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.
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