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!!