Markets wobble on continued hopes for rate cuts

Dow rose 60, decliners ahead of advancers about 5-4 & NAZ slid 13.  The MLP index stayed in the 274s & the REIT index was flattish in the 375s.  Junk bond funds drifted a little lower & Treasuries saw limited buying taking yields a tad lower.  Oil was up 1+ to the 75s & gold gained 15 to 2390 (more on both below).

Dow Jones Industrials 

Mortgage rates dipped just under 7% this week after crossing above that threshold in the prior reading as rates remain stubbornly high, stifling the housing market.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage ticked down to 6.99% this week from 7.03% last week. The average rate on a 30-year loan was 6.71% a year ago.  The average rate on the 15-year fixed mortgage also decreased to 6.29% from 6.36% last week.  One year ago, the rate on the 15-year fixed note averaged 6.07%.

Mortgage rates tick down, back below 7%

The race to the $25K EV in the US car market has been won, but not in the way the auto industry wanted.  Since Jan, Hertz Global Holdings (HTZ) has been in Tesla (TSLA) sales mode, with 20K electric vehicles from its global fleet, representing nearly a 3rd of the rental-car company’s existing EV inventory, on the dealer lot.  The move, viewed as a stumble in Hertz’s (HTZ) EV strategy, in 2021, it heralded plans to order hundreds of thousands of TSLAs, Polestars & battery-electric GM models, also reflects a sobering up of the electrification hype within the US auto industry, which has run into a consumer in 2024 spurning at least the expected pace of the transition away from gas-powered cars.  While EV sales in the US more than quadrupled from 2020 to 2023, & now account for more than 9% of total light-duty vehicle sales, the pace of growth has slowed & automakers are focusing more on selling hybrids.  Yet the eventual transition to EVs remains inevitable, as sticker prices become more in line with those of internal combustion engine (ICE) vehicles, something the sales slump is making happen even faster as auto companies attempt to move EVs, battery technology improves driving range & the charging infrastructure expands.  And there is the overarching imperative to reduce the tons of climate-changing carbon emissions that cars & trucks produce.  Considering all that, now might be a good time to buy 1 of HTZ's used TSLAs thru its long-established Hertz Car Sales division, in business since 1977 & operating about 70 locations across the country.  Although as with buying any used car — from manufacturers & independent dealers, online marketplaces or private owners — there are pros & cons.  On the plus side, HTZ has plenty of EVs that it’s motivated to sell at what it calls no-haggle prices.  “Our EVs can be found nationwide in most major metros and averaging around $25,000,” said a Hertz spokesperson.  All of the HTZ-certified vehicles are given a 115-point inspection & include a 12-month/12K-mile (whichever comes first) limited powertrain warranty.  HTZ also offers vehicle protection plans that last beyond the warranty, as well as a 7-day or 250-mile buy-back guarantee.  HTZ, like most used car retailers, offers trade-ins & financing.  Also, some used EVs are eligible for up to $4K in federal tax credits, & several states offer tax credits or rebates.  On the minus side, although the HTZ late-model EV fleet is only a couple of years old, the cars have been frequently rented, so the mileage can be relatively higher compared to other used vehicles.  That could mean more wear & tear, since there’s no telling how aggressively they've been driven.  TSLA stock rose 3.01 & HTZ stock fell 17¢.

EV sales slump and Hertz dump take used Teslas to ‘no haggle’ $25,000 price

The number of Americans who applied for unemployment benefits last week rose to a 4-week high of 229K, likely in part due to the end of the school year, but there was little sign of rising layoffs.  The forecast called for new claims to total 219K in the latest week, based on seasonally adjusted figures.  Initial jobless claims have hovered between 194K - 232K this year, a remarkably low level last achieved consistently in the 1960s.  Big picture: Businesses are not hiring as many workers, but they are not cutting as many jobs.  Sales are still pretty strong & good help is hard to find, giving most firms little incentive to shrink staff.  As long as most adults are working, they are likely to keep spending at levels sufficient to keep the economy growing.

Jobless claims climb to 4-week high of 229,000, but layoffs still little sign of accelerating

Gold prices climbed to a 2-week high as weaker-than-expected US jobs data fanned hopes of a Federal Reserve interest rate cut later this year with focus shifting to non-farm payrolls data due tomorrow.  Spot gold was up 0.8% at $2373 per ounce & US gold futures rose 0.7% to $2393.  Data yesterday showed US private payrolls increased less than expected in May while data for the prior month was revised lower.  Lower interest rates reduce the opportunity cost of holding non-yielding bullion.  The Fed will likely cut its key interest rate in Sep & once more this year.  Gold prices are expected to hit another record high this year, despite a dip in physical demand.  Meanwhile, global stocks hit an all-time high & the € rose after the European Central Bank cut interest rates for the first time in nearly 5 years, but also signaled that further moves could take a while.

Gold hits two-week high, payrolls data in focus

West Texas Intermediate (WTI) crude oil closed higher for a 2nd day with risk appetite is on the rise following interest-rate cuts by Canada & Europe.  WTI crude for Jul closed up $1.48 to settle at $75.55 per barrel, while Aug Brent crude, the global benchmark, was last seen up $1.46 to $79.87.  The 2 day rally follows 5 straight days of losses that came on signs of weak demand & an OPEC+ decision to begin returning 2.2M barrels per day of supply cuts back to market beginning in Oct.  The Energy Information Administration yesterday said US oil inventories rose by 1.2M barrels per day last week, while most analysts expected stocks to fall.  Gasoline & distillate inventories also climbed, a sign of weak demand despite the start of the US driving season on the Memorial Day weekend.  Still, with US equities at record highs & central banks beginning to lower interest rates, traders are showing a willingness to bid up risky commodities.

WTI Oil Rises Again Despite Signs of Weak Demand as Risk Appetite Rises Following Start of G7 Interest-Rate Easing

Dow has been edging higher in Jun without significant conviction.  Traders want to see the new jobs data tomorrow & next week results from the FOMC meeting (along with fresh inflation data).  Nervous investors are buying more gold.