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.