Dow dropped 264, decliners over advancers better than 2-1 & NAZ tumbled 379. The MLP index was up 3+ to the 292s & the REIT index added 1+ to the 419s. Junk bond funds were mixed & Treasuries saw selling which raised yields (more below). Oil slid lower in the 68s & gold recovered 2 to 2575.
Dow Jones Industrials
Mortgage rates seem to have steadied. That may be a good sign for the market, experts say. The average 30-year fixed-rate mortgage in the US slightly dipped to 6.78% last week ending Nov. 14 barely changed from 6.79% a week prior, according to Freddie Mac data via the Federal Reserve. “Even though it’s higher than it has been over the course of several weeks, it’s probably good news for homebuyers,” said Jessica Lautz, deputy chief economist & VP of research at the National Association of Realtors. “When rates are moving around a lot, it makes a lot of uncertainty in the market,” Lautz said. Mortgage rates declined this fall in anticipation of the first interest rate cut since Mar 2020. But then borrowing costs jumped again this month as the bond market reacted to Trump's election win. While the pres-elect has talked about bringing mortgage rates down, presidents do not control borrowing costs for home loans, experts say. Instead, mortgage rates closely track Treasury yields & are partially affected by what happens with the federal funds rate. “They foresee inflationary policies, whether it’s tariffs or greater government spending, the tax bill ... they’re pricing in more inflation,” said James Tobin, pres & CEO of the National Association of Home Builders. “As the bond market reacts, mortgage rates are going to react to that, too.” Less volatility can be a good sign, said Chen Zhao, chief economist at Redfin, an online real estate brokerage. “High volatility by itself actually pushes mortgage rates even higher above treasury yields,” Zhao added. “More stable rates also means that homebuyers don’t have to worry during their home search about what their budget allows for changing.”
Treasury yields were higher, ending a week where the 10-year Treasury yield jumped amid new inflation data & comments from Federal Reserve Chair Jerome Powell that suggested the central bank may not be as aggressive next year with its rate-cutting campaign. The 10-year Treasury yield was last higher by about 3 basis point to 4.451% & the 10-year rate ended last week around 4.31%. The yield on the 2-year Treasury rose by nearly 5 basis points to 4.341% & the 2-year yield ended last week around 4.25%. 1 basis point equals 0.01% & yields & prices move in opposite directions. Powell said yesterday that strong US economic growth means the central bank won't need to quickly cut interest rates. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in his speech. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” The remarks come after the Fed cut interest rates by a qtr point last week. Investors have lowered their expectations of a similar cut by the Fed at its next Dec meeting. On the economic front, investors fresh retail sales data that showed an increase of 0.4% last month. That's slightly above the forecast 0.3% increase.
10-year Treasury yield jumps on week as Fed not in a hurry to keep cutting rates
General Motors (GM) laid off roughly 1000 employees as the automaker attempts to
cut costs & realign priorities amid changing market conditions. The layoffs were across the
business. Some were due to poor performance, while others were part of a
review to reorganize priorities by the automaker. A
majority of the employees impacted were in suburban Detroit at the
automaker's global technical center in Warren, Michigan & a small number of hourly employees were included in the layoffs. The company is targeting $2B in fixed cost reductions this year as it deals with slowing US sales, business deterioration in China & a shift in its “all-in” strategy for electric vehicles amid slower-than-expected consumer adoption. “In order to win in this competitive market, we need to optimize for
speed and excellence,” GM spokesperson Kevin Kelly said. “This includes operating with efficiency, ensuring we have
the right team structure, and focusing on our top priorities as a
business. As part of this continuous effort, we’ve made a small number
of team reductions. We are grateful to those who helped establish a
strong foundation that positions GM to lead in the industry moving
forward.” The stock fell 29¢.
GM lays off 1,000 employees amid reorganization, cost-cutting
Stocks sank, on track for weekly losses, as investors absorbed Chair Jerome Powell's signal that the Federal Reserve won't hurry to make interest-rate cuts. Powell's hawkish comments are casting a pall on markets as the initial optimism for Pres-elect Trump's policies starts to wear off. Retail sales data reflected continued resilience in the American consumer, a sign of the economic strength Powell suggested would allow the Fed to take its time. Oct sales rose 0.4% month on month, versus 0.3% expected, including a revision higher for Sep's reading to 0.8% from 0.4%.
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