Markets bounce back from Fed-fueled rout

Dow rose 215 in an unimpressive recovery, decliners over advancers 3-2 & NAZ snapped back 118.  The MLP index edged up 1 to the 287s & the REIT index was fractionally higher to the 395s.  Junk bond funds were mixed & Treasuries had more selling, raising yields again (more below).  Oil slid lower but held above 70 & gold dropped another 48 to 2605.

Dow Jones Industrials 

Sales of previously owned homes rose 4.8% in Nov compared with Oct, according to the National Association of Realtors (NAR).  That put them at a seasonally adjusted, annualized rate of 4.15M units.  Sales were 6.1% higher than Nov 2023.  This is the 3rd-highest pace of the year & the largest annual gain in 3 years.  This count is based on closings, so contracts were likely signed in Sep & Oct.  Mortgage rates had fallen to an 18-month low in Sep but then shot higher in Oct.  “Home sales momentum is building,” said Lawrence Yun, chief economist for the NAR.  “More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%.”  The supply of homes for sale at the end of Oct was 1.33M units, up 17.7% from Nov of last year.  At the current sales pace, that represents a 3.8-month supply.  A 6-month supply is considered balanced between buyer & seller.  That tight supply continued to put pressure on prices.  The median price in Nov was $406K, up 4.7% year-over-year.  That annual comparison is gaining again.  Prices were up 4% annually in Oct.  Price gains were strongest in the Northeast & Midwest, at 9.9% & 7.3% respectively.  Roughly 18% of homes were sold above list price.  First-time homebuyers gained some ground, representing 30% of Nov sales, up from 27% in Oct but slightly lower than a year ago.  Cash is still king at 25% of sales.  Investors, however, pulled back at just 13% of sales, down from 18% in Nov of last year.  “Is this an indication where investors or more number-crunching people think that home prices are at the top? Or is another reason that rents are no longer rising?” Yun queried.

November home sales surged more than expected, boosted by lower mortgage rates

The 10-year Treasury yield continued higher a day after crossing above the key 4.5% level as firm economic data today suggested that the Federal Reserve is making the right move in planning to dial back rate cuts in 2025.  The yield on the 10-year Treasury rose over 3 basis points to 4.536%, after surpassing 4.5% in the previous session, a perceived marker of increased volatility & the 2-year Treasury yield slipped more than 3 basis points to 4.321%.  Yields & prices move inversely to 1 another.  1 basis point is equivalent to 0.01%.  Investors parsed fresh jobless claims data & US gross domestic product growth.  Jobless claims pulled back to 220K last week.  The forecast called for 230K.  Meanwhile, US GDP grew at a 3.1% clip in the 3rd-qtr, above forecast & 0.3 percentage point higher than the previous estimates.  Traders could view both readings as indicative that the economy remains steady, which supports fewer interest cuts moving forward from the Federal Reserve.  Chair Jerome Powell struck a hawkish tone on the outlook for next year, however, raising its inflation forecast & pointing to just 2 possible rate cuts in the horizon, down from the 4 posted in Sep.  The chances of another rate cut at the Fed's first policy meeting of the year in Jan slipped to under 10%, according to fed funds futures trading.

10-year Treasury yield hovers above 4.5% after Fed signals slower rate cutting cycle

Thousands of Amazon (AMZN) workers organized under the Teamsters union went on strike today after the company's "repeated refusal to follow the law and bargain."  AMZN Teamsters at 7 facilities in Skokie, Illinois; New York City, Atlanta, San Francisco & Southern California are participating in the "largest strike" against the T-$ company in American history, the union said.  Workers at other facilities are prepared to join them.  Though Teamsters says it represents about 10K people across 10 AMZN facilities in the US, the company doesn't recognize workers' affiliation with the union.  AMZN says the Teamsters union is "intentionally [misleading] the public" because they don't represent AMZN employees & drivers, company spokesperson Kelly Nantel said.  "For more than a year now, the Teamsters have continued to intentionally mislead the public – claiming that they represent ‘thousands of Amazon employees and drivers’. They don’t, and this is another attempt to push a false narrative," Nantel added.  "The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union."  Nantel also said the company "does not expect any impact on our operations."  Teamsters spokesperson Kara Deniz responded to AMZN's statement, saying the company is "gaslighting the American public with their false narratives."  "The truth is, over 20 bargaining units, representing nearly 9,000 employees have successfully organized because for many years the company has exploited and abused workers, and these workers are fed up and fighting back," Deniz said.  "No matter how massive Amazon’s corporate PR machine is, they cannot fool the American public into believing drivers delivering Amazon packages in Amazon-branded vans don’t actually work for Amazon," Deniz continued.  "No one believes this nonsense. Amazon needs to stop avoiding their legal obligation to these workers and get to the bargaining table now."  The stock rose 4.63.

Amazon workers across the country walk off the job days before Christmas

Stocks rebounded from the previous day's sell-off that was fueled by a hawkish outlook from the Federal Reserve on its path for interest rates.  Markets are bouncing back after a harsh reaction the day before, prompted by the Fed scaling back the number of rate cuts it expects next year or 2.  Chair Jerome Powell said even yesterday's decision, cutting rates by a qtr point, was a "closer call."  Markets interpreted the Fed's moves as a "hawkish cut" & reacted accordingly, sending stock averages to their worst days in months.  Meanwhile, the blue-chip Dow is in the midst of its longest losing streak in 50 years & looking to break out of that funk today.  However the Dow is still up over 12% this year.