Markets fall led by selling in tech stocks

Dow sank 378, decliners over advancers 2-1 & NAZ pulled back 512.  The MLP index was off 2 to 281 & the REIT index fell 6+ to the 423s.  Junk bond funds barely budged & Treasuries finished down only slightly, which limited the earlier rise in yields.  Oil rose 1+ to go over 70 & gold plunge 44 to 2756 ( more on both below).

Dow Jones Industrials 

Microsoft's (MSFt), a Dow stock, better-than-expected earnings report wasn't enough to prevent the stock's steepest selloff in 2 years, as investors instead focused on the company's forecast for the current period.  For the period ending in Dec, Microsoft called for revenue in the range of $68.1-69.1B, implying 10.6% growth at the middle of the range.  The forecast called for $69.83B in revenue.  Revenue in its cloud infrastructure business, Azure, increased 33%.  CFO Amy Hood said that growth, in constant currency, will come in at 31-32% in the fiscal 2nd qtr.  Fiscal first-quarter revenue increased 16% from a year earlier to $65.6B, exceeding the estimate of $64.5B.  EPS of $3.30 topped the $3.10 estimate.  Outside suppliers are late in delivering data center infrastructure to MSFT, meaning the company won't be able to meet demand in the fiscal 2nd qtr.  “I feel pretty good that going into the second half of even this fiscal year, that some of that supply-demand will match up,” CEO Satya Nadella said.  MSFT's AI investments continue to be a major focus for investors, as the company builds out its infrastructure & ramps up chip spending to handle heftier workloads.  MSFT has invested close to $14B in OpenAI, which was valued at $157B in a financing round earlier this month.  Hood said on the call she expects the company to take a $1.5B hit to income in the current period, mainly because of an expected loss from its investment in the AI startup.  Meanwhile, spending on property & equipment grew 50% year over year to $14.9B.  The forecast called for $14.6B. Net income rose 11% to $24.7B from $22.3B in the year-ago qtr.  The stock tumbled 22+ (5%).

Microsoft’s stock heads for worst day in two years after disappointing forecast

Mortgage rates continued their upward climb this week, leaving demand essentially flat in the stagnant housing market.  Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage surged to 6.72% from last week's reading of 6.54%. The average rate on a 30-year loan was 7.76% a year ago.  Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage surged to 6.72% from last week's reading of 6.54%. The average rate on a 30-year loan was 7.76% a year ago.

Mortgage rates rise for fifth straight week

Merck (MRK) reported 3rd-qtr revenue & adjusted earnings that topped expectations as the company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments & its animal health business.  But its vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the US, posted another qtr of lighter-than-expected sales.  Revenue from the shot, Gardasil, fell 11% compared with the year-earlier period.  The pharmaceutical giant narrowed its full-year sales forecast to $63.6-64.1B, from a previous guidance of $63.4-64.4B.  MRK also lowered its adjusted EPS guidance to $7.72 - $7.77, from a previous forecast of $7.94 - $8.04.  That updated outlook reflects a 1-time charge of 24¢ per share related to business development deals with Curon Biopharmaceutical & Daiichi Sankyo.  EPS was $1.24 for the3rd qtr.  That compares with EPS of $1.86 during the year-earlier period.  Excluding acquisition & restructuring costs, EPS was $1.57 for the 3-month period.  The company booked $16.6B in revenue for the 3rd qtr, up 4% from the same period a year ago.  The results come as MRK shows substantial progress in preparing for Keytruda's patent expiration in 2028.  The loss of exclusive rights to the medicine will likely cause sales to fall, forcing the company to draw revenue from elsewhere.  MRK has a handful of new deals under its belt & key drug launches that will help it offset those losses.  That includes Winrevair, a medication approved in the US in Mar to treat a progressive & life-threatening lung condition.   The stock fell 1.95.

Merck tops earnings estimates on strong demand for Keytruda, new drugs

Even though prices lost over $50 an ounce, but they still gained for the month.  Gold prices took an eye-catching hit in posting their largest 1-day decline since Jul - highlighting a complicated landscape for the precious metal that's littered with "push-and-pull" factors just ahead of a US election that may lead it to a major "pivot point."  The drop in gold prices comes as a sharp reminder of the delicate balance gold has to navigate.  With Treasury yields climbing, the appeal of safe-haven yields is putting significant pressure on gold, especially with recognition that risk assets like stocks take a hit.  It's facing typical push-pull factors given investors need liquidity, so even gold "isn't safe enough when the market's in risk-off mode.  It's also not yielding enough when bonds are on the rise. Gold for Dec fell $51 (1.8%) to settle at $2749 an ounce.  Based on the most active contract, it marked the biggest daily $ &  percentage declines since late Jul.  Gold futures, which had settled just a day earlier at record-high settlement & intraday levels, ended the month with a 3.4% gain.

Gold logs biggest drop since July, election may be a 'pivot point'

Oil prices extended gains after settlement, rising by more than $1 on a report that Iran is preparing to attack Israel from Iraqi territory in the coming days.  WTI crude oil futures jumped $1.81 to $70.42, after settlement & Brent futures for Jan jumped by $1.82 to $73.98.  Brent crude futures settled up 61¢ (0.8%) to $73.16 a barrel & Brent futures for Dec expired today.  The more actively traded Jan contract settled at $72.81.  WTI futures settled up 65¢, or 0.95%, at $69.26.  Israeli intelligence suggests Iran is preparing to attack Israel from Iraqi territory in the coming days, possibly before the US presidential election on Nov.  The attack is expected to be carried out from Iraq using a large number of drones & ballistic missiles.  The report said that carrying out the attack through pro-Iran militias in Iraq could be an attempt by Tehran to avoid another Israeli attack against strategic targets in Iran.  The week began with a large selloff with Brent & WTI futures falling more than 6% on Mon after Israel showed some restraint in its retaliatory attacks on Iran over the weekend.  The possibility that OPEC+ would delay a planned oil output increase also supported prices today.  A decision could come as early as next week.  OPEC+ is scheduled to meet on Dec 1 to decide its next policy steps.

Oil prices stable after boost from US fuel demand

NAS led a tumble in US stocks after Meta (META) & MSFT earnings sparked worries about rising artificial intelligence costs.  Concerns that would put pressure on profitability helped send shares in both lower.   Bond yields rose with the 10-year Treasury climbing to as high as 4.33%.  These are trying times for investors which will be highlighted by next week's Fed meeting.  Investor nerves are very high & even safe haven gold was sold heavily today after yesterday's record.  Dow had a wild month although it settled with a relatively mild 567 loss in Oct.

Markets tumble on Big Tech's AI spending worries and rising yields

Dow sank 419, decliners over advancers 3-1 & NAZ tumbled 452.  The MLP index fell 2+ taking it below 281 & the REIT index fell 2+ to the 427s.  Junk bond funds fluctuated & Treasuries were sold again, taking high yields even higher (more below).  Oil was up almost 1 to the mid 68s & gold tumbled 56 to 2744.

Dow Jones Industrials

An inflation gauge closely watched by Federal Reserve policymakers continued to slow in Sep, as the pace of price growth trended closer to the Fed's target in Sep.  The Commerce Det reported that the personal consumption expenditures (PCE) index rose 0.2% in Sep & increased 2.1% year over year, in line with estimates.  Core PCE, which excludes volatile food & energy prices, rose 0.3% for the month & increased 2.7% from a year ago, also in line with estimates.  The Federal Reserve is focusing on the PCE headline figure as it tries to bring the pace of price increases back to 2%, although policymakers view the core data as a better indicator of inflation.  Headline PCE was down from 2.3% in Aug to 2.1% in Sep, suggesting inflation continued to cool, while the core PCE was little changed from a month ago.  The headline PCE data showed that prices for goods declined by 1.2% in Sep compared with a year ago, while prices for services were up by 3.7%.  Food prices were up 1.2% & energy prices were down 8.1% from a year ago.  Wages & salaries were up 0.5% in Sep from a month ago, the same growth rate as in Aug.  That was slightly higher than the 0.4% growth recorded in Jul & 0.2% in Jun, but notably slower than the 1.1% wage growth seen in Feb.  The personal savings rate as a percentage of disposable income was 4.6% in Sep, down from 4.8% in Aug.  The data comes as the Federal Reserve is preparing to meet next week & discuss its next move on interest rates.  The market's expectations about the Fed cutting rates by 25 basis points are little changed following the PCE release, as traders see a 94% chance of a cut that size.

Inflation gauge closely watched by the Fed falls to lowest level in years

Treasury yields rose as traders parsed the latest economic data in the run-up to tomorrow's all-important jobs report.  The 10-year Treasury yield was nearly 7 basis points higher at 4.331% & the 2-year Treasury yield added 6 basis points to 4.216%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Weekly jobless claims, meanwhile, came in under the forecast.  That can bolster expectations for continued strength in the labor market.  These releases come as investors await data on nonfarm payrolls, the unemployment rate & hourly wages tomorrow.  It's the last jobs day before the presidential election & next Federal Reserve policy meeting, which are both scheduled for next week.

10-year Treasury yield trades above 4.3% before Friday’s jobs report

Uber (UBER) reported 3rd-qtr results that beat expectations for revenue but missed on analysts’ projections for gross bookings.  Revenue grew 20% in its 3rd qtr from $9.3B a year prior.  The company reported $40.97B in gross bookings for the period, which is below the $41.25B expected.  The company reported EPS of $1.20, up from 10¢ in the same qtr last year.  UBER said its net income includes a $1.7B pre-tax benefit from unrealized gains related to the reevaluation of its equity investments.  Adjusted EBITDA was $1.69B, up 55% year over year & slightly above the $1.64B expected.  “We are in the fortunate position of having strong performance in our core business, which allows us to make organic investments in new products and capabilities that will pay off for our platform over the long term,” Uber CEO Dara Khosrowshahi said.  For its 4th qtr, UBER expects gross bookings $42.75 - $44.25B, compared with estimates of $43.68B.  UBER anticipates adjusted EBITDA of $1.78 - $1.88B, compared with the $1.83B expected by analysts.  There were 2.9B trips completed on the platform during the period, up 17% year over year.  The number of monthly active platform consumers reached 161B in its 3rd qtr, up 13% year over year from 142M.  The stock dropped 8.43 (11%).

Uber reports third-quarter results that beat Wall Street’s revenue expectations

Optimism for a Big Tech boost to stocks took a knock as investors digested Meta (META) & Microsoft  (MSFT), a Dow stock, quarterly reports.  While the results beat estimates, both companies flagged that they will step up already high spending on AI infrastructure.  Concerns that would put pressure on profitability sent shares lower.  Bond yields surged with the 10-year Treasury climbing to 4.33%.  The US $ index, which measures the greenback against a basket of currencies also rose.  Overseas, UK bond selling intensified over worries of inflation amid fiscal stimulus & borrowing.  Risky investments (i.e. stocks) are not in vogue.

Markets struggle to advance while gold is bid higher to new records

Dow was off 91 (session lows), advancers over decliners about 5-4 & NAZ fell 104.  The MLP index remained in the 282s & the REIT index added 1+ to the 429s.  Junk bond funds were flat & Treasuries had only a small amount of buying which kept yields little changed.  Oil was up 1+ to the 68s & gold surged 18 to 2799 for another record close (more on both below).

Dow Jones Industrials 

Signed contracts to buy existing homes in Sep jumped a surprising 7.4% compared with Aug, according to the National Association of Realtors.  The forecast had been expecting about a 1% gain.  These pending sales were at the highest level since Mar & 2.6% higher than Sep of last year.  Since pending sales are based on signed contracts, representing people out shopping during the month, it is the most current indicator of buyer demand.  It also shows just how sensitive today's buyers are to mortgage rates.  The average rate on the 30-year fixed mortgage was coming down all through Aug & touched its most recent low of 6.11% on Sep 11, according to Mortgage News Daily.  It stayed around that level for the rest of the month before shooting higher in Oct & is now just over 7%.  “Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” said Lawrence Yun, chief economist for the Realtors.  “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.”  Regionally pending sales were higher year over year in the Northeast & West & flat in the Midwest & South.  Overall, the gains were biggest in the West, where home prices are the highest & buyers would benefit most from even a small drop in rates.  With higher rates, affordability is taking a hit once again.  Mortgage demand from homebuyers, however, still saw gains last week & was 10% higher compared with the same week 1 year ago, according to the Mortgage Bankers Association.  The levels of mortgage demand are still historically low, & sales, while higher, are as well.

Pending home sales took an unexpected leap higher last month

Eli Lilly (LLY) fell short of profit & revenue expectations for the 3rd qtr, weighed down by disappointing sales of its blockbuster weight loss drug Zepbound & diabetes treatment Mounjaro, & slashed its full-year adjusted profit guidance.  LLY expects full-year adjusted earnings of $13.02 - $13.52 per share, down from previous guidance of $16.10 - $16.60 per share.  The drugmaker cited a $2.8B charge recorded during the 3rd qtr & related to its acquisition of bowel disease drugmaker Morphic Holding as denting its results.  The company also lowered the high end of its revenue outlook for the year & now expects sales of between $45.4- 46B.  Its previous guidance called for revenue of as much as $46.6B.  The Sep period was Zepbound's 3rd full qtr on the US market after winning approval from regulators nearly a year ago.  The weekly injection raked in $1.26B in sales for the period, below the $1.76B that was expected.  Meanwhile, Mounjaro posted $3.1B in revenue for the 3rd qtr, more than double what it booked in the same period a year ago.  But the forecast expected $3.77B.  CEO David Ricks said the 3rd-qtr performance of Zepbound & Mounjaro “is not a function of supply.”  The company said 3rd-qtr sales of the drugs were negatively impacted by inventory decreases among wholesalers.  Supply increases allowed LLY to fulfill back orders for wholesalers in the 2nd qtr, which led to increased inventory of Zepbound & Mounjaro during the period.  Those wholesalers tapped into some of that existing stock in the 3rd qtr instead of buying more from the company, which dampened revenue from both treatments.  Demand in the US has far outpaced supply for its incretin drugs, such as Zepbound & Mounjaro, over the last year.  Both treatments mimic certain gut hormones to tamp down a person's appetite & regulate their blood sugar.  The stock tumbled 56+ to 846.

Eli Lilly stock tumbles after drug giant misses estimates and slashes profit guidance

Super Micro Computer stock (SMCI) cratered after a filing revealed accounting firm Ernst & Young (EY) has resigned from its relationship with the tech company.  In the resignation letter, EY said: “We are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management's and the Audit Committee’s representations and to be unwilling to be associated with the financial statements prepared by management, and after concluding we can no longer provide the Audit Services in accordance with applicable law or professional obligations.”  EY quit while conducting the audit for SMCI's fiscal year that ended on Jun 30, 2024.  In the 8-K SEC filing, SMCI said it "disagrees" with EY's decision & is "working diligently to select new auditors."  "The Company does not expect that a resolution of the matters raised by E&Y or those under consideration by the previously announced Special Committee of the Board will result in any restatements of its quarterly financial results for the fiscal year ended June 30, 2024, or for prior fiscal years," Super Micro added.  SMCI stock plunged 16 (33%).

Super Micro stock plunges after auditor resigns

Gold topped $2800 an ounce for the first time, but 1 analyst warned that the upward movement for prices may be "limited" going forward as strength in Treasury bond yields is a reminder to investors of the high opportunity cost of the non-yielding precious metal.  The precious metal's "allure is further evidenced by the resumption of net inflows" into bullion-backed exchange-traded funds & record global demand, citing a report from the World Gold Council (WGC).  The report said total gold demand, including over-the-counter, or OTC, investments that are not made on a central exchange, climbed by 5% year over year to 1313 metric tons in the Jul-Sep period.  That's a record for the 3rd qtr.  It also said global gold demand based on value topped $100B for the first time.  Gold prices tend to decline when the $ & Treasury yields strengthen, but it has actually climbed along with them in recent weeks, bucking its usually inverse relationship.  A stronger $ can be a negative for gold, which is priced in the unit, making it more expensive to users of other currencies.  Higher Treasury yields, meanwhile, raise the opportunity cost of holding assets, such as gold, that don't pay interest.  Today, the most-active Dec futures contract touched a high of $2801 before settling at an all-time high of $2800, up $19 (0.7%) for the session.  This settlement & intraday high topped the previous records set just a day earlier.

Gold prices break a new record, but may be near a peak

Oil prices rebounded, rising more than 2% after data showed US crude.  Gasoline inventories fell unexpectedly last week & a report that OPEC+ may delay a planned oil output increase.  After falling more than 6% earlier in the week on the reduced risk of wider Middle East war, Brent crude futures settled up $1.43 (2.0%) at $72.55 a barrel & West Texas Intermediate crude rose $1.40 (2.1%) to $68.61.  US gasoline stockpiles fell unexpectedly last week to a 2-year low on strengthened demand, the Energy Information Administration (EIA) said, while crude inventories also posted a surprise drawdown as imports slipped.  US imports of crude oil from Saudi Arabia fell to their lowest point last week since Jan 2021, at just 13K bpd, down from 150K bpd the previous week.  Crude imports from Canada, Iraq, Colombia, Brazil all slipped on the week, the EIA said.  The most supportive element was gasoline inventories drawing amid higher implied demand week-on-week.  OPEC+, which groups the Organization of the Petroleum Exporting Countries & allies such as Russia, could delay a planned oil production increase in Dec by a month or more because of concern over soft oil demand & rising supply.

Oil rises as sources say OPEC+ may delay planned drawdown

Stocks were mixed as earnings boosted optimism for Big Tech results.  Meanwhile, crucial GDP & labor market data continued to add data pieces to the Federal Reserve's puzzle ahead of its next interest rate decision next week.  Amid all the news coming out, gold soared to another record, reaching 2800.  Some investors remain nervous about the future of the sock market's rally.

Markets edge higher on earnings, GDP and jobs data

Dow gained 130, advancers over decliners 5-2 & NAZ went up 29.  The MLP index stayed in the 283s & the REIT index added 2 to 430.  Junk bond funds hardly budged & Treasuries had a little buying taking yields a little lower (more below).  Oil was up 1 to the low 68s following recent selling & gold gained 9 to 2790.

Dow Jones Industrials

Companies in the private sector added 233K jobs in Oct, payroll processing firm ADP said.  The figure is well above estimates of 114K jobs, the highest since Jul 2023.  Sep's larger-than-expected increase was revised higher to 159K.  Large businesses, those with 500 or more employees, added 140K jobs in the month.  Businesses with 50 - 499 employees hired 86K workers & establishments with fewer than 50 employees added 4K jobs.  The education & health services sector added the most jobs in Oct (53K) while trade, transportation & utilities added 51K.  The leisure & hospitality sector added 37K jobs in the month.  Hiring in the construction & natural resources/mining sectors totaled 37K & 4K, respectively.  The only sector to report losses in Oct was manufacturing, which saw a decline of 19K.  Job creation was concentrated in the South, where 77K jobs were added.   The Midwest added 63K jobs while the Northeast & West added 48K & 44K jobs, respectively.  ADP also said wages grew 4.6% from a year ago.

Private sector job growth beats predictions, ADP says

Business investment rose by 0.3% in the 3rd-qtr as private inventory investment slowed & residential fixed investment decreased more significantly.  The report showed that current-$ personal income increased by $221B in the 3rd-qtr, a smaller rise than the $316B in the 2nd-qtr, with the increase primarily reflecting a rise in compensation.  Disposable personal income rose by $166B (3.1%) in the 3rd-qtr after it rose by $260B (5%) in the prior qtr.  Personal saving was $1.04T in the 3rd-qtr, down slightly from $1.13T in the 2nd-qtr, while the personal saving rate also declined from a qtr ago – coming in at 4.8% in the 3rd-qtr compared to 5.2% in the previous qtr.  "The increase in Q3 GDP is even better than it appears as real final sales to domestic purchasers matched their largest gain since the first three months of 2023," said Ryan Sweet, chief US economist at Oxford Economics.  "Though GDP is backward-looking, it sends a clear message that the economy is doing well, and inflation is moderating, good news for the Federal Reserve."  Stronger than expected labor market & inflation data over the last month has caused markets to move away from expecting another 50 basis point cut to anticipating a smaller cut in Nov.

US economy grew 2.8% in the third quarter, slower than expected

The yield on the 10-year Treasury note hovered near a 3-month high as traders combed thru a fresh batch of mixed data & hunted for further clues on the rate cut outlook.  The 10-year Treasury yield was down about 1 basis point at 4.26%, after briefly rising above 4.3% in the previous session to notch its highest level since Jul & the yield on the 2-year Treasury rose more than 2 basis points to 4.146%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Iinvestors monitored mixed economic data (above).  The Fed joined several other major central banks in easing monetary policy when it lowered rates by 50 basis points in Sep.  Policymakers are currently in a blackout period ahead of the Nov 6-7 meeting, which means they will not be delivering remarks off the back of the data releases, or about their general policy & economic expectations.

10-year Treasury yield hovers near 3-month high as traders digest economic data

Fresh gov data showed that US economic growth slowed slightly last qtr to a 2.8% annualized pace, slightly under the forecast.  The data revealed, however, that consumers have kept spending at a robust pace as inflation continues to fall.  Also, the ADP report found US private payroll growth surged in Oct, adding more data into the mix for investors to digest.

Markets hesitate while tech heavy Nasdaq sets a new record

Dow fell 154, decliners over better than advancers 2-1 & NAZ gained 145.  The MLP index stayed in the 282s & the REIT index slid back 2+ to 429.  Junk bond funds slid lower & Treasuries had limited selling, lowering yields slightly (still at 3 month highs).  Oil was flattish in the 67s after yesterday's selloff & gold surged 29 to 2785 (more on both below).

Dow Jones Industrials 

Consumers grew more optimistic about the US economy heading into the contentious presidential election even as job openings hit multi-year lows, according to separate reports today.  The Conference Board's consumer confidence index for Oct rose more than 11% to a reading of 138, its biggest 1-month acceleration since Mar 2021.  Along with that, the board's expectations index of future conditions jumped nearly 8%, to a reading of 89.1 that is well clear of the sub-80 level that indicates a recession.  The forecast had been looking for a headline number of 99.5.  “Consumers’ assessments of current business conditions turned positive,” said Dana Peterson, the board's chief economist.  “Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data.”  That sentiment was seemingly at odds with a Bureau of Labor Statistics report showing that job openings slid to 7.44M in Sep, off more than 400K from the previous month's downwardly revised level and the lowest since Jan 2021.  That number was also below a forecast of 8.0M.  The drop in openings took the ratio of job vacancies to available workers below 1.1 to 1.  In mid-2022, the number was greater than 2 to 1.  Though the openings level moved lower, hires rose 123K on the month.  Separations were little changed, while quits fell by 107K.

Consumer confidence surges as election nears, while job openings move lower

Ford (F) guided to the low end of its previously announced 2024 earnings forecast as it slightly topped 3rd-qtr expectations.  The Detroit automaker said it now expects adjusted earnings before interest & taxes (EBIT) of about $10B.  It had previously guided to $10-12B.  It retained its forecast for adjusted free cash flow of $7.5-8.5B.  Several analysts had been concerned Ford would need to lower its forecast due to softening demand, rising vehicle inventory levels & worries about Ford’s ability to achieve an announced $2B in cost cuts this year.  “Our focus continues on cost and quality, which are holding back our progress and represent tremendous upside potential,” Ford CFO & Vice Chair John Lawler said.  Lawler said Ford has achieved its $2B in material, freight & manufacturing costs, but higher inflationary & warranty costs have eaten into those improvements & have restricted the company “from having a record year.”  EPS were 49¢ adjusted vs 47¢ expected & automotive revenue was $43.1B vs $41.9B expected.  Ford CEO Jim Farley said that the company continues to believe in its EV strategy; however, the automaker has pulled back on many investments in the vehicles to focus on hybrid models.  Net income for the 3rd qtr was 22¢ per share adjusted EBIT increased roughly 16% year over year to $2.55B.  Ford's 2023 3rd qtr included $41.2B in automotive revenue, net income of $1.17B (30¢ per share) & adjusted earnings before interest & taxes of $2.2B (39¢ per share).  Overall revenue for the 3rd qtr, including its finance business, increased about 5% year over year to $46.2B.  It marked the company's 10th consecutive qtr of year-over-year revenue growth.  The stock fell 96¢.

Ford guides to low end of 2024 earnings forecast, slightly tops Q3 expectations

Some of the top figures in finance sound more concerned about the persistence of inflation than the occupant of the Oval Office in 2025.  "I do believe we have greater embedded inflation in the world than we've ever seen," BlackRock (BLK) CEO Larry Fink said at the Future Investment Initiative in Saudi Arabia, adding that "no one is asking the question, 'At what cost?'"  Few of the figures who attended the annual Future Investment Initiative confab were willing to offer a strong prediction on whether Kamala Harris or Donald Trump would win on Nov 5.  Citadel CEO Ken Griffin said, "It is a race that Trump is favored to win, but it's almost a coin toss."  Trump supporter & Blackstone (BX) CEO Stephen Schwarzman admitted he wasn't sure who would win but said Trump "has a much better base of knowledge of how that job works" than he did in 2016.  Apollo (APO) CEO Marc Rowan said that "if Trump wins," he expects more mergers & acquisitions to happen.  No matter who wins the election, most finance bosses are concerned that inflation will prove to be stickier than expected.  Thus they aren't expecting interest rates to come down as quickly as traders currently expect.  "We're not going to see interest rates as low as people are forecasting," BlackRock's Fink said.

Wall Street bosses are more worried about inflation than election

Gold prices hit a record high, as uncertainties surrounding the US presidential election & the Middle East conflict, along with expectations of an interest rate cut by the Federal Reserve, boosted bullion's appeal.  Spot gold was up 0.9% at $2766 per ounce, after hitting a record high of $2771 earlier in the session.  US gold futures gained 0.9% to $2779.  Bullion thrives in a low interest-rate environment & is considered a hedge against market volatilities.  Gold prices have surged more than 34% so far this year.  Gold is supported by safe-haven bets as geopolitical tensions & political uncertainty continue, with Japan now being added into the mix on the political uncertainty front after the weekend election.  Rep former US Pres Donald Trump & Dem VP Kamala Harris are also caught in a tight race to the White House.  On the geopolitical front, at least 93 Palestinians were killed & missing in an Israeli strike in northern Gaza, the Gaza health ministry said.

Gold touches record peak on US election jitters, Mid-East woes

Oil recovered after tumbling the most in more than 2 years yesterday, as the wipe-out of a geopolitical premium in prices shifted traders' gaze back to supplies & key upcoming events including the US election.  Brent rose above $72 a barrel after plummeting 6.1% in the previous session, while West Texas Intermediate traded around $68.  Israel signaled it was open to a short truce in Gaza in exchange for the release of a small number of hostages, following a retaliatory strike on Iran over the weekend that spared the OPEC producer's oil infrastructure.  In a sign that war risk is fading, the premium of bullish oil call options over the opposite puts has narrowed sharply.  A gauge of implied volatility for Brent also fell to the lowest in almost a month & a swath of contracts expired worthless as prices cooled.  Brent for Dec settlement gained 1% to $72.14 a barrel & WTI for Dec rose 1% to $68.03 a barrel.

Oil Recovers After 6% Plunge as Focus Moves Back to Supply

Tech stocks led a mixed markets day as investors digested new data on job openings & absorbed a fresh wave of earnings.  The bulls have been having a difficult time making their case for buying stocks while investors are impressed with gold's rise to new records.

Markets waver on mixed economic data

Dow slid back 70, decliners over advancers 5-2 & NAZ went up 59.  The MLP index hardly budged hovering near 282 & the REIT index fell 3 to the 428s.  Junk bond funds fluctuated & Treasuries were sold bringing higher yields (more below).  Oil was up slightly in the 67s after recent selling & gold rebounded 2581 to a new record.

Dow Jones Industrials

Pfizer (PFE) reported 3rd-qtr revenue & adjusted profit that blew past expectations as the company's Covid vaccine & antiviral pill Paxlovid helped boost sales.  The pharmaceutical giant also hiked its full-year outlook & now expects to book adjusted EPS of $2.75 - $2.95, up from its previous guidance of 2.45 - $2.65.   PFE expects revenue $61-64B, up from a previous revenue forecast of $59.5-$62.5B.  That includes roughly $5B in expected revenue from its Covid vaccine & $5.5B from Paxlovid.  The company booked 3rd-qtr EPS of 78¢.  That compares with net loss of 42¢ per share, during the same period a year ago.  Excluding certain items, including restructuring charges & costs associated with intangible assets, the company posted EPS of $1.06 for the qtr.  Revenue was $17.7B in the 3rd qtr, up 31% from the same period a year ago.  Excluding Covid products, revenue for the 3rd qtr rose 14% on an operational basis, fueled by approved cancer products from Seagen, which it acquired last year for a whopping $43B.  Those drugs brought in $854M in revenue for the qtr, including $409M from a targeted treatment for bladder cancer called Padcev as well as $268M from Adectris, a drug that targets certain lymphomas.  PFE completed its acquisition of Seagen in Dec.  The stock fell 66¢.

Pfizer tops earnings estimates, hikes full-year guidance as Covid products help sales

McDonald’s (MCD), a Dow stock & Dividend Aristocrat, reported quarterly earnings & revenue that beat expectations as its US restaurants reversed last qtr's same-store sales decline.  However, investors are worried about another dent to US sales fueled by a recent E. coli outbreak across 13 states linked to MCD's Quarter Pounder burgers.  As of Fri, 75 health cases have been tied to the outbreak, including 1 death of an older adult.  Daily sales & traffic turned negative immediately after MCD was linked to the outbreak, CFO Ian Borden said.  Still, the company isn't expecting the situation to have a material impact on its business.  3rd-qtr EPS was $3.13, down from $3.17 a year earlier.  Excluding certain items, the fast-food giant EPS was $3.23.  Net sales rose 3% to $6.87B.  Global same-store sales fell 1.5%, a more drastic decline than the 0.6% than expecteds, & was weighed down by the company's intl markets.  It's the 2nd straight qtr that same-store sales have fallen.  “While we anticipated a challenging environment in 2024, our performance this year has fallen short of our expectations,” CEO Chris Kempczinski said.  US same-store sales rose 0.3%, reversing last qtr's same-store sales declines but still slightly weaker than the 0.5% increase predicted.  Traffic to its US restaurants was slightly negative, but the company credited its marketing & a $5 value meal launched in late Jun for the increase in sales.  The stock rose 1.11.

McDonald’s reverses U.S. same-store sales declines in the third quarter, but E. coli fallout looms

Treasury yields were higher, with the 10-year Treasury yield trading at its highest level since Jul as investors looked to upcoming economic data.  The yield on the 10-year Treasury was up around 3 basis points at 4.306% & it has been on the rise in recent days.  The 2-year Treasury yield was last marginally lower at 4.141%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Several data releases painted a mixed economic backdrop.  While consumer confidence was strong, a lower-than-expected number of job openings indicated some potential weakness in the labor market.  The ADP's private payrolls data & the all important Oct jobs report are also due in the coming days.  Also this week, the latest personal consumption expenditure price index is expected, which is the Federal Reserve's favored inflation gauge.  Investors will be watching the data closely for hints about the monetary policy outlook.

10-year Treasury yield hits new 3-month high above 4.3% ahead of key data this week

Stocks searched for direction as investors digested new data on job openings & absorbed a fresh wave of earnings.  Investors have been closely watching for signs of further cooling in the labor market ahead of the Federal Reserve's next interest rate decision on Nov 7.  Updates on inflation & the jobs market later in the week will also be key in determining Fed policy.  Once again, gold is in heavy demand while the stock is struggling to advance.

Markets rise after substantially selling last week

Dow advanced 273, advancers over decliners about 2-1 & NAZ went up 48.  The MLP index lost 1+ to the 282s & the REIT index added 2 to the 431s.  Junk bond funds slid a little lower & Treasuries continued to be sold, raising yields.  Oil plunged 4+ to the 67s & gold was flat at 2754 (more on both below).

Dow Jones Industrials 

McDonald's (MCD), a Dow stock & Dividend Aristocrat, Quarter Pounder burgers will return to roughly 900 restaurants this week after the fast-food giant pulled the menu item linked to a deadly E. coli outbreak.  Affected restaurants, roughly 1/5 of the company's US footprint, will be serving the Quarter Pounder burgers without slivered onions for the foreseeable future as health authorities continue their investigation into the source of the outbreak.  That change will affect restaurants in Colorado, Kansas & Wyoming & portions of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma & Utah.  “The issue appears to be contained to a particular ingredient and geography, and we remain very confident that any contaminated product related to this outbreak has been removed from our supply chain and is out of all McDonald’s restaurants,” Cesar Pina, chief supply chain officer for MCD North American operations, said in a letter sent to the company's US system.  The Colorado Dept of Agriculture's testing did not detect E. coli in samples of the beef patties taken from restaurants in the area, according to Pina.  The agency isn't planning further tests of the company’s beef.  Health authorities have honed in on slivered onions used in the Quarter Pounders as the likely suspect for the outbreak.  The Food & Drug Administration is still investigating if onions produced by Taylor Farms are responsible.  MVD has stopped using Taylor Farms as a supplier for the ingredient indefinitely.  The stock rose 1.99.

McDonald’s Quarter Pounder burgers to return to restaurants affected by E. coli

Apple (AAPL), a Dow stock, released iOS 18.1, an update that includes the company's artificial intelligence, called Apple Intelligence, for the iPhone 16 & iPhone 15 Pro. It also released software updates for iPad & Mac with Apple Intelligence.  The release is a critical milestone for AAPL, which is relying on the feature launch to power its marketing campaign for the iPhone 16 lineup released last month.  It is also AAPL's answer to questions about its AI strategy.  AAPL has taken a different path with its device-based AI than its megacap rivals, which are focused on cloud-based AI systems powered by Bs of $s of Nvidia (NVDA) chips.  Apple Intelligence is limited to start.  The first wave of AAPL Intelligence features includes writing tools that can proofread or rewrite text, new features that can remove objects from photos & a feature that can summarize a stack of notifications into a single message.  This release includes improvements to Siri, including a new look that makes the entire screen glow around the phone's edges.  Siri can answer questions about AAPL products, including troubleshooting, & has more natural voices.  However, the update does not let Siri take actions inside of apps, which is expected in another update next year.  Plus, another update with ChatGPT integration & image-generation abilities is also scheduled for later this year as part of iOS 18.2.  Some investors believe Apple Intelligence could drive a major upgrade cycle & cement AAPL as the leader in daily usage of cutting-edge AI.  The stock rose 1.79.

Apple releases Apple Intelligence. Here’s how to get it on your iPhone

Oracle (ORCL) announced it intends to join a new federally-backed medical network that will make it easier for clinics, hospitals & insurance companies to share patient data.  The network, called the Trusted Exchange Framework and Common Agreement (TEFCA), launched in Dec. ORCL, which acquired the medical records giant Cerner for $28B in 2022, is the latest major vendor to support TEFCA, joining its chief rival Epic Systems.  ORCL needs to be approved to join TEFCA, but its interest in doing so helps to bolster the nascent network's credibility.  It also suggests that TEFCA may succeed in ushering in a new standard for data-sharing practices across the health-care industry.  Sharing medical records between different hospitals, clinics & health-care organizations is a notoriously complex process.  Health-care data is stored in a variety of formats across dozens of different vendors, making it difficult for doctors & other providers to easily access all the relevant data about their patients.  “This is just a natural next step,” Seema Verma, exec VP & general manager of ORCL Health & Life Sciences, said.  “We are not into information blocking. We don’t have that reputation.”  ORCL's competitor, Epic, has long been accused of dragging its feet around interoperability efforts, & Oracle has not been afraid to call the company out.  In a May blog post, Ken Glueck, exec VP at ORCL, wrote, “Everyone in the industry understands that Epic CEO Judy Faulkner is the single biggest obstacle to EHR [electronic health record] interoperability.”  Several companies & organizations have previously tried to streamline health-care information exchange, but TEFCA was designed to help bring all of these players together on a national scale.  The network's ultimate goal is to finally standardize the legal & technical requirements for sharing patient data.   ORCL stock fell 1.07.

Oracle applies to join Epic and others in new federal medical record network

Gold's record rally took a breather as Treasury yields & the $ gained the upper hand, while investors awaited a series of US economic data due this week for cues on the Federal Reserve's interest rate outlook.  Spot gold fell 0.2% to $2743 an ounce.  Bullion hit a record high of $2758 last Wed.  US gold futures settled almost unchanged at $2755.  Yields on benchmark 10-year Treasuries rose to a 3-month high.  The $ index was on track for its best month since Apr 2022, making gold less attractive for overseas buyers.  With the Nov 5 US election approaching, VP Kamala Harris & former Pres Donald Trump are caught in a knife-edge battle to win over some of the more competitive states.  The market also awaits a slew of data this week, including ADP employment on Wed, US Personal Consumption Expenditures on Thurs & Fri's payrolls report.

Gold Eases as Treasury Yields Rise, Focus on US Data

Oil prices tumbled 6%, more than $4 a barrel, after Sat's retaliatory strike by Israel against Iran's military bypassed oil & nuclear facilities, not disrupting energy supplies.  Brent futures settled at $71.42 a barrel, down $4.63 (6.1% )& US WTI crude futures finished at $67.38 a barrel, down $4.40 (6.1%).  Both Brent & US West Texas Intermediate crude futures hit their lowest since Oct 1 at the open.  Last week, the benchmarks gained 4% in volatile trade on uncertainty over the looming US election & the extent of Israel's expected response to the Iranian missile attack of Oct 1.  On Sat, scores of Israeli jets completed 3 waves of strikes before dawn against missile factories & other sites near Tehran & in western Iran, the latest exchange between the Middle Eastern rivals.  The attacks were more tailored toward military targets, easing fears that Israel might attack Iran's nuclear facilities or oil infrastructure.  The Organization of the Petroleum Exporting Countries & its allies in OPEC+ kept oil output policy unchanged last month, including a plan to start raising output from Dec.  The group will meet on Dec 1 ahead of a full meeting of OPEC+.

Oil Falls 6% on Reduced Risk of Wider Middle East War

US stocks climbed as Middle East war fears cooled & ahead of a busy week packed with Big Tech earnings, an inflation update & a crucial monthly jobs report.  Meanwhile oil was hit with heavy selling after Israel's attack on Iran, taking it to a about a 4 year low.  The rise in interest could be troubling for the stock market going forward.

Markets rise as Middle East war fears cool

Dow bounces back 322, advancers over decliners 3-1 & NAZ went up 97.  The MLP index fell 2 to the 282s while oil stocks were sold & the REIT index rose 3+ to the 433s.  Junk bond funds were mixed & Treasuries had more selling, driving yields higher (more below).  Oil tumbled 3+ to the low 68s after Israeli airstrikes spared Iran's oil facilities (more below) & gold was steady at 2754 (in record territory).

Dow Jones Industrials

US crude oil sold off steeply, putting the benchmark on pace for its worst day in more than 2 years after Iranian energy facilities were not damaged during an Israeli attack over the weekend.  Futures for global crude benchmark Brent slid 5.9% to $71.53 per barrel while US West Texas Intermediate futures dropped 6.3% to $67.29 per barrel.  US crude oil is on pace for its worst day since 2022, when prices fell 7.9%.  Israel on Sat attacked Iran's military installations in 3 provinces in response to Tehran launching ballistic missiles against Israel on Oct 1.  Iranian news agency Tasnim reported that the attack, which the state-owned Islamic Republic News Agency said killed 4 soldiers, had inflicted “limited” damage.  The strike steered clear of oil, nuclear & civilian infrastructure locations.  Iranian oil news network Shana said that Iran's oil industry operation is “underway normally” with no disruptions.  For weeks, markets had braced themselves for an Israeli retaliation following the direct Iranian offensive against the Jewish state earlier this month.  Broader Middle East tensions have continued to rise following the attack on Israel by Iran-backed Hamas on Oct 7 last year.  Oil markets' key consideration had been a direct engagement between both parties, with concerns of an attack on Iranian oil facilities rising in recent weeks.  Iran accounts for up to 4% of global oil supplies.

U.S. oil on pace for worst day in two years after Israel spares Iran crude facilities

Boeing (BA), a Dow stock, launched a stock offering that could raise up to $22B as the planemaker looks to strengthen its finances squeezed by an over month-long strike by its workers & preserve its investment-grade credit rating.  The move will boost its battered finances, which have worsened since roughly 33K of its workers represented by the machinists union walked off their jobs in Sep, halting production of models including its cash-cow 737 MAX aircraft.  The company is offering 90M in common stock & $5B in mandatory convertible securities.  “The offering is certainly favorable for credit quality. We’ll factor it into our assessment of the rating in the context of continued negative free cashflow,” said Ben Tsocanos, aerospace director at S&P Global Ratings.  BA has never fallen below the investment-grade rating.  If the primary offering is oversubscribed, the company has an option to issue 13.5M shares more & can increase the mandatory convertible offering by another $750M.  BA stock fell 55¢.

Boeing to raise up to $22 billion to shore up finances, stave off downgrade

The yield on the 10-year Treasury continued its ascent, after hitting a 3-month high last week.  The 10-year Treasury yield rose 1 basis point to 4.24%, while the 2-year Treasury added around 1 basis point to 4.105%.  Yields move inversely to prices & 1 basis point equals 0.01%.  The yield on the 10-year Treasury hit a 3-month high on Wed, topping 4.25%, before dipping slightly to close out the week.  Investors will also continue to digest a slew of central bank commentary following last week's IMF meetings in DC with Federal Reserve policymakers now in a blackout period which prevents commentary ahead of next week's interest rate decision.

Treasury yields continue their ascent after hitting a 3-month high last week

The market was bolstered by relief that Israel limited its retaliatory strikes on Iran to military targets & not oil or nuclear facilities as feared.  This will also be an important week for earnings.

Markets drift lower

Dow retreated 259, decliners over advancers 3-2 & NAZ gained 103.  The MLP index remained steady in the 284s & the REIT index fell 3 to the 431s.  Junk bond funds were mixed & Treasuries had some selling which brought higher yields.  Oil rose 1+ to the high 71s on MidEast worries & gold was up 5 to 2754 (more on both below).

Dow Jones Industrials 

A day after its sharpest rally since 2013, Tesla's (TSLA) stock today headed for its highest close in more than a year as investors & analysts continued to applaud the electric vehicle company's 3rd-qtr results.  However, TSLA stock remains about 35% below its all-time high reached in 2021.  The company had a brutal first qtr of 2024, with year-over-year deliveries falling & consumers flocking to EVs from a host of competitors.  Its shares yesterday soared 22%, the 2nd-best performance since the company's IPO in 2010.  That came after TSLA reported revenue of $25.2B, which just missed expectations of $25.37B, but was up 8% compared with a year earlier.  TSLA reported EPS of 72¢ adjusted, topping the estimate of 58¢.  Profit margins were boosted by $739M in revenue for environmental regulatory credits, which some considered a report were a “potentially unsustainable driver” of earnings & cash flow.  Results were also boosted by $326M in revenue from FSD, the company's Full Self-Driving Supervised system.  CEO Elon Musk said that his “best guess” is that vehicle growth will reach 20-30% next year, citing lower-cost vehicles & the “advent of autonomy.”  Analysts were expecting delivery growth of about 15% for 2025.  When it comes to autonomy, however, Musk has consistently missed his own deadlines for getting products to market.  Bernstein analysts wrote in a note after earnings that Musk has a “long history of being overly optimistic about FSD,” adding that research shows “Tesla continues to lag well behind competitors” on robotaxis.  Musk also said that TSLA plans to start production of its recently unveiled Cybercab, a robotaxi with butterfly doors & no steering wheel or pedals, by the end of 2026.  He said TSLA would conduct driverless ride-hailing in California & Texas next year in its existing cars, which are not currently safe to use without a human driver ready to steer or brake at any time.  However, the stock remains about 35% below its all-time high reached in 2021.  The company had a brutal first qtr of 2024, with year-over-year deliveries falling & consumers flocking to EVs from a host of competitors.  The competitive risks remain.   The stock jumped another 8.71.

Tesla shares head for highest close in 13 months as post-earnings rally continues

German Finance Minister Christian Lindner warned that if the US kicked off a trade war with the EU, there could be retaliation.  “Trade controversy sees never winners, only losers,” Lindner said on the sidelines of the Intl Monetary Fund's annual meeting.  What US trade policy could look like if Donald Trump were elected as pres is a key issue, Lindner suggested.  “In that case we need diplomatic efforts to convince whoever enters the White House that it’s not in the best interest of the U.S. to have a trade conflict with [the] European Union. We would have to consider retaliation,” he added.  Lindner belongs to the pro-business Free Democratic Party which is currently in coalition with Chancellor Olaf Scholz’s Social Democratic Party.  The US's problem with trading lies with China rather than the EU, Lindner said, adding that the EU “should not become a negative side effect” of controversy between the US & China.  Trump has floated the idea that, if he were elected, blanket tariffs of 10-20% could be imposed on almost all imports, no matter where they came from.  If such a 20% tariff were implemented by the US, the EU's & Germany's gross domestic product would fall in the coming years.  Trade is one of the main pillars of the German economy, suggesting heightened tensions, uncertainty & tariffs would hit the country harder than others.  Earlier this month, the German statistics office, Destatis, said that the US's importance as a trading partner for Germany has been growing.  The agency said that since 2021, the US's had been the 2nd-most important trade partner for Germany behind China, but in the first ½ of 2024, foreign trade turnover with the US was higher than that with China.  In 2023, around 9.9% of German exports went to the US, according to Destatis.

German finance minister warns of retaliation if U.S. kicks off trade war

Harley-Davidson (HOG) cut its full-year revenue forecast as persistent inflation & weak demand in the wake of a consumer boycott that spurred it to drop diversity, equity & inclusion (DEI) programs took a toll on its balance sheet.  The motorcycle maker said its sales in North America were down 10% & that it expects its full-year global shipments to be down 16-17%, compared with its prior forecast of a 7-10% decline.  HOG projected that its annual retail sales would be down 6-8%, after it previously expected sales would be flat to up by 3%.  It now projects revenue from motorcycles & related products will be down 14-16% compared with its prior estimate of down 5-9%.  "We have worked diligently through the quarter to mitigate the impact of high interest rates, and macroeconomic and political uncertainty, that continue to put pressure on our industry and customers, especially in our core markets," said CEO Jochen Zeitz.  The company's sales slump comes after it faced pressure earlier this year from anti-DEI activists, including social media influencer Robby Starbuck, who exposed several of the company's controversial internal policies in Jul.  In Aug, HOG released a statement renouncing DEI initiatives that it said it had abandoned earlier in the year.  "It is critical to our business that we hire and retain the best talent and that all employees feel welcome," the statement read.  "That said, we have not operated a DEI function since April 2024, and we do not have a DEI function today. We do not have hiring quotas and we no longer have supplier diversity spend goals."  The company also said it was reassessing employee training initiatives & sponsorships while refocusing on its most loyal customers.  The stock rose 16¢.

Harley-Davidson cuts revenue forecast on inflation, DEI backlash

Gold prices edged up after recovering from a profit-taking bout as Middle East tensions & US election jitters supported price.  Spot gold was up 0.2% at $2741 per ounce.  Prices hit a record $2758 on Wed & logged a 3rd straight weekly gain.  US gold futures settled 0.2% higher at $2754.  The possibility that maybe something is going to happen this weekend between Israel & Iran could have triggered some safe-haven buying going into the weekend.  At least 9 Palestinians were killed & several wounded in an Israeli air strike on Al-Shati, medics reported.  Non-yielding gold has risen over 32% so far this year as safe-haven demand stemming from ongoing tensions in the Middle East bolstered prices, along with a ½-point basis cut by the Federal Reserve.

Mideast Woes & US Election Uncerainty Lift Prices, Gold Steady

WTI crude oil futures rallied 2.3% to settle at $71.80 per barrel, bouncing back from a 2-day decline and securing a weekly gain of 3.7%.  Investors are closely monitoring ongoing tensions in the Middle East, ceasefire negotiations & the upcoming US elections.  The anticipated talks between Israel & Hamas to address the Gaza conflict have traders on edge regarding potential Israeli strikes on Iran.  Additionally, market participants are watching for potential output adjustments from OPEC+ & the implications of the US election.  The oil market has experienced significant volatility driven by Middle Eastern unrest & concerns over a potential surplus due to rising production from non-OPEC+ countries, alongside OPEC's plans to relax output restrictions.  In the coming weeks, investors will also keep an eye on Japan's election, important interest rate decisions from 3 major central banks & the announcement of the new UK gov's budget.

Oil Rallies 2.3%, Books Weekly Gain

Dow was in the red following limited buying in early trading.  Treasury yields crawled crawled higher in the PM which brought back stock sellers on uncertainty over the Fed's next move which shadowed an earnings season in full swing.  The Dow had a difficult time, falling 1161 this week, but TSLA's rise helped NAZ reach new highs.  Worries that the Federal Reserve will go slow on interest rate cuts are nagging thoughts that keep investors on the sidelines.

Markets rise as yields ease

Dow rebounded 109, advancers over decliners better than 2-1 & NAZ was up 248.  The MLP index remained in the 285s & the REIT index added 1+ to the 435s.  Junk bond funds hardly budged in price & Treasuries had very limited selling which hardly moved yields.  Oil crawled up to 71 & gold added up 1 to 2750 (more below).

Dow Jones Industrials

Waymo has closed a $5.6B funding round to expand its robotaxi service in & beyond Los Angeles, San Francisco & Phoenix, where it operates today.  The autonomous vehicle venture is owned by Google parent Alphabet (GOOG), which led the series C investment in Waymo, alongside earlier backers.  Waymo co-CEOs Tekedra Mawakana & Dmitri Dolgov said the funding would go toward expansion & advancing the Waymo Driver for business applications.  “With this latest investment, we will continue to welcome more riders into our Waymo One ride-hailing service in San Francisco, Phoenix, and Los Angeles, and in Austin and Atlanta through our expanded partnership with Uber,” they wrote.  The series C funding brings Waymo's total capital raised to $11.1B after it raised $3.2B & $2.5B in 2 earlier rounds.  GOOG CFO Ruth Porat announced in Jul that the parent company would commit to a multiyear investment of up to $5B in Waymo.  While many companies are testing autonomous vehicles, or AVs, on public roads in the US, including well-funded upstarts such as Wayve, Waymo is the only one to operate a commercial robotaxi service in several major metro areas.  The service has been embraced by some women who have safety concerns about riding with unknown human drivers.  And it has even been used by parents to send their teens to school when other transit options felt less safe or convenient.  Waymo now conducts more than 100K weekly trips for passengers in Los Angeles, Phoenix & San Francisco, who can hail their robotaxis via the Waymo One app.  More recently, Waymo partnered with Uber (UBER) to launch its robotaxi service in Austin, Texas, home of would-be rival Tesla's (TSLA) headquarters.  Alphabet (GOOG) rose 2.29.

Alphabet’s self-driving unit Waymo closes $5.6 billion funding round as robotaxi race heats up

The yield on the 10-year Treasury was flatish after hitting a 3-month high earlier this week.  The benchmark 10-year Treasury yield was less than 1 basis lower at about 4.2%, after breaching 4.25% on Wed & the 2-year Treasury  was fractionally lower at 4.064%.  Yields move inversely to prices & 1 basis point equals 0.01%.  Traders have been monitoring a slew of commentary from Federal Reserve policymakers this week reflecting on Sep's jumbo 50-basis-point interest rate cut & the potential path ahead.  Their tone has broadly been more cautious, with Beth Hammack of the Cleveland Fed yesterday cautioning “We are not saying mission accomplished when it comes to inflation.”  Others have stated the need to be “cautious and deliberate” & “patient” with further cuts.  Market pricing puts a 97% probability on the Fed cutting rates by 25 basis points in Nov, according to CME's FedWatch tool.

10-year yield is little changed after hitting 3-month high earlier in the week

Gold prices reached new record highs this week amid uncertainty surrounding the upcoming election & the rising US national debt.  Prices for gold futures have risen over 32% YTD & more than 38% in the past year & have set a number of new all-time highs in the process.  Gold reached new records of $2738 on Mon & $2760 on Tues, before paring back some of those gains & closing at $2749 yesterday.  Investors have turned to gold as a safe haven from a variety of geopolitical risks in the past year, including the ongoing conflicts in the Middle East & Ukraine.  Uncertainty surrounding the direction of US economic policy after the election, as well as the Fed's rate cutting plans & long-term trajectory of the growing national debt have also bolstered investment in gold.  "What we're really seeing is gold continuing to be viewed as a quintessential hedge against inflationary pressures along with the safe-haven demand and fund inflows, gold continues to be extremely well supported," said David Meger, director of metals trading at High Ridge Futures.  "Uncertainty leading into the US election is one additional pillar of support for the gold market, given the unease that the market may be feeling going into the election,"  He added that, "Concerns around the rising U.S. fiscal debt outlook is strengthening the investment case for gold."  The federal gov's budget deficit topped $1.8T in fiscal year 2024, which concluded at the end of Sep.  That amounted to the 3rd-largest budget deficit in history & trails only the FY2020 & FY2021 deficits that occurred amid elevated federal spending due to the COVID pandemic & related economic disruptions.

Gold prices rise to all-time highs with US debt mounting, election uncertainty

Stocks rose while Treasury yields eased lower, but markets were still on track for weekly losses as uncertainty over the Fed's next move shadowed an earnings season in full swing.  A pullback in US bond yields lifted some recent pressure on risk appetite for stocks.  The benchmark 10-year yield slipped to 4.19%, slipping back from a 3-month high above 4.25% hit midweek.  Meanwhile gold continues in high demand from nervous investors.

Markets are mixed but gold continues to rally

Dow dropped 140, advancers slightly ahead of decliners & NAZ gained 138.  The MLP index was steady in the 284s & the REIT index was even in the 434s.  Junk bond funds fluctuated & Treasuries were purchased which lowered yields.  Oil slid lower but held above 70 & gold recovered 20 to 2749 (more on both below).

Dow Jones Industrials 

American Airlines (AAL) posted a 3rd-qtr loss but raised its profit forecast for the year as CEO Robert Isom said the company's sales strategy shift earlier this year is paying off.  The carrier said it expects EPS of 25-50¢ on an adjusted basis for the 4th quarter, above the 29¢ expected.  For the full year, the airline expects to earn as much as an adjusted $1.60 a share, ahead of an earlier forecast for no more than $1.30 a share.  AAL in May fired  its chief commercial officer after a sales strategy that aimed to drive direct bookings backfired & quickly reverted much of its sales model.  “We have taken aggressive action to reset our sales and distribution strategy and reengage the business travel community, which we’re confident will improve our revenue performance over time,” Isom said.  “We have heard great feedback from travel agencies and corporate customers as we work to rebuild the foundation of our commercial strategy and make it easy for customers to do business with American.”  Revenue rose 1.2% to a record $13.65B for the 3 months ended Sep 30, but posted a net loss of $149M, narrower than the $545M loss it reported a year earlier.  Unit revenue fell 2% in the qtr.  For the 4th qtr, AAL said its unit revenue will likely drop 1-3% compared with last year, with capacity up as much as 3% year over year.  The stock fell 5¢.

American Airlines lifts 2024 profit forecast, posts third-quarter loss

Mortgage rates continued their upward trajectory this week, climbing for a month straight while further pushing down demand in the stalled housing market.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage surged to 6.54% from last week's reading of 6.44%.  The average rate on a 30-year loan was 7.79% a year ago.  "The continued strength in the economy drove mortgage rates higher once again this week," said Sam Khater, Freddie Mac's chief economist.  "Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy."  Many would-be buyers & sellers are holding out to see if rates fall further.  Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.  The average rate on the 15-year fixed mortgage also rose to 5.71% from 5.63% last week.  1 year ago, the rate on the 15-year fixed note averaged 7.03%.

Mortgage rates rise for fourth straight week

Weekly jobless claims unexpectedly fell last week in a sign that turnover in the labor market remains low.  New data from the Dept of Labor showed 227K initial jobless claims were filed last week, down from 241K the week prior & below the 242K that had been expected.  The data shows claims have reversed an upward trend seen in Sep that had brought the metric to its highest levels in more than a year.   Today's release also showed continuing claims hit 1.89M in the latest week, up from 1.86M the week prior & the highest level seen since Nov 2021.  Economists believe the move lower in weekly jobless claims in part reflects a recovery from recent weather disruptions in the data.  The declining number of weekly unemployment claims falls in line with other labor reports, which have shown that while the hiring & quit rates have both fallen this year, leading to low worker turnover, layoffs aren't happening at a rate that is not alarming.  A similar narrative was revealed in the Federal Reserve's Oct Beige Book, which surveys firms within the central bank's 12 districts.

Weekly jobless claims unexpectedly fall

Gold prices rose by nearly 1% to trade near record highs as safe-haven demand from persistent geopolitical concerns bolstered prices, while palladium saw a 9% surge on concerns of supply sanctions on top-producer Russia.  Spot gold was up 0.7% at $2735 per ounce, having retreated from a record high of $2758 yesterday & US gold futures settled 0.7% higher at $2748.  Expectations of further monetary policy easing by central banks & gold's historical reputation as a hedge against economic & political uncertainty have boosted prices over 32% so far this year, hitting multiple record peaks along the way.

Gold Climbs on Safety Rush

Oil prices fell by about 1% in volatile trade on worries that slow economic growth in Europe could reduce energy demand, as uncertainty around conflict in the Middle East kept traders on edge ahead of the US presidential election.  Brent futures fell 54¢ (0.7%) to $74.42 a barrel while US West Texas Intermediate (WTI) crude slipped 59¢ (0.8%) to $70.18.  Earlier in the session, both crude benchmarks were trading up over $1 a barrel.  The energy complex continues to zig & zag as Middle East risk premium expands & contracts almost daily.  Since Iran fired missiles at Israel on Oct 1, Brent crude surged 8% during the week ended Oct 4 on worries Israel would attack Iran's oil infrastructure & fell 8% during the week ended Oct 18 on reports Israel would not hit energy infrastructure, easing fears of supply disruptions.  Iran was on track to export around 1.5M bpd in 2024, up from an estimated 1.4M bpd in 2023, according to analysts & US gov reports.  Iran backs several groups fighting Israel, including Hezbillah in Lebanon, Hamas in Gaza & the Houthis in Yemen.

Oil prices broadly stable with uncertainty around Middle East and ceasefire talks

NAZ rose as Tesla's (TSLA) surprisingly solid results & high-flying sales forecast lifted hopes for a strong earnings season.  But the indices turned mixed as the Dow extended losses, continuing a sharp sell-off from the day before.  Boeing (BA), a Dow stock, sagged roughly 1% after striking workers rebuffed its pay deal on the heels of the plane maker's $6B quarterly loss.  It's the latest in a string of rough news for stocks on the Dow.  Meanwhile gold is flirting with its record highs & the 10-year Treasury yield fell back after topping 4.25% yesterday amid worries that the Federal Reserve won't cut interest rates as quickly as anticipated. The yield dropped to just under 4.20% today.  Go figgah!!