Dow fell 165, advancers over decliners 4-3 & NAZ went up 81. The MLP index finished up 2+ to the 322s & the REIT index was off 1+ to the 408s. Junk bond funds were slightly higher & Treasuries continued to see buying which lowered yields. Oil edged lower, dipping below 71, & gold sank 49 to 2896 on profit taking (more on both below).
Dow Jones Industrials
Dell (DELL) rose following a report that Elon Musk's startup xAI was preparing an agreement to buy $5B in artificial intelligence servers from the hardware maker. The equipment containing Nvidia (NVDA)'s GB200 graphics processing units (GPUs) would be delivered this year. Many data center gear manufacturers have been seeing growth from selling boxes for training & running AI models. DELL said in Nov that it had $3.6B in quarterly AI server order demand. DELL's total revenue for the latest qtr totaled $24.4B, up 10% year over year. In Dec, xAI announced a $6B funding round with a report that the Musk startup, which competes with OpenAI, was raising the money to purchase GPUs. The Grok assistant from xAI is available for people to use on X, which is also owned by Musk. Musk has been building out xAI’s facility in Memphis, Tennessee. DELL stock rose 4.08.
Dell shares pop on report of $5 billion deal for AI servers for Elon Musk’s xAI
Less than 1 day after Pres Trump signed off on a reciprocal tariff plan, the administration's Treasury secretary shut down any economic concerns around the state of global trade. "President Trump is serious about negotiating this. And look, I don't understand why there's any pushback on this, that if they want to bring all these barriers down, then we will have more frictionless global trade," Scott Bessent said. "As we've learned with President Trump, you should take him at his word. This is not theater," he continued. "The April 1 deadline is for a study that the Commerce Department is doing on global tariffs that apply to U.S. products country by country." Yesterday, Trump announced a plan for the US to look at implementing "reciprocal" tariffs against countries that tax or limit markets for American goods. Trump said he did not expect any exemptions or waivers for the plan, which could apply to both adversaries & allies. Commerce Secretary nominee Howard Lutnick & the US trade representative would then submit a report detailing the tariffs on a country-by-country basis, a White House official said & the studies will be completed by Apr 1.
Trump's Treasury secretary shuts down any tariff concerns, praises 'frictionless global trade'
The number of Americans filing new applications for unemployment benefits decreased last week, suggesting the labor market remained stable early in Feb. Initial claims for state unemployment benefits fell 7K to a seasonally adjusted 213K last week ended, the Labor Dept said. The forecast was 215K claims for the latest week. Claims have trended lower so far this year, consistent with historically low layoffs. That is helping to underpin the economic expansion, allowing the Federal Reserve to pause interest rate cuts while it assesses the impact of policies by Pres Trump's administration. Economists view Trump's push for mass deportations of undocumented immigrants, tariffs on imports & tax cuts as inflationary. The US central bank left its benchmark overnight interest rate unchanged at 4.25% - 4.50% last month, having reduced it by 100 basis points since Sep, when it embarked on its policy easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 & 2023 to tame inflation. Despite low layoffs, employment opportunities for those who lose their jobs are no longer as abundant as they were a year or so ago, with businesses adopting a wait & see attitude. Nonfarm payrolls increased by 143K jobs in Jan, while the unemployment rate was at 4.0%. The number of people receiving benefits after an initial week of aid, a proxy for hiring, declined 36K to a seasonally adjusted 1.85M during the latest week.
US weekly jobless claims decline amid stable labor market
Gold prices rose & were on tack for a 7th consecutive weekly gain as worries over a potential global trade war intensified after Pres Trump's push for reciprocal tariffs. Spot gold was up 0.3% at $2936. an ounce, taking its weekly advance to 2.7%. Bullion hit a record peak of $2942 on Tues. US gold futures were up 0.5% at $2961. Uncertainty over the Trump administration's policies on trade, tariffs & broader foreign policy continues to support bullion. Yesterday Trump directed his economic team to formulate plans for reciprocal tariffs on every country that imposes taxes on US imports. This potentially inflationary move could drive further safe-haven demand for gold, a traditional hedge against rising prices & geopolitical uncertainty. Meanwhile, yesterday's PPI report eased some concerns about inflation in the world's largest economy after a hotter than expected consumer prices report earlier in the week. Traders expect that the Federal Reserve will not cut interest rates until Sep because of concerns over high inflation while a drop in jobless claims signaled a resilient labor market.
Safe-haven gold set for seventh weekly gain on trade war fears
Oil prices were down slightly on prospects for a peace deal between Russia & Ukraine that could ease global supply disruptions by ending sanctions against Moscow, but losses were limited by a delay in US immediate reciprocal tariffs. Brent futures were down 2¢ at $75 a barrel & US West Texas Intermediate (WTI) crude fell 28¢ to $71.01. For the week, Brent was set to gain about 0.5% & WTI was up about 0.01%. Pres Trump ordered US officials this week to begin talks on ending the war in Ukraine after Russian Pres Vladimir Putin & Ukrainian Pres Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him. Lifting sanctions on Moscow in the event of a peace deal should boost global energy supplies. Russian oil exports could be sustained if workarounds to the latest U.S. sanctions package are found, the Intl Energy Agency (IEA) said in its latest oil market report.
Oil edges lower as potential Ukraine peace deal eases supply worriesStocks mostly edged higher today to cap a busy week of tariff hikes, inflation updates, & retail sales data, which fell short of estimates. Markets took a pause following this week's fast-moving stream of policy shifts from Pres Trump. These ranged from 25% tariffs on steel & aluminum to Ukraine peace talks with Russia to a review of CHIPS Act terms for projects. For the week Dow was up 240.
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