Markets are mixed while waiting for the Fed's decision

Dow was off 21 following yesterday's extraordinary rally, advancers over decliners 3-2 & NAZ rose 247.  The MLP index slid back 1+ to 291 & the REIT index went up 3+ to the 421s.  Junk bond funds were a little higher & Treasuries saw buying which reduced yields (more below).  Oil crawled up pennies in the 71s & gold rebounded 22 to 2698.

Dow Jones Industrials

Pres-elect Donald Trump likely will return to cornerstones of his previous economic platform such as tariffs, lower taxes & sanctions when he assumes office in Jan, his former Treasury secretary said.  Steven Mnuchin, who held the post throughout Trump's first term from 2017-21,said that he sees those items as critical to the Rep's agenda.  Tax cuts are “a signature part of his program,” Mnuchin added.  “I think that should be easy to pass in Congress, particularly if the Republicans control the House as well, which it looks like it will be.”  Also on the agenda would be tariffs, which Trump implemented on multiple items during his first term & promised to do again.  “I think that tariffs do need to be used to get counterparties back to the table, especially China, which is not living up to all of the agreements they made,” Mnuchin continued.  Finally, he indicated that nations such as Iran & Russia can expect to see sanctions again.  The Trump administration levied measures against petroleum producers in Iran in 2019 because they were owned by the Revolutionary Guard.  “The sanctions on Iran and Russia were very impactful. In the case of Iran, they’re now selling millions of barrels of oil, which needs to be stopped,” Mnuchin said.  Outside of those issues, Mnuchin, who said he likely would not take an official role in the Trump administration but would “be happy to serve from the outside,” expects Trump to take on other issues such as steep deficit spending.  “I think he’s in a position now, particularly with this overwhelming result, to take on difficult issues, and I think that’s got to be part of government spending,” he said.

Mnuchin says Trump’s top priorities will be tax cuts, Iran sanctions and tariffs

Treasury yields dipped as investors reacted to Donald Trump's sweeping election victory & awaited the Federal Reserve's decision on interest rates.  The 10-year Treasury yield fell 4 basis points to 4.39% after jumping over 14 basis points in the previous session & the yield on the 2-year Treasury fell 5 basis point to 4.19%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  The central bank is widely expected to deliver another interest rate cut, with financial markets pricing in the prospect of a qtr-point move lower as a near certainty.  The fed funds rate, which sets what banks charge each other for overnight lending but often influences consumer debt as well, is currently targeted at 4.75-5.00%.  Market pricing currently favors another qtr-point cut in Dec, followed by a Jan pause, then multiple reductions thru 2025.

Treasury yields dip as investors await Fed decision

Moderna (MRNA) posted a surprise profit for the 3rd qtr, smashing estimates, as its cost-cutting efforts took hold while sales of its Covid vaccine came in higher than expected.  The company posted EPS of 3¢ which compares with a net loss of $9.53 per share reported for the year-ago period.  MRNA is slashing expenses, with a recently announced goal of achieving $1.1B in savings by 2027, as it tries to recover from the rapid decline of its Covid business.  It is the first qtr that includes sales of its vaccine against respiratory syncytial virus, RSV, its 2nd-ever commercially available product.  Before year-end, the company plans to file for approval of its experimental “next-generation” Covid vaccine & combination shot targeting Covid & the flu.  MRNA this year also expects to apply for expanded approval of its RSV vaccine, targeting high-risk adults ages 18-59.  Its newest Covid vaccine saw benefits after winning approval in the US 3 weeks earlier than the last iteration of the shot did in 2023, which allowed the biotech company to “meet demand more effectively.”  The company was able to ship out doses to pharmacies & health-care providers & reach the arms of more patients sooner.  “I think the earlier launch and a steeper ramp drove a much higher sales number” for the Covid vaccine, CEO Stéphane Bancel said.  During the first week of the vaccine's launch, the company shipped twice as many products globally than it did in 2023.  He added that “this was a big cost reduction quarter, and we’re going to continue to do that.”  EPS of 3¢ compares with an expected loss of $1.90.  MRNA booked 3rd-qtr sales of $1.86B, only slightly higher than the $1.83B in revenue it recorded during the same period a year ago.  The vast majority of that total came from its Covid shot, including $1.2B in US sales & roughly $600M from intl markets.  The company reiterated its full-year 2024 product sales guidance of roughly $3-3.5.  Last qtr, MRNA slashed its outlook on lower expected sales in Europe, a “competitive environment” for respiratory vaccines in the US & the potential for deferred intl revenue into 2025.  The stock slid back 6¢.

Moderna posts surprise profit as Covid vaccine impresses, cost cuts take hold

Stocks extended gains as investors continued to digest Donald Trump's electoral victory & awaited the Federal Reserve's policy decision in the afternoon.  Spirits still appeared buoyant after Trump's presidential election win, which sent all 3 major stock gauges soaring to fresh record highs yesterday.  His plans for core tax cuts & deregulation have fueled optimism for a boost to the economy that will feed into stocks.