & gold dropped 22 to 2346 (more on both below).

Dow Jones Industrials 

US chipmaker Intel (INTC), a Dow stock, announced new artificial intelligence chips for data centers, as it looks to take on rivals Nvidia (NVDA) & AMD (AMD), which have showcased upcoming chips in the last 2 days.  INTC's Xeon 6 processor will deliver better performance & power efficiency for high-intensity data center workloads as compared with its predecessor, CEO Pat Gelsinger said during a conference in Taiwan.  The announcement comes as rivals NVDA & AMD launched new AI chips on Sun & yesterday, respectively, as they jostle for leadership in the booming industry.  It also comes 6 months after INTC launched its 5th Gen Intel Xeon processors for data center workloads & 2 months after announcing the Gaudi 3 processor for AI model training and deployment.  INTC also revealed that prices for the Gaudi 2 & Gaudi 3 AI accelerators are lower than that of rival chips.  “Customers are looking for high performance, cost-effective gen AI training and inferencing solutions. And they’ve started to turn to alternatives like Gaudi. They want choice. They want open software and hardware solutions and time to market solutions at dramatically lower TCOs [total cost of ownership],” Gelsinger said.  INTC also revealed architecture details for its upcoming Lunar Lake processors “to continue to grow the AI PC category.”  The Lunar Lake chips, expected to ship in the 3rd qtr, will compete against NVDA's & AMD's chips that are specifically designed for AI PCs.  INTC is trying to catch up to NVDA & AMD, after having largely been on the sidelines of the AI frenzy which saw tech giants buying up as many NVDA chips as possible.  INTC stock fell 26¢.

Intel unveils new AI chips as it seeks to reclaim market share from Nvidia and AMD

Ford Motor's (F) US new vehicle sales rose 11.2% last month compared with May of last year, boosted by strong sales growth for all-electric & hybrid models.  The Detroit automaker reported 65% increases in sales of both hybrid & all-electric vehicles.  That’s compared with a 5.6% rise in sales of Ford's traditional vehicles with internal combustion engines.  Despite the notable increases in hybrids & EVs, the sales in those segments totaled about 26K vehicles combined.  That’s 14% of the automaker's more than 190K total sales last month.  The boost to EV sales is a conundrum for investors.  Ford wants to grow EV sales to build scale & assist in offsetting tightening fuel economy standards & emissions, but the company's Model E electric vehicle unit has reported massive losses.  Ford reported in Apr the division lost $1.32B on 10K vehicles wholesaled from Jan-Mar.  While the unit also includes EV-related business such as software, those losses equate to a loss of $132K for each vehicle the unit sells.  In May, Ford nearly doubled sales of its all-electric F-150 Lightning pickups, compared with May 2023.  Sales of the Mustang Mach-E EV also jumped, up 46% year over year.  The spike in hybrid sales is part of Ford's plan to double down on the technology.  The automaker earlier this year said it would delay production of new all-electric vehicles to instead focus on offering hybrid options across its entire North American lineup by 2030.  Ford reported total YTD US sales thru May of 877K units, up 5.6% compared with the same time period in 2023.  The sales have been led by a roughly 10% increase in SUV sales & 2.5% uptick in truck & van sales.  The stock fell 16¢.

Ford EV and hybrid sales surge 65% in May

Warner Bros Discovery's (WBD) Max announced price increases for its ad-free options, as a range of streamers make their memberships more expensive.  The move comes only 12 days before the debut of season 2 of HBO's “Game of Thrones” prequel “House of the Dragon,” whose series premiere garnered nearly 10M viewers, making it the biggest in HBO's history.  Max currently has 3 pricing options: with ads; ad-free; & ultimate ad-free, which allows for more devices and downloads than the cheaper plans.  The price of the ad-free option of the streaming service will increase by $1 per month to $16.99, while the yearly ad-free plan will rise by $20 a year to $169.99.  The cost of the ultimate ad-free plan will also increase by $1 per month to $20.99, while the yearly ultimate plan will jump $10 per year to $209.99.  The ad-supported option will remain unchanged at $9.99 a month or $99.99 a year.  While the prices will take effect immediately for new subscribers, existing subscribers will see the price hike starting from their next billing cycle on or after Jul 4.  The price hike follows its competitor's decisions to bundle their streaming services.  The bundle will be available in both ad-supported & ad-free tiers.  While the pricing has not been disclosed, it was reported that it will be offered at a discount in an effort to make it a more desirable option.  WBD last month missed both top & bottom-line estimates for its first-qtr earnings report, despite adding 2M direct-to-consumer streaming subscribers during the qtr.  CEO David Zaslav said WBD is hoping the subscribers will stick with the bundle offering to take advantage of cheaper prices, decreasing the loss of customers, which he said has been “the killer” in the streaming business.  This is only the 2nd time Max has raised prices for its ad-free service since its launch.  In early 2023, Max raised the ad-free tier price from $14.99 to $15.99 a month, an increase the company said would allow it to invest in its content & user experience.   The stock was off 9¢.

Warner Bros. Discovery hikes prices for Max streaming service

Gold fell as technical selling intensified despite data showing further signs of a slowdown in the US labor market reinforced bets that the Federal Reserve will be able to cut interest rates this year.  US job openings fell in Apr to the lowest level in more than 3 years, consistent with a gradual slowdown in the labor market, according to the Job Openings & Labor Turnover Survey.  The result was below all estimates.  Treasury yields pushed lower after the print & Fed swaps are pricing in a faster pace of 2024 rate cuts.  But that didn't stop gold traders from selling, with the metal down as much as 1.5%.  Recent data indicate the US labor market is cooling, but it has been gradual through slower hiring rather than outright job cuts.  Fed officials say they hope that trend will continue in order to rein in demand & tame inflation without putting Ms of people out of work.  Traders will now focus on Fri's jobs report for further clues on the timing of the Fed's long-anticipated pivot to lowering borrowing costs.  Higher rates typically pose a headwind for the precious metal.  Bullion has risen almost 13% this year & reached an all-time high in May, largely driven by optimism for a Fed pivot to monetary easing this year.  It has also been supported by haven purchases due to the conflicts in Ukraine & the Middle East, as well as buying by central banks & Chinese consumers.  Spot gold traded 1.5% lower at $2326 an ounce.

Gold Slips as Traders Book Profit Despite Data Fuel Fed Cut Bets

West Texas Intermediate (WTI) crude oil fell to a fresh 4-month low, dropping for a 2nd day after OPEC+ said it plans to roll back voluntary production cuts beginning in the 4th qtr.  WTI crude for Jul closed down 97¢ to $73.25 per barrel, the lowest since Feb 5, while Aug Brent crude, the global benchmark, was last seen down 64¢ to $77.72.  OPEC+ ministers yesterday decided to leave voluntary cuts of 2.2M barrels per day slated to end on Jun 30 in place thru the 3rd qtr.  The plan is to roll back the cuts in the 4th qtr, depending on market conditions.  The cartel's decision to add additional barrels to the market later this year comes amid rising global inventories, as demand remains light and additional production from the United States, Canada & other western hemisphere producers has helped offset the cuts.

WTI Oil Falls Again on Worries OPEC+ Decision to Roll Back Voluntary Cuts in Q4 Will Swell Global Inventories

In the AM, stocks didn't do much.  In the PM they got a rally going but sellers returned in the last hour of trading.  The stock market is meandering, looking for direction.  High interest rates along with uncertainty about rate cuts are keeping investors away from risky investments like stocks.