Markets advance in anticipation of a big rate cut next week

Dow shot up 322, advancers over decliners an impressive 6-1 & NAZ advanced 111.  The MLP index slid back to the 285s after a rise yesterday & the REIT index added 1+ to go over 440.  Junk bond funds inched higher & Treasuries saw limited buying which took yields a little higher (more below).  Oil rose in the 69s (up for a 3rd straight session) & gold jumped another 21 to 2601.

Dow Jones Industrials

More than 500 business groups across the US are calling on Congress & the next administration to keep former Pres Trump's tax cuts in place, warning that allowing them to expire at the end of next year would amount to "the largest tax increase in American history."  The Chamber of Commerce led the hundreds of local chambers & other business organizations in signing an open letter to lawmakers & the next administration, saying the 2017 tax reforms have been instrumental in driving growth in the economy, & that doing away with them would cause harm.  "While the impact of a massive tax increase on individual Americans is clear, it is critical for policymakers to understand that the expiration of many pro-growth business tax reforms from the 2017 Tax Cuts and Jobs Act (TCJA) also will dramatically increase costs for families and customers, harm main street businesses, reduce take-home pay for workers, and result in the loss of innovation and American jobs," Neil Bradley, exec VP & chief policy officer at the US Chamber of Commerce, said.  "Pro-growth tax policy doesn’t just grow the overall U.S. economy; it raises wages for American workers and improves standards of living," he continued.  "Maintaining and improving pro-growth tax policy ensures that the U.S. remains globally competitive, retaining and attracting businesses, jobs, investment, and innovation here at home."  The call from the business groups comes as Trump & rival 2024 presidential candidate VP Kamala Harris make their pitches to the American people for their respective tax plans ahead of the Nov election.  Harris has vowed to reverse the Trump-era cuts & is proposing to raise the rate that major businesses pay from 21% to 28%.  At the same time, the Dem nominee seeks to increase the federal gov''s small business tax deduction by 10 fold, from $5K to $50K.  Trump, meanwhile, is vowing to cut taxes even beyond his signature legislation from 2017 if he returns to the White House.  "Our plan will massively cut taxes," Trump said last month at a campaign event.  "I gave you the best tax cut in history."

US business groups warn Congress to act as Americans face historic tax increase

Shares of Adobe (ADBE) fell more than 9%, after the software company released 3rd-qtr results that offered worse-than-expected guidance for the 4th qtr.  ADBE reported $5.41B in revenue for the qtr, up 11% year over year & above the $5.37B expected.  EPS was $3.76, up from $3.05 in the year-ago period.  For its 4th qtr, ADBE said it expects revenue of $5.50-5.55B & EPS of $4.63 - $4.68.  Analysts were expecting $5.61B in sales & $4.67 in EPS.  Goldman Sachs analysts reiterated their buy rating & said they think ADBE's disappointing outlook overshadowed the strength of its core business, adding that the business is being bolstered by artificial intelligence adoption & its key growth drivers “remain intact.”  “While investors are likely concerned about guidance’s effect on upcoming DM FY25 guidance and hesitant about where we are in the maturity of the business, we believe this reaction is overblown,” they wrote.  Analysts at Bank of America said ADBE reported results & outlook that were somewhat mixed but healthy overall.  They said ADBE is driving “meaningful AI generation,” & they argued there is only 1 other competitor.  UBS analysts said ADBE's 4th-quarter outlook is “uninspiring” but that the sell-off seems overdone.  “In our view the print was hardly a disaster,” they wrote.  The stock tumbled 53.25 (9%).

Adobe shares fall 9% on weak fourth-quarter guidance

Treasury yields were lower as investors considered the path ahead for interest rates as they digested the latest economic data.  The yield on the 10-year Treasury was down by 3 basis points at 3.649% & the 2-year Treasury yield was last nearly 6 basis points lower at 3.591.  Yields & prices have an inverted relationship & 1 basis point equals 0.01%.  Attention began to turn to the Federal Reserve meeting next week at which the central bank is widely expected to cut interest rates.  Traders were last pricing in a 59% chance of a 12-basis-point rate cut & a 41% probability of a 50-basis-point reduction, according to CME Group's FedWatch tool.  The Fed’s meeting is set to begin Tues before concluding Wed, with the interest rate decision & a post-meeting press conference.  The central bank will also release its latest economic projections then.

2-year Treasury yield slides as investors assess interest rate outlook

Stocks were in demand, setting the stage for strong weekly wins after expectations for a jumbo interest rate cut by the Federal Reserve.  Traders are warming to the likelihood of a ½-point rate cut by the Fed.  At the same time nervous investors are taking safe haven gold to another record.