Markets hesitate as rally takes a breather

Dow dropped 140 (near session lows), but advancers over decliners 5-4 & NAZ retreated 99.  The MLP index added 1+ to the 323s & the REIT index went 1+ to the 402s.  Junk bond funds remained mixed & Treasuries had a little buying, lowering yields.  Oil hardly budged in the 74s & gold jumped 16 to 2781 (more on both below).

Dow Jones Industrials

Tesla (TSLA) launched an updated version of the Model Y in the US & Europe, bringing some new excitement to its product portfolio, which had been getting long in the tooth.  TSLA said the “new Model Y,” featuring an updated exterior and interior, new suspension tuning, & a slew of other smaller updates, would start at $59,990 before any incentives for the “Launch Series” & would lease for $699 with $2,999 down.  The all-wheel-drive Launch Series Model Y is the only trim available for offer, with deliveries beginning in Mar.  The older version of the Model Y is still on sale, with the long-range rear-wheel drive trim priced at $44,990, the long-range all-wheel drive at $47,990, & the performance all-wheel drive at $51,990.  TSLA did not say how long the older Model Y would remain on sale or when it would be phased out.  Last year, TSLA finally updated the Model 3 sedan for global markets, which was well received by consumers, in part because the original Model 3 launched 7 years earlier & needed a refresh.  “Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter,” TSLA said in late Oct.  Last year, TSLA delivered 1.78M vehicles, missing analyst estimates for 1.8M & resulting in an annual total below 2023's 1.8M vehicles delivered.  It was TSLA's first year-over-year decline, hinting that new competition, demand, & global economic conditions may be hurting the company.  The stock fell 5.80.

Tesla launches refreshed Model Y in bid to boost sales in US, globally

US consumer sentiment weakened in Jan for the first time in 6 months amid worries about the labor market & potential higher prices for goods if Pres Trump's new administration presses ahead with planned tariffs on imports.  The University of Michigan said that its Consumer Sentiment Index fell to 71.1 this month from a preliminary reading of 73.2 & 74.0 in Dec.  The forecast had expected an unchanged reading.  The final survey was closed on Mon, the day when Trump was inaugurated for a 2nd term as pres.  The decline in sentiment was broad-based and seen across income, wealth & age groups.  "Despite reporting stronger incomes this month, concerns about unemployment rose," Joanne Hsu, the director of the University of Michigan's Surveys of Consumers, said.  "About 47% of consumers expect unemployment to rise in the year ahead, the highest since the pandemic recession."  Consumers'1-year inflation expectations were at 3.3%, unchanged from the preliminary estimate, but up from 2.8% in Dec.  The 12-month inflation expectations are now above the 2.3%-3.0% range seen in the 2 years prior to the COVID-19 pandemic.  Long-run inflation expectations were at 3.2%, revised down from a preliminary reading of 3.3% & up from 3.0% in Dec.  "Concerns over the future trajectory of inflation were visible throughout the interviews and were tied to beliefs about anticipated policies like tariffs," Hsu added.

News about Consumer Confidence January 2025 Michigan

The S&P US Global Manufacturing PMI edged up to 50.1 in Jan 2025 from 49.4 in Dec, beating market expectations of 49.7 & signaling a slight improvement in manufacturing conditions after 6 months of decline.  Factory output edged up for the first time in ½ a year, with new orders also returning to modest growth.  Employment rose for a 3rd straight month, with the pace of job creation the fastest since Jul.  Supplier lead times continued to lengthen, reflecting busier supply chains, although the impact on the PMI was less pronounced than in Dec.  On the downside, inventories fell at their sharpest rate in 17 months, partly due to higher-than-expected input usage in production rather than cost-driven stockpiling.  Gold's move towards a fresh all-time high has coincided with a correction in the $, which is lower following remarks by Trump that suggest he may go soft on tariffs & settle for a trade deal with China.

US Factory Activity Recovers from Growth

Gold prices rose nearly 1%, lingering near record high levels scaled in Oct, steered by Pres Trump's calls to lower interest rates & uncertainty surrounding his trade policies.  Spot gold rose 0.9% to $2776 per ounce & was up 2.8% for the week.  Prices are at their highest since Oct 31, when they hit a record high of $2790.  US gold futures for Feb rose 0.7% to $2783 per ounce.  The $ hit a 1-month low, making bullion less expensive for foreign buyers.

Gold surges to near-record high as Trump calls for lower interest rates

Crude oil prices were little changed but headed for a weekly decline after Pres Trump unveiled a sweeping plan to increase US production & demanded that OPEC lower crude prices.  Brent crude futures were up 6¢ at $78.35 a barrel while US West Texas Intermediate (WTI) crude futures were up 4¢ at $74.66.  For the week, Brent is down 3.1% so far & WTI is down 4.1%.  Crude oil prices have eased so far this week, as investors trimmed their war premiums after the Gaza ceasefire while bracing for a shift in Trump's energy policy.  For now, Trump is not as predictable as expected, which makes oil prices prone to volatility on headlines. Trump, in a speech yesterday at the World Economic Forum in Davos, Switzerland, said he would demand the Organization of the Petroleum Exporting Countries & its de facto leader, Saudi Arabia, lower the cost of crude.  He also said he would ask Riyadh to increase the US investment package to $1T, up from the $600B reported by the Saudi state news agency earlier in the day.  Trump declared a national energy emergency on Mon, lifting environmental restrictions on energy infrastructure as part of a sweeping plan to maximize domestic oil & gas production.  On Wed, he vowed to hit the European Union with tariffs & imposed 25% duties on Canada & Mexico, & added that his administration was considering punitive duties of 10% on China.  US crude inventories last week hit their lowest since Mar 2022, according to the US Energy Information Administration.

Crude Oil Prices Drop Due to Trump's Energy Policy

Stocks retreated, stalling the recent rally as investors digested the latest batch of earnings & weighed Donald Trump's hints at a softer stance on China tariffs.  Pres Trump's call at Davos for cuts to US interest rates, oil prices, & taxes spurred investor optimism for his policies, buoying stocks this week.  The major gauges are set to end the holiday-shortened week with gains above 2%, demonstrating the power of Trump's comments even as there are questions his ability to execute the changes.