Markets pause in volatile trading ahead of presidential election

Dow retreated 257, advancers over decliners 3-2 & NAZ fell 59.  The MLP index was up 1 to 280 & the REIT index rose 4+ to the 431s.  Junk bond funds were basically flattish & Treasuries saw more buying ahead of the Fed meeting & that reduced yields.  Oil jumped 2 to the low 71s & gold slid 2 to 2746 (more on both below).

Dow Jones Industrials 

Boeing's (BA), a Dow stock, more than 32K striking machinists will vote for the 3rd time on a contract proposal.  If a simple majority approve the offer, it would end the more than 7-week work stoppage that has halted most of the struggling airplane production, another curveball in what execs had once cast as BA's turnaround year.  Results are expected after polls close tonight.  The proposal includes 38% raises over 4 years, up from the 35% increase BA proposed & workers rejected late last month, extending the strike.  The deal that kicked off the strike in Sep had 25% raises, while the union had originally pushed for pay increases of about 40%.  BA said machinist pay will average $119K at the end of this contract proposal.  Workers have complained about the skyrocketing cost of living in the Seattle area, where most of BA's aircraft are produced.  But the union, upon unveiling the proposal last Wed, warned this deal might be as good as workers are going to get.  “In every negotiation and strike, there is a point where we have extracted everything that we can in bargaining and by withholding our labor,” the International Association of Machinists & Aerospace Workers District 751 said.  “We are at that point now and risk a regressive or lesser offer in the future.”  The stock rose 52¢.

Striking Boeing machinists vote on union-backed contract proposal, this time with a warning

Retailers are facing a tough equation as they head into the all-important holiday shopping season, this time over DEI initiatives.  Companies are bracing for blowback related to policies around diversity, equity & inclusion & are hoping to avoid alienating customers who may deem the brands too woke, or not woke enough.  Some are tapping outside advisors for advice on how to avoid criticism, while others are opting out of public events on the topic as backlash against equity & inclusion programs grows in the lead-up to the 2024 presidential election.  “There’s a clear sentiment in the retail community that nobody wants to get Tractor Supply'd,” (TSCO) said 1 retail industry insider, referring to that company's decision to walk back a series of DEI initiatives after conservative activist Robby Starbuck criticized the policies online.  “Retailers left to their own devices would like to be very proactive on DEI,” said the person.  “But now they don’t want any of their views to be public because they want to be able to sell stuff to everybody, and it’s become such a stupid political issue.”  The retail industry’s concerns over DEI come after a number of high-profile, consumer-facing companies some of their equity & inclusion policies in recent months.  The changes included ending sponsorships for Pride festivals & cutting ties with the Human Rights Campaign, an LGBTQ+ advocacy group.  Across industries, some companies have also cut positions for DEI roles.  Between 2019 & 2022, new jobs for chief diversity & inclusion officers spiked nearly 170%, according to a LinkedIn study, but over the last year, new jobs for such roles have fallen while companies have cut staffers & downsized programs that fell under DEI.  When explaining their decisions to cut back on DEI, some companies cited the recent Supreme Court decision that outlawed affirmative action as a catalyst for reviewing their policies.  Privately, many retailers are concerned about losing customers & becoming the subject of conservative backlash, industry insider said.

Retailers brace for DEI blowback in lead-up to election, holiday shopping season

Tesla China sold 68K vehicles wholesale in Oct 2024, as per data released by the China Passenger Car Association (CPCA).  The results represent a 22.7% decline from the 88K vehicles sold wholesale in Sep 2024 & a decline of 5.3% from Oct 2023's 72K units.  The CPCA has not yet released how many vehicles were exported by TSLA China last month. Thus, the electric vehicle maker’s domestic sales for Oct are yet to be determined.  However an independent estimated 47K domestic vehicle deliveries during the month.  Data compiled by industry watchers suggest that in the Jan-Oct 2024 period, TSLA China sold 744K vehicles wholesale.  This represents a 3.5% decline compared to the company's figures from the previous year.  It should be noted, however, that TSLA China’s YTD domestic sales are so far up 6.5% year-over-year as of the week ending Oct 27, 2024.  Its best-selling vehicle, the Model Y, seems to be maintaining its hold in China's new energy vehicle segment, with industry watchers suggesting that the all-electric crossover’s domestic sales have accumulated 373K units this year.  If these estimates are accurate, it would mean that the Model Y is still 1 of China's best-selling NEVs.  Elon Musk has previously noted that TSLA could match its record deliveries in 2023 this 2024.  To achieve this, the electric vehicle maker would have to deliver about 515K vehicles this Q4 2024.  This is a pretty ambitious target, though it might be feasible if TSLA China sees some momentum in Nov & Dec.  TSLA stock dropped 6.14.

Tesla China sells 68,280 vehicles wholesale in October 2024

Gold edged lower as traders turn cautious with the $ & yields falling ahead of tomorrow's US presidential election & this week's interest-rate decision from the Federal Reserve.  Gold for Dec delivery was last seen down $3 to $2746 per ounce.  The rise comes ahead of the US election, with polls showing a tight race between Donald Trump & Kamala Harris, as the 2 candidates offer much different economic policies.  Harris is expected to continue much of the Biden Administration's policies while Trump plans blanket tariffs on imports.  A Dem victory could be met with claims of cheating & political unrest that prompt safe-haven buying.  The Federal Reserve's policy committee will release its latest interest-rate decision on Thurs, with the group widely expected to follow its prior 50 basis point cut with a 25 basis point drop in rates.  The $ was lower ahead of the vote, with the ICE dollar index last seen down 0.41 points to 103.87.  Treasury yields were lower, with the US 2-year note last seen paying 4.189%, down 3.5 basis points, while the yield on the 10-year note was down 7.9 basis points to 4.318%.

Gold Edges Down Even as Dollar and Yields Drop Ahead of U.S. Election and Fed Meeting

Oil advanced after OPEC+ agreed to push back its Dec production increase by 1 month & tensions escalated again in the Middle East.  Brent rose as much as 2.5% to more than $74 a barrel, while West Texas Intermediate climbed above $71.  Saudi Arabia and its allies delayed a series of monthly output hikes until early next year, a move anticipated by many traders amid fragile market conditions.  Meanwhile, Iran escalated its rhetoric against Israel with supreme leader Ayatollah Ali Khamenei warning of a "crushing response" in a speech yesterday.  A reported said that Tehran told allies an attack would come after the US presidential vote but before Jan's inauguration & wouldn't be limited to missiles and drones, as 2 previous strikes were.  Oil prices have become increasingly volatile, with concerns of an oversupply next year & lackluster demand in top importer China weighing against unrest in the Middle East, which supplies about 1/3 of the world's crude.  While futures fell early last week after the strike by Israel on Iran avoided energy infrastructure, they later pared the decline on concerns the move lower was too strong.  Brent for Jan rose 2.5% to $74.90 a barrel & front-month futures fell 3.9% last week.  WTI for Dec increased 2.6% to $71.33 a barrel.

Oil Rises as OPEC+ Delays Output Hike

The neck-&-neck race has investors bracing for volatility on Election Day.  All predictions are that it should be a very close election, making it impossible to come up with a reliable forecast.  Hope for the best.