Markets struggle about the vigor of the stock market's rally

Dow was up 47, decliners over advancers 5-4 & NAZ fell 50.  The MLP index was steady in the 286s & the REIT index went up 2+ to the 422s.  Junk bond funds slid lower & Treasuries had modest selling, lifting yields slightly.  Oil inched up pennies in the low 68s & gold dropped 19 to 2586 (more on both below).

Dow Jones Industrials 

Collectively, Americans now owe a record $1.17T on their credit cards, according to a new report on household debt from the Federal Reserve Bank of New York.  Credit card balances rose by $24B in the 3rd qtr of 2024 & are 8.1% higher than a year ago.  Despite that increase, credit card delinquency rates improved — with 8.8% of balances transitioning to delinquency over the last year, compared with 9.1% in the previous qtr, the New York Fed found.  That change could “suggest that rising debt burdens remain manageable,” the New York Fed researchers said.  “Overall, balance sheets look pretty good for households,” the researchers added.  Credit card debt has remained stable over the last 2 decades; however, in the years since the pandemic, households largely spent down their excess savings, which sparked a rebound in credit card balances.  Consumer spending continues to remain strong, despite high borrowing costs.  But now, growth in credit card balances has slowed, a separate quarterly credit industryinsights report from TransUnion also found.  The average balance per consumer stands at $6329, rising only 4.8% year over year — compared with an 11.2% increase the year before & 12.4% the year before that, TransUnion found.

Credit card debt hits record $1.17 trillion, New York Fed research shows

Tesla (TSLA) is recalling 2431 Cybertrucks to replace defective drive inverters, according to the National Highway Traffic Administration (NHTSA).  It's the 6th recall of the Cybertruck since the angular steel pickup went on sale about a year ago.  The Cybertruck sells in the US for a base price of around $80K.  TSLA addressed the previous Cybertruck recall with an over-the-air software update to fix an issue that caused images from the truck's backup cameras to not display correctly after the driver shifted into reverse.  The latest Cybertruck recall requires the replacement of a part called a drive inverter, which provides power to the wheels of the vehicle.  “If the inverter stops producing torque, the driver loses the ability to apply torque to the vehicle using the accelerator pedal resulting in a loss of propulsion, which may increase the risk of a collision,” Tesla wrote.  The Cybertruck became the 3rd best-selling fully electric vehicle in the US during the 3rd qtr of 2024, behind its Model Y & Model 3 EVs.  TSLA is currently facing 4 known NHTSA investigations looking into possible safety defects in its vehicles.  The most serious concerns whether the company's premium driver assistance system, marketed as “Full Self-Driving Supervised,” is safe to use in reduced visibility conditions such as glaring sunlight & fog.  CEO Elon Musk has clashed with NHTSA & other federal regulators for years.  The stock went up 1.75.

Tesla initiates sixth Cybertruck recall in a year

AMD (AMD) said that it will lay off 4% of its global staff as the longtime computer chipmaker seeks to gain a stronger foothold in the growing artificial intelligence chip space dominated by Nvidia (NVDA).  ″As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps that will unfortunately result in reducing our global workforce by approximately 4%,” an AMD representative said.  “We are committed to treating impacted employees with respect and helping them through this transition.”  AMD had 26K employees at the end of last year.  AMD is the 2nd-biggest producer of graphics processing units, or GPUs, behind NVDA.  The company has said AI represents 1 of its largest growth opportunities.  AMD stock is down 5% in 2024 while NVDA shares are up 200%, making it the most valuable publicly traded company in the world.  AMD produces powerful AI accelerators for data centers, including the MI300X as an alternative to NVDA-based systems.  But NVDA dominates the market for powerful AI chips, with over 80% market share, partially because it developed the core software that AI engineers use to develop programs such as OpenAI’s ChatGPT.  AMD said in Oct it expects $5B in AI chip sales this year, about a 5th of the $25.7B in total sales FactSet projects for AMD’s 2024.  AMD believes the total market for AI chips will be $500B by 2028, but its total sales are currently dwarfed by NVDA, which FactSet expects to post $126B in revenue for calendar year 2024.  AMD stock fell 4.33.

AMD to lay off 4% of workforce, or about 1,000 employees

Gold prices extended losses for the 4th straight session, weighed down by a stronger $ & elevated bond yields on news that Oct US consumer prices increased as expected.  The Labor Dept also reported slower progress toward low inflation since mid-year, which could result in fewer interest rate cuts from the Federal Reserve next year.  Spot gold was down 0.7% at $2580 per ounce after hitting a near 2-month low earlier in the session.  US gold futures settled 0.8% lower at $2586 per ounce.  The $ advanced near a 7-month high against major currencies, while benchmark US 10-year yield climbed.  Traders are pricing in an 82% chance of a Fed rate cut in Dec, up from around 58% before the data.  However, investors believe Trump's presidency might cause the Fed to pause its easing cycle if inflation takes off after expected new tariffs.  Looking ahead, the US Producer Price Index (PPI) & weekly jobless claims are due tomorrow, with retail sales data on Fri.  Remarks from Fed Chair Jerome Powell & other central bank officials are also on the radar.

Gold extends fall as dollar, Treasury yields rise

Oil edged higher, but prices remain broadly stuck in a narrow band, as traders weigh the outlook for consumption & a possible oversupply next year.  Brent crept above $72 a barrel after ending little changed yesterday, near its lowest level this month.  Crude's slight gain coincided with a respite from an election-driven $ rally that has made commodities less attractive for some buyers.  Oil prices remain thoroughly rangebound though, trading in a band of a little over $5 for close to a month as traders weigh the outlook for next year.  OPEC shaved its demand-growth forecasts for a 4th consecutive month yesterday, with outlooks from the US & Intl Energy still to come this week.  The market is looking for a catalyst to break out.  Even as prices remain stuck for now, Morgan Stanley cut its oil price forecast citing the likelihood of a glut next year.  The bank reduced its expectations for consumption this year & next & said while the 2nd Trump presidency could impact prices considerably, it would be hard to call the direction for a while.  Brent for Jan rose 0.9% to $72.55 a barrel & WTI for Dec was 1% higher at $68.78 a barrel.

Oil Edges Higher With Oversupply Concerns Limiting Price Gains

Stocks moved lower in late day trading trading as investors mull over whether the Federal Reserve stock will keep on track for another rate cut next month.  They are weighing if Trump policies could boost inflation as well as the economy.  That has helped push Treasury yields higher.  Additionally, the latest rally for the stock market may have been overdone which is the case for gold.