Dow rose 218, advancers over decliners 4-3 & NAZ went up 159. The MLP index slid back 1 to the low 289s & the REIT index was up 3 to the 428s. Junk bond funds were mixed & Treasuries continued to be sold, increasing yields. Oil remained weak, down 1+ to the 74s, & gold was off 9 to 2666 (more on both below).
Dow Jones Industrials
The latest inflation data provided more evidence that the Federal Reserve is nearing its objective, fresh on the heels of the central bank's dramatic interest rate cut just a few weeks ago. Consumer & producer price indices for Sep both came in around expectations, showing that inflation is drifting down to the central bank’s 2% target. In fact, economists at Goldman Sachs think the Fed may already be there. The investment bank Fri projected that the Commerce Dept's personal consumption expenditures price index for Sep will show a 12-month inflation rate of 2.04% when it is released later this month. If Goldman is correct, that number would get rounded down to 2% & be right in line with the Fed's long-held objective, a little over 2 years after inflation spiked to a 40-year high & unleashed an aggressive round of interest rate hikes. The Fed prefers the PCE as its inflation gauge though it uses a variety of inputs to make decisions. “The overall trend over 12, 18 months is clearly that inflation has come down a lot, and the job market has cooled to a level which is around where we think full employment is,” Chicago Fed Pres Austan Goolsbee said after the latest consumer price data was released. “We’d like to get both of them to stay in the space where they are right now.” While keeping inflation at bay may not be an easy task, the latest data indicates that though prices are not receding from their troublesome heights of a few years ago, the rate at which they are increasing is pulling back. The 12-month rate for the all-items consumer price index was at 2.4% in Sep, while the producer price index, a proxy for wholesale inflation & a leading gauge for pipeline pressures, showed an annual rate of 1.8%. Goldman's projection that the PCE index is heading to 2% is also about in line with tracking from the Cleveland Fed. The central bank district's “inflation nowcasting” dashboard pegs the 12-month headline PCE rate at 2.06% for Sep, which would get rounded up to 2.1%. However, on an annualized pace, inflation for the entire 3rd qtr is running at just a 1.4% rate, well below the Fed's 2% goal. There are some caveats to show that policymakers still have some work to do. Core inflation, which excludes food & energy & is a metric that the Fed considers a better measure of longer-term trends, is expected to run at a 2.6% annual rate for the PCE in Sep. Using just the consumer price index, core inflation was even worse in Sep, at 3.3%. Fed officials, though, see the unexpectedly high shelter inflation numbers as a major driver of the core measure, which they figure will ease as a lower trend in rents works its way through the data.
The Federal Reserve may have pretty much just hit its 2% inflation target
Nvidia (NVDA) shares reached a record close as analysts gear up
for earnings season & updates from all of the chipmaker's top
customers on their planned spending on artificial intelligence
infrastructure. The
shares are now up almost 180% for the year & have soared more than 9-fold since the beginning of 2023. NVDA,
widely viewed as the company selling the picks & shovels for the AI
gold rush, has been the biggest beneficiary of the generative AI boom,
which started with the public release of OpenAI’s ChatGPT in Nov
2022. Its graphics processing units (GPUs) are used to create &
deploy advanced AI models that power ChatGPT & similar applications. Companies are purchasing NVDA GPUs in large quantities to build increasingly
large clusters of computers for their advanced AI work. Of
the Bs of $s the top tech companies are spending annually on
their AI buildouts, an outsized amount is going to NVDA, which
controls about 95% of the market for AI training & inference chips. NVDA revenue has more than
doubled in each of the past 5 qtrs, & at least tripled in 3
of those periods. Growth is expected to modestly slow the rest of the
year, with analysts projecting expansion of about 82% to $32.9B
in the qtr ending in Oct. NVDA recently said
that demand for its next-generation AI GPU called Blackwell is “insane”& it expects Bs of $s in revenue from the new product in
the 4th qtr. With a market cap of $3.4T, NVDA is the 2nd most valuable publicly traded US company, behind Apple (AAPL), a Dow stock, at about $3.5T. The stock jumped 3.17 to a new record.
Nvidia heads for record close as AI chipmaker’s market cap tops $3.4 trillion
Stellantis (STLA) is fixing its slowing US sales at the
right pace after fumbling a marketing plan earlier this year, CEO
Carlos Tavares said. Tavares,
who last week pushed out the company's CFO & the COOs for both North America & Europe in a management restructuring, said reporters that he is responsible for the
bad things that have happened at the company, but also for the good. “If I don't want that responsibility I should do
something else,” said Tavares, who reiterated that he plans to retire
when his contract expires in 2026. The board last month confirmed that
it's searching for a successor. STLA,
formed from the 2021 merger of France's PSA Peugeot & Fiat Chrysler
Automobiles, has struggled this year in both Europe & the US. In
the EU, it is fighting cuts in gov electric vehicle
subsidies & Chinese competitors as it tries to sell more EVs to reach a
goal of cutting greenhouse gas emissions 55% by 2030. The EU has
planned tariffs on imported Chinese EVs. Sales
have been down most of the year in the US, long the company's cash
cow. In the 2nd qtr, the company came up with a new marketing
plan with incentives to counter high sticker prices. But it didn't
attract enough buyers. Sales fell 20% & they’re down over 17% for the first 9 months of the year. The
rest of the auto industry saw sales increase 1% in Jan-Sep. In Jun, US dealer inventory ballooned to just over 430K vehicles. But
Tavares said that has dropped by 52K in recent months, &
the company is trying to get below 350K by Christmas for a “fresh
start” going into the new year. He expects the new leadership team to
produce stronger profits & better customer satisfaction. The stock was up 22¢.
Stellantis CEO says company is on pace to fix sales problems after poor performance this year
Gold prices eased as broad economic stimulus measures in China, the biggest bullion consumer, failed to invoke investor confidence & a $ rally to 2-month highs capped upside momentum. Spot gold fell 0.2% to $2650 per ounce, having hit its highest in over a week earlier in the session & US gold futures eased 0.3% to$2667. The $ rose to its highest since mid-Aug as investors digested China's weekend stimulus announcements, while the € extended its fall ahead of a central bank meeting this week. There were a lot of little headwinds for gold, including the China stimulus, stronger $, weaker €, weaker base metals & profit-taking. Gold's record price rally in the last few months has dampened investor sentiment & bullion demand in China. A stronger $ makes gold more expensive for other currency holders. Chinese data is double-edged. Weak Chinese data could reduce demand for gold, but a broader slowdown in China could unsettle markets, enhancing gold's appeal as a safe haven.
Gold Edges Lower as U.S. Dollar Rally Curbs Upside
Oil declined after China's highly anticipated Finance Ministry briefing on Sat lacked specific new incentives to boost consumption in the world's biggest crude importer. West Texas Intermediate fell around 2% to settle just below $74 a barrel while Brent also slumped. Despite Beijing's promises of more support for the struggling property sector & hints of greater gov borrowing, the briefing didn't produce the headline $ figure for fresh fiscal stimulus that the markets had sought. Data showed export growth unexpectedly slowed, curbing a trade rebound that had been a bright spot in a weakening economy. WTI has risen around 8% this month as the prospect of an escalation in the Middle East threatens output from a region that supplies about a 3rd of the world's oil. The tensions have seen hedge funds flee bearish bets against the crude benchmark at the fastest pace in nearly 8 years, while bearish bets on diesel futures plunged by the most on record. WTI for Nov declined 2.3% to settle at $73.83 a barrel & Brent for Dec dropped 2% to settle at $77.46 a barrel.
Oil declined on China Demand Woes While Mideast Tensions Loom
Stocks were in demand, taking popular averages to or near record levels. Tech stocks led the gains. Earnings are at center stage as the first full week of 3rd qtr results gets underway. How the season plays out is seen as key to the rally in stocks. Risk-on investing is in vogue.
No comments:
Post a Comment