Markets rose in choppy trading while gold continues to be in demand

Dow climbed 161, but decliners over advances 4-3 & NAZ added only 13.  The MLP index was off 1+ to the 286s & the REIT index retreated 3+ to the 434s.  Junk bond funds eased a little higher & Treasuries continued to see selling which raised yields, taking the 10 year note back to about 4.1%.  Oil remained slightly higher above 70 & gold gained 14 to 2705 (more on both below).

Dow Jones Industrials 

The head of the International Monetary Fund cautioned that high debt & low growth remained major impediments to the global economy.  IMF Managing Director Kristalina Georgieva said that while notable progress had been made in the global economic recovery, govs had become too accustomed to borrowing, with “anemic growth” adding to the challenges of servicing that debt.  “It’s not yet time to celebrate,” she continued.  “When we look into the challenges ahead of us, the biggest one is low growth, high debt. This is where we can and must do better,” she added.  While Georgieva commended the work of major central banks in taming inflation, she noted that the achievements had not been universal & that some economies were continuing to struggle with higher prices, which was adding to social & political discontent.  “It is successful major economies that have done really well … and there are pockets in the world where inflation is still a problem,” she said.  “The impact of higher prices remains, and it is making many people in many countries feel worse off and angry.”  The comments come as finance ministers & central bank governors are set to meet next week in DC for the 2024 annual meetings of the IMF & the World Bank Group.  They will discuss topics including the world economic outlook, poverty eradication & the green energy transition.  Georgieva warned that intl trade would no longer be the “engine of growth” it once was, highlighting the proliferation of restrictive policies among many economies.  The US & the EU have moved to impose a series of punitive tariffs against China over what they deem as Beijing’s unfair trade practices.

IMF chief says ‘not yet time to celebrate’ as low growth and high debt pose risks

Mortgage rates continued their upward climb this week, further hindering demand in the housing market amid elevated rates & high home prices.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage surged to 6.44% from last week's reading of 6.32%.  The average rate on a 30-year loan was 7.63% a year ago.  "The 30-year fixed-rate mortgage increased for the third consecutive week, moving closer to 6.5%," said Sam Khater, Freddie Mac's chief economist.  "In general, higher rates reflect the strength in the economy that is supportive of the housing market," Khater said.  "But notably, as compared to a year ago, rates are more than one percentage point lower and potential homebuyers can stand to benefit, especially by shopping around for the best quote as rates can vary widely between mortgage lenders."  Many would-be buyers & sellers are holding out to see if rates fall further.  Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.  The average rate on the 15-year fixed mortgage also rose to 5.63% from 5.41% last week.  1 year ago, the rate on the 15-year fixed note averaged 6.92%.

Mortgage rates march higher for third straight week

Israeli Foreign Minister Israel Katz said that Hamas leader Yahya Sinwar was killed by Israel's military forces.  “The elimination of Sinwar creates an opportunity for the immediate release of the hostages and a potential change that could lead to a new reality in Gaza—without Hamas and without Iranian control,” he said.  Earlier in the day, the Israeli Defense Forces (IDF) said it was investigating the “possibility” that Sinwar was among 3 militants killed in an operation in the Gaza Strip, whose identities it could not confirm at the time.  “The forces that are operating in the area are continuing to operate with the required caution,” it added in a social media post.  In a social media update posted after the IDF communication, Israeli Defense Minister Yoav Gallant quoted a biblical citation, “You will pursue your enemies and they will fall before you by the sword. - Leviticus 26.”  He added, “Our enemies cannot hide. We will pursue and eliminate them.”  National Security spokesman John Kirby said they were aware of reports Sinwar may be dead, but that the US officials had not independently verified them.  As the news broke, Pres Biden was en route to Germany to meet with allied countries for talks on Ukraine & the Middle East.  Markets have been mired in the Middle East conflict, which now poses substantial risks to oil supplies, if Israel answers the latest Iranian hostilities with strikes targeting Tehran's energy infrastructure & export facilities.  Houthi maritime attacks against ships it claims are linked to Israel, the US or the UK, which have also been carried out against unaffiliated vessels, have meanwhile disrupted a key commercial route in the Red Sea that links Asia-Pacific & the Mediterranean.

Hamas leader Yahya Sinwar has been killed, Israeli foreign minister says

Gold prices hit record highs as uncertainty surrounding the US presidential elections & the war in the Middle East prompted investors to seek out the safe-haven asset, while easing monetary policy environment kept prices elevated.  Spot gold rose 0.6% to $2689 per ounce & US gold futures gained 0.5% to $2705.  Gold has seen a surge of over 30% this year, surpassing record levels, driven by prospects of further Federal Reserve rate cuts after a ½ percentage point rate cut last month & ongoing geopolitical uncertainties.  Gold prices are expected to rise to $2941 a troy ounce over the next 12 months, delegates to the London Bullion Market Association's annual gathering predicted earlier this week.  Earlier in the US session, prices had backed off from record highs after data showed US retail sales increased slightly more than expected in Sep while a Labor Dept report said unemployment unexpectedly fell last week.  Gold, which yields no interest on its own, tends to gain when interest rates are cut.  The ECB also cut interest rates for the 3rd time this year by qtr-point.

Gold Trading at a Record High Even as Yields Jump After U.S. Retail Sales Rose More Than Expected

West Texas Intermediate (WTI) crude oil closed with a small gain rising off a 2-week low as geopolitical worries ease as a report showed an unexpected drop in US inventories last week.  WTI crude for Nov closed up 28¢ to settle at $70.67 per barrel, while Dec Brent crude, the global benchmark, was last seen up 24¢ to 74.46.  Prices fell to the lowest since Oct 2 yesterday on easing worries an expected retaliatory attack on Iran for its Oct.1 missile strike on Israel would target oil infrastructure after reports said Israel plans to only attack Iranian military assets.  In its weekly survey, the Energy Information Administration said US oil inventories fell by 2.2M barrels last week, above the estimate for a rise of 1.8M barrels.  Weak demand from China & the Dec start to OPEC+'s plan to restore 2.2M bpd of production cuts with monthly supply additions of 180K-barrels per day for a year are also keeping a check on prices.  Crude oil remains rangebound as demand worries, especially in China, a country at the forefront of electrification, & the prospect of increased OPEC+ supply offsetting a potential threat to Middle East supplies.

WTI Oil Edges Up from a Two-Week Low Despite Weak China Demand as U.S Inventories Fall

Stocks pared session gains but still ended in positive territory.  Even with Nvidia (NVDA) at another record high, investors' enthusiasm was not greatly affected with decliners greater than advancers.  The rise in retail sales was not really impressive.  If the killing of Sinwar is proven without a doubt, that may help the volatile situation in the MidEast which could be plus for global trade.

Markets wobble as retail sales rose and unemployment data fell

Dow went up 50, decliners over advancers 3-2 & NAZ edged up 26.  The MLP index was flat in the 287s & the REIT index fell 3+ to the 435s following recent strength.  Junk bond funds barely budged & Treasuries had significant selling which raised yields (more below).  Oil was up chump change but still under 71 despite disappointing Chinese stimulus & gold soared 20 to another record at 2711.

Dow Jones Industrials

Consumer spending held up in Sep, underscoring a resilient economy that is now getting a boost from the Federal Reserve, the Commerce Dept reported.  Retail sales increased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in Aug & better than the 0.3% forecast.  Excluding autos, sales accelerated 0.5%, better than the forecast for just a 0.1% rise.  The numbers are adjusted for seasonal factors but not inflation, which rose 0.2% on the month as measured by the consumer price index.  In other economic news, initial unemployment claim filings totaled a seasonally adjusted 241K, a decline of 19K & lower than the estimate for 260K, the Labor Dept reported.  Claims fell even following hurricanes Helene & Milton, which tore thru the Southeast in recent weeks exacting tens of Bs of $ in damage.  Filings in both Florida & North Carolina declined after jumping the previous week, according to unadjusted data.  Together, the reports show that consumers, who power about 2/3 of all economic activity in the US, are still spending & the labor market is holding up after signs of weakening thru the summer.  On the retail side, spending grew at miscellaneous store retailers, which showed an increase of 4%, as well as at clothing stores (1.5%) & bars & restaurants (1%).  Those increases offset a 1.6% drop at gas stations as fuel prices fell, along with declines at electronics & appliances stores (-3.3%) & furniture & home furnishing businesses (-1.4%).  Sales increased 1.7% from a year ago, compared with the CPI rate of 2.4% for the same period.

Retail sales rose 0.4% in September, better than expected

Treasury yields advanced after the latest economic data signaled strength in the economy.  The 10-year Treasury yield added 7 basis points to 4.089% & the 2-year Treasury yield climbed 5 basis points to 3.985%.  1 basis point equals 0.01%, & yields & prices move in opposite directions.  Yields took a leg up after consumer spending figures came in hotter than forecast.  The data comes after several Fed officials earlier this week hinted at further rate cuts to come.  Additional comments from policymakers are expected as the week continues.  Elsewhere, the European Central Bank (ECB) implemented its 3rd interest rate cut of the year at its meeting today.  The decision comes as policymakers have pointed towards a weaker growth outlook & easing inflation risks.

Treasury yields jump after better-than-expected retail sales, drop in jobless claims

The ECB cut its key interest rate to 3.25%.  The move at the Oct meeting had been fully priced by markets after policymakers flagged reduced inflation risks and a weakening growth outlook.  Following the decision, the ECB's Governing Council called the process of disinflation “well on track” in its most optimistic statement in the current cycle.  “The inflation outlook is also affected by recent downside surprises in indicators of economic activity,” it said.  Headline price rises in the euro area eased to 1.8% in Sep, coming in below the central bank's 2% target for the first time in 3 years.  The ECB once again forecast that inflation would “rise in the coming months, before declining to target in the course of next year.”  It is the first time the ECB has reduced rates at consecutive meetings since 2011.  The ECB only debated a 25 basis point rate cut, rather than a larger 50 basis point cut, as opted for by the Federal Reserve in Sep, ECB Pres Christine Lagarde said.  “It is a fact that the economic activity has come in — on the basis of the … indicators that are available — a bit lower than we anticipated,” Lagarde added.  Expectations for a faster pace of monetary easing had built since the ECB's Sep 12 meeting, when market pricing suggested just 1 more rate cut this year, rather than the 2 priced in as of today.

ECB cuts rates, Lagarde flags downside risks to inflation outlook

Strong retail sales data reinforced overall strength in the US economy, giving recognition to the argument the economy could be reaccelerating following a surprisingly strong Sep jobs report.  However, investors are cautious as they study the data.  And gold found more fans, who took it to a new record above 2700.

Markets advance as the Dow leads stock averages to new records

Dow jumped 337 (from breakeven, it kept rising throughout the session to finish near the highs), advancers over decliners 3-1 & NAZ gained 51.  The MLP index added 2 to the 288s & the REIT index rose a big 5 to 358.  Junk bond funds were higher & Treasuries were in demand which lowered yields.  Oil continued slightly lower but held above 70 & gold was up 12 to 2694 (more on both below).

Dow Jones Industrials 

Apple's (AAPL), a Dow stock, newest version of the iPad Mini will hit the market on Oct 23 with the technology to run artificial intelligence (AI) features.  The tech giant touted the new tablet as delivering "incredible value & the full iPad experience in an ultraportable design" as it unveiled the device.  The upcoming iPad Mini will have a starting price tag of $499 & pre-orders for the device have already opened ahead of its launch next week.  AAPL built the iPad Mini with the A17 Pro chip that will allow it to run Apple Intelligence & other new features, according to the company & will have iPadOS 18.  Using a software update, the tech giant will bring initial AI features such as ones for writing, Siri & cleaning up photos to the US later in the month.  More will be coming "over the next several months," AAPL said.  Capabilities to create images, custom emojis & utilize ChatGPT will be among them.  AAPL has also increased the base level of storage the iPad Mini offers twofold from that of its predecessor to 128GB.  It will have a 12MP wide back camera with Smart HDR 4 & a 12MP Ultra Wide front camera.  AAPL has also added compatibility with the Apple Pencil Pro.  The tech giant last released a new model of the iPad Mini about 3 years ago.  The first edition of the tablet debuted in 2012.  The stock was down 2.07.

Apple unveils iPad Mini full of new tech features, including AI capabilities

General Motors (GM) has agreed to establish a joint venture with Lithium Americas (LAAC) that includes the automaker supplying $625M in cash & credit to the Canadian mining business.  The deal is centered on the development, construction & operation of a lithium carbonate mining operation called Thacker Pass in Humboldt County, Nevada.  Lithium is a key component for batteries that power electric vehicles.  Securing raw materials such as lithium from the US is crucial to GM's plans to profitably grow its all-electric vehicle business & meet tightening federal requirements for incentives to produce & sell the vehicles & the large batteries needed to power them.  “We’re pleased with the significant progress Lithium Americas is making to help GM achieve our goal to develop a resilient EV material supply chain,” Jeff Morrison, GM senior VP of global purchasing & supply chain said.  “Sourcing critical EV raw materials, like lithium, from suppliers in the U.S., is expected to help us manage battery cell costs, deliver value to our customers and investors, and create jobs.”  GM will have a 38% interest in Thacker Pass.  The joint venture investment is expected to include $330M cash to be contributed on the date of its closing; $100M cash to be contributed at a “final investment decision” for a phase of the project; & a $195M letter of credit facility prior to first draw on the $2.3B Dept of Energy Loan.  “Our relationship with GM has been significantly strengthened with this joint venture as we continue to pursue a mutual goal to develop a robust domestic lithium supply chain by advancing the development of Thacker Pass,” LAAC CEO Jonathan Evans said.  GM stock rose 1.15 & LAAC stock (a low priced stock) was up 10¢.  

GM to invest $625 million in joint venture to mine EV battery raw materials in U.S.

United Airlines (UAL) is starting a $1.5B share buyback as the carrier reported higher-than-expected earnings for the busy summer travel season & forecast strong results for the last 3 months of the year.  UAL expects to earn an adjusted $2.50 - $3.00 a share in the 4th qtr, compared to $2.00 a year earlier & the $2.68 estimated.  The share buyback would be its first since before the Covid-19 pandemic.  US airlines received more than $50B in gov aid during the pandemic travel slump that prohibited share repurchases & divs, though airlines were still fighting for financial stability.  “Like other leading airlines and companies, we are initiating a measured, strategic share repurchase program,” CEO Scott Kirby said.  “Importantly, my commitment to you is that investing in our people and our business will always be my top priority even while we institute this share repurchase program.”  For the 3rd qtr, revenue was $14.8B, up 2.5% from a year earlier & above estimates.  It reported net income of $965M, down 15% from a year ago.  Domestic unit revenue was positive in Aug & Sep compared to last year as airlines trimmed a glut of flights that were pushing down fares.  Fares are likely to rise into 2025.  “We believe Q1 yield strength will be possible due to the significant schedule changes and business model changes that will continue to be implemented by low-margin airlines,” said COO Andrew Nocella.  UAL expanded capacity by 4.1% in the 3rd qtr.  Corp revenue rose 13% in the qtr; premium revenue, including business class tickets, rose 5%; & sales from its no-frills basic economy tickets were up 20%.  Adjusting for 1-time items, EPS was $3.33, topping forecasts & its estimate in Jul of $2.75 - $3.25.  The stock shot up 7.97 (12%).

United shares head for pre-pandemic high after airline forecasts strong finish to 2024, plans buyback

Gold advanced towards record highs as gains in non-yielding bullion were bolstered by weakness in US bond yields & expected rate cuts by major central banks, with additional safe-haven support from ongoing geopolitical conflicts.  Spot gold rose about 1.1% to $2658 per ounce, inching close to a record high of $2685 it hit on Sep 26 & US gold futures settled 1.4% to $2676.  Expectations of a 25-basis-point rate cut by the Federal Reserve in Nov are solidifying, weaker inflation data in Europe & the UK have increased expectations for more aggressive ECB & BoE easing, leading to generally lower yields which have lifted gold.  Treasury yields fell to their lowest in over a week, making gold more attractive as it tends to thrive in a low interest rate environment.

Gold extends gains over 1% as US PPI data solidifies rate cut hopes

Oil steadied as traders continued to monitor the outlook for next year & the risk of escalation in the Middle East.  West Texas Intermediate edged lower to settle near $70 after flipping between small gains & losses throughout the session.  The benchmark sank more than 4% yesterday on reports that Israel had agreed to avoid oil facilities in its planned response to Tehran's recent missile strike.  Israel launched a fresh attack in southern Beirut today, despite Lebanon saying that it received some form of guarantee from the US that Israel will ease its offensive.  Meanwhile, Iranian authorities have started efforts to contain an oil leak from subsea pipelines off the nation's key Kharg Island terminal in the Persian Gulf.  While the cause was unclear, the leak heightened attention on Iran's export facilities.  Crude has been on a roller-coaster ride this month, with prices buffeted by tensions in the Middle East, as well as China's efforts to revive domestic growth. Traders have also been weighing the market's outlook for next year, with the Intl Energy Agency yesterday flagging prospects for a global glut.  Later today, traders will also monitor an industry report on US stockpiles for insights into consumption in the biggest oil user before official data is reported tomorrow.  Last week, stockpiles swelled by 5.8M barrels, their biggest increase since late Apr.  WTI for Nov fell 0.3% to settle at $70.39 a barrel & Brent for Dec was little changed at $74.22 a barrel.

Oil Price Little Change Near $70 With Risk to Middle East Supplies in Focus

The stock averages keep climbing as investors digest earnings reports.  Meanwhile thoughts of lowering yields are raising demand for gold.  This combination is difficult to understand.

Markets edge higher after yesterday's decline

Dow rose 206, advancers over decliners an impressive 4-1 & NAZ fell 25.  The MLP index added 1+ to the 288s & the REIT index went up 3+ to the 436s.  Junk bond funds inched higher & Treasuries had limited buying which let rates edge higher (more below).  Oil slid back pennies but remained above 70 on supply prospects & gold added 9 to 2688 (still in record territory).

Dow Jones Industrials

Amazon Web Services is investing over $500M in nuclear power, announcing 3 projects from Virginia to Washington State.  AWS, Amazon (AMZN)'s subsidiary in cloud computing, has a massive & increasing need for clean energy as it expands its services into generative AI.  It's also a part of AMZN's path to net-zero carbon emissions.  AWS announced it has signed an agreement with Dominion Energy (D), Virginia's utility company, to explore the development of a small modular nuclear reactor (SMR) near Dominion's existing North Anna nuclear power station.  Nuclear reactors produce no carbon emissions.  An SMR is an advanced type of nuclear reactor with a smaller footprint that allows it to be built closer to the grid.  They also have faster build times than traditional reactors, allowing them to come online sooner.  AMZN is the latest large tech company to buy into nuclear power to fuel the growing demands from data centers.  “We see the need for gigawatts of power in the coming years, and there’s not going to be enough wind and solar projects to be able to meet the needs, and so nuclear is a great opportunity,” said Matthew Garman, CEO of AWS.  “Also, the technology is really advancing to a place with SMRs where there’s going to be a new technology that’s going to be safe and that’s going to be easy to manufacture in a much smaller form.”  Virginia is home to nearly ½ of all the data centers in the US, with one area in Northern Virginia dubbed Data Center Alley, the bulk of which is in Loudon County.  An estimated 70% of the world’'s internet traffic travels thru Data Center Alley each day.  Dominion serves roughly 3500 megawatts from 452 data centers across its service territory in Virginia.  About 70% is in Data Center Alley.  A single data center typically demands about 30 megawatts or greater.  Bob Blue, its pres & CEO, said that the utility now receives individual requests for 60 - 90 megawatts or greater.  Dominion projects that power demand will increase by 85% over the next 15 years.  AWS expects the new SMRs to bring at least 300 megawatts of power to the Virginia region.  “Small modular nuclear reactors will play a critical role in positioning Virginia as a leading nuclear innovation hub,” said Virginia Gov Glenn Youngkin.  “Amazon Web Services’ commitment to this technology and their partnership with Dominion is a significant step forward to meet the future power needs of a growing Virginia.”  AMZN stock was off 1.46 & Dominion stock rose 1.63.

Amazon goes nuclear, to invest more than $500 million to develop small modular reactors

The National Retail Federation (NRF) projected that holiday spending will increase this year to a new record, totaling $979 - $989B, as consumers lean on e-commerce.  This reflects a growth of up to 3.5%, which would be the slowest pace in 6 years.  Last year, holiday sales grew 3.9% to $956B.  E-commerce is being credited as the primary driver of the retail sales growth for the 2024 holiday season, according to the NRF, the nation's largest retail trade group.  Specifically, online & other non-store sales are expected to account for $295B - $298B of the total spending, up from $273B last year, according to NRF estimates.  Notable differences between this year & last include the shopping period between Thanksgiving & Christmas being nearly a week shorter, totaling 26 days, & the economic impact of Hurricanes Helene & Milton.  Despite consumers still feeling pressures, particularly due to a sluggish US job market, NRF chief economist Jack Kleinhenz is optimistic "about the pace of economic activity and growth projected in the second half of the year."  "Household finances are in good shape and an impetus for strong spending heading into the holiday season, though households will spend more cautiously," Kleinhenz added.  Adobe projected earlier this season that online spending was going to be largely driven by a surge in discounts & the popularity of buy now, pay later services.  The buy now, pay later services, which allow consumers to pay in installments, will drive a record $18.5B in online spending, up 11.4% year over year.

Holiday spending projected to hit new record this year

The 10-year Treasury yield wavered slightly as bond traders digested the latest comments from Federal Reserve officials this week.  The 10-year Treasury yield   slipped 3 basis points to 4.008% & the 2-year Treasury yield was last at 3.929%, declining nearly 3 basis points.  1 basis point equals 0.01% & yields move inversely to prices.  On Mon, Minneapolis Fed Pres Neel Kashkari suggested that future interest rate cuts would be “modest” & reiterated that policy decisions would depend on economic data.  Elsewhere, Fed Governor Christopher Waller urged caution about any future rate reductions.  Yesterday, however, San Francisco Fed Pres Mary Daly said there's room for the central bank to lower rates further.  “We’re a long way from where it’s likely to settle,” she said.  “So the decisions that are really in front of us are ones about how quickly to adjust towards that level. But it’s quite possible that we will have a neutral rate of interest that’s a little higher than the interest rate that we came in with.”

10-year Treasury yield dips slightly as traders weigh Fed officials’ comments

Both the stock market & gold continue remain in or near record highs.  The stock market represents "risk on" & gold represents "risk off."  That is rare to see.

Markets slip as earnings season picks up steam

Dow pulled back 106, advancers over decliners better than 3-2 & NAZ was off 117.  The MLP index fell 2 to the 287s & the REIT index soared 7+ to the 435s.  Junk bond funds inched higher & Treasuries were purchased which brought lower yields.  Oil dropped 3+ to 70 & gold bounced back 8 to 2674.

Dow Jones Industrials

Citigroup reported 3rd-qtr results that topped expectations, with growth in investment banking & wealth management.  However, the bank set aside more money to offset potential loan losses.  Its banking division reported an 18% increase in revenue year over year, led by a 31% gain in its investment banking arm & wealth revenue rose 9%.  EPS fell to $1.51 from $1.63 a year earlier.  Earnings were hurt by a higher cost of credit, including a net build of $315M in Citi's allowance for credit losses.  Revenue rose 1% to $20.3B from $20.1B a year ago.  On the markets side, equity markets revenue rose 32% year over year, but fixed income revenue dipped 6%.  CEO Jane Fraser took over in Mar 2021 & has focused on slimming down the bank during her tenure.  That includes reducing Citi's global presence & laying off workers.  Investors will be looking for updates on her turnaround plan later today.  “This quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining traction, including positive operating leverage for each of our businesses, share gains and fee growth,” Fraser said.  The stock fell 67¢.

Citigroup earnings top estimates, boosted by investment banking

Goldman Sachs (GS), a Dow stock, topped estimates for 3rd-qtr profit & revenue on strong results from its stock trading & investment banking operations.  Profit surged 45% from a year earlier to $2.99B ($8.40 per share) as revenue climbed 7% to $12.7.  CEO David Solomon cited an “improving operating environment” as he touted his firm's results.  Equities trading was the outlier this qtr, posting an 18% revenue increase to $3.5B, more than ½ a billion $s higher than the $2.96B estimate.  Fixed income trading revenue slipped 12% from a year earlier to $2.96B, just above the $2.91B estimate, on a slowdown in interest rate products & commodities.  Investment banking revenue jumped 20% to $1.87B, topping the $1.62B estimate, on strength in debt & equity underwriting, & the bank said its backlog for pending deals increased from both a year earlier & the 2nd qtr.  The asset & wealth management division also helped it top expectations; revenue there jumped 16% to $3.75B, exceeding the $3.58B estimate.  The stock rose 2.06.

Goldman Sachs beats on profit and revenue as stock trading and investment banking boost results

Bank of America (BAC) topped estimates for 3rd-qtr profit & revenue on better-than-expected trading results.  Net income fell 12% from a year earlier to $6.9B (81¢ a share) on higher provisions for loan losses& rising expenses.  Revenue rose less than 1% to $25.5B as gains in trading revenue, asset management & investment banking fees offset a decline in net interest income.  CEO Brian Moynihan since 2010, demonstrated the advantages of having a massive & diversified financial institution.  Analysts have focused on the bank's core activity of taking in deposits & lending to consumers & corps as rising rates have squeezed the firm's haul from interest income.  But the qtr showed that the bank also benefits from surging activity thru its trading & advisory operations.  Fixed income trading revenue rose 8% to $2.9B, topping the $2.74B estimate, on strength in currencies & interest rate activity.  Equities trading jumped 18% to $2B, topping the $1.81B estimate, on higher cash & derivative volumes.  Investment banking fees also surged 18% to $1.4B, topping the $1.27B.  While net interest income (NII) fell 2.9% from a year earlier to $14.1B, that edged out the $14.06B estimate.  That NII figure in the 3rd qtr was higher than in the 2nd qtr, a sign that NII the trajectory for this key metric is improving.  The lender said in Jul that a rebound in NII was coming in the 2nd ½ of the year.  The stock rose 76¢.

Bank of America tops estimates on better-than-expected trading revenue

Investors assessed a fresh crop of bank earnings.  As the rush of earnings starts to broaden out, hopes are for further positive surprises in what some suspect could be a tricky season.  Also, energy stocks tumbled on a report that Israel is prepared to refrain from bombarding Iran's crude & nuclear facilities in its response to an attack 2 weeks ago.

Markets climb, led by Nvidia reaching a new record

Dow rose 218, advancers over decliners 4-3 & NAZ went up 159.  The MLP index slid back 1 to the low 289s & the REIT index was up 3 to the 428s.  Junk bond funds were mixed & Treasuries continued to be sold, increasing yields.  Oil remained weak, down 1+ to the 74s, & gold was off 9 to 2666 (more on both below).

Dow Jones Industrials 

The latest inflation data provided more evidence that the Federal Reserve is nearing its objective, fresh on the heels of the central bank's dramatic interest rate cut just a few weeks ago.  Consumer & producer price indices for Sep both came in around expectations, showing that inflation is drifting down to the central bank’s 2% target.  In fact, economists at Goldman Sachs think the Fed may already be there.  The investment bank Fri projected that the Commerce Dept's personal consumption expenditures price index for Sep will show a 12-month inflation rate of 2.04% when it is released later this month.  If Goldman is correct, that number would get rounded down to 2% & be right in line with the Fed's long-held objective, a little over 2 years after inflation spiked to a 40-year high & unleashed an aggressive round of interest rate hikes.  The Fed prefers the PCE as its inflation gauge though it uses a variety of inputs to make decisions.  “The overall trend over 12, 18 months is clearly that inflation has come down a lot, and the job market has cooled to a level which is around where we think full employment is,” Chicago Fed Pres Austan Goolsbee said after the latest consumer price data was released.  “We’d like to get both of them to stay in the space where they are right now.”  While keeping inflation at bay may not be an easy task, the latest data indicates that though prices are not receding from their troublesome heights of a few years ago, the rate at which they are increasing is pulling back.  The 12-month rate for the all-items consumer price index was at 2.4% in Sep, while the producer price index, a proxy for wholesale inflation & a leading gauge for pipeline pressures, showed an annual rate of 1.8%.  Goldman's projection that the PCE index is heading to 2% is also about in line with tracking from the Cleveland Fed.  The central bank district's “inflation nowcasting” dashboard pegs the 12-month headline PCE rate at 2.06% for Sep, which would get rounded up to 2.1%.  However, on an annualized pace, inflation for the entire 3rd qtr is running at just a 1.4% rate, well below the Fed's 2% goal.  There are some caveats to show that policymakers still have some work to do.  Core inflation, which excludes food & energy & is a metric that the Fed considers a better measure of longer-term trends, is expected to run at a 2.6% annual rate for the PCE in Sep.  Using just the consumer price index, core inflation was even worse in Sep, at 3.3%.  Fed officials, though, see the unexpectedly high shelter inflation numbers as a major driver of the core measure, which they figure will ease as a lower trend in rents works its way through the data.

The Federal Reserve may have pretty much just hit its 2% inflation target

Nvidia (NVDA) shares reached a record close as analysts gear up for earnings season & updates from all of the chipmaker's top customers on their planned spending on artificial intelligence infrastructure.  The shares are now up almost 180% for the year & have soared more than 9-fold since the beginning of 2023.  NVDA, widely viewed as the company selling the picks & shovels for the AI gold rush, has been the biggest beneficiary of the generative AI boom, which started with the public release of OpenAI’s ChatGPT in Nov 2022.  Its graphics processing units (GPUs) are used to create & deploy advanced AI models that power ChatGPT & similar applications.  Companies are purchasing NVDA GPUs in large quantities to build increasingly large clusters of computers for their advanced AI work.  Of the Bs of $s the top tech companies are spending annually on their AI buildouts, an outsized amount is going to NVDA, which controls about 95% of the market for AI training & inference chips.  NVDA revenue has more than doubled in each of the past 5 qtrs, & at least tripled in 3 of those periods.  Growth is expected to modestly slow the rest of the year, with analysts projecting expansion of about 82% to $32.9B in the qtr ending in Oct.  NVDA recently said that demand for its next-generation AI GPU called Blackwell is “insane”& it expects Bs of $s in revenue from the new product in the 4th qtr.  With a market cap of $3.4T, NVDA is the 2nd most valuable publicly traded US company, behind Apple (AAPL), a Dow stock, at about $3.5T.  The stock jumped 3.17 to a new record.

Nvidia heads for record close as AI chipmaker’s market cap tops $3.4 trillion

Stellantis (STLA) is fixing its slowing US sales at the right pace after fumbling a marketing plan earlier this year, CEO Carlos Tavares said.  Tavares, who last week pushed out the company's CFO & the COOs for both North America & Europe in a management restructuring, said reporters that he is responsible for the bad things that have happened at the company, but also for the good.  “If I don't want that responsibility I should do something else,” said Tavares, who reiterated that he plans to retire when his contract expires in 2026.  The board last month confirmed that it's searching for a successor.  STLA, formed from the 2021 merger of France's PSA Peugeot & Fiat Chrysler Automobiles, has struggled this year in both Europe & the US.  In the EU, it is fighting cuts in gov electric vehicle subsidies & Chinese competitors as it tries to sell more EVs to reach a goal of cutting greenhouse gas emissions 55% by 2030.  The EU has planned tariffs on imported Chinese EVs.  Sales have been down most of the year in the US, long the company's cash cow.  In the 2nd qtr, the company came up with a new marketing plan with incentives to counter high sticker prices.  But it didn't attract enough buyers.  Sales fell 20% & they’re down over 17% for the first 9 months of the year.  The rest of the auto industry saw sales increase 1% in Jan-Sep.  In Jun, US dealer inventory ballooned to just over 430K vehicles.  But Tavares said that has dropped by 52K in recent months, & the company is trying to get below 350K by Christmas for a “fresh start” going into the new year.  He expects the new leadership team to produce stronger profits & better customer satisfaction.  The stock was up 22¢.

Stellantis CEO says company is on pace to fix sales problems after poor performance this year

Gold prices eased as broad economic stimulus measures in China, the biggest bullion consumer, failed to invoke investor confidence & a $ rally to 2-month highs capped upside momentum.  Spot gold fell 0.2% to $2650 per ounce, having hit its highest in over a week earlier in the session & US gold futures eased 0.3% to$2667.  The $ rose to its highest since mid-Aug as investors digested China's weekend stimulus announcements, while the € extended its fall ahead of a central bank meeting this week.  There were a lot of little headwinds for gold, including the China stimulus, stronger $, weaker €, weaker base metals & profit-taking.  Gold's record price rally in the last few months has dampened investor sentiment & bullion demand in China.  A stronger $ makes gold more expensive for other currency holders.  Chinese data is double-edged.  Weak Chinese data could reduce demand for gold, but a broader slowdown in China could unsettle markets, enhancing gold's appeal as a safe haven.

Gold Edges Lower as U.S. Dollar Rally Curbs Upside

Oil declined after China's highly anticipated Finance Ministry briefing on Sat lacked specific new incentives to boost consumption in the world's biggest crude importer.  West Texas Intermediate fell around 2% to settle just below $74 a barrel while Brent also slumped.  Despite Beijing's promises of more support for the struggling property sector & hints of greater gov borrowing, the briefing didn't produce the headline $ figure for fresh fiscal stimulus that the markets had sought.  Data showed export growth unexpectedly slowed, curbing a trade rebound that had been a bright spot in a weakening economy.  WTI has risen around 8% this month as the prospect of an escalation in the Middle East threatens output from a region that supplies about a 3rd of the world's oil.  The tensions have seen hedge funds flee bearish bets against the crude benchmark at the fastest pace in nearly 8 years, while bearish bets on diesel futures plunged by the most on record.  WTI for Nov declined 2.3% to settle at $73.83 a barrel & Brent for Dec dropped 2% to settle at $77.46 a barrel.

Oil declined on China Demand Woes While Mideast Tensions Loom

Stocks were in demand, taking popular averages to or near record levels.  Tech stocks led the gains.  Earnings are at center stage as the first full week of 3rd qtr results gets underway.  How the season plays out is seen as key to the rally in stocks.  Risk-on investing is in vogue.

Markets edge higher ahead of key earnings reports

Dow went up 105, decliners barely ahead of advancers & NAZ gained 131.  The MLP index was flat at 290 & the REIT index added 2+ to the 428s.  Junk bond funds slid lower & Treasuries had a little selling which raised yields.  Oil dropped 1+ to the 74s after China offers little detail on stimulus plans & gold declined 13 to 2663.

Dow Jones Industrials

It's been just over a month since more than 30K Boeing (BA), a Dow stock, machinists walked off the job after overwhelmingly voting down a tentative contract.  Costs & tensions have only risen since then.  The strike is adding to pressure on its new CEO, Kelly Ortberg, who was brought in over the summer to solve the plane maker's various troubles.  The strike, which S&P Global Ratings estimates costs BA more than $1B a month, bookends an already difficult year that started with a near-catastrophic blowout of a 737 Max door plug & comes 6 years after the first of 2 fatal Max crashes put the storied manufacturer in constant crisis mode.  The union & company remain at an impasse, & airplane production at factories in the Seattle area & other locations has been idled, depriving BA of cash.  BA last week pulled a sweetened contract offer that the union had rejected, saying it wasn't negotiated.  BA officials had been upbeat to airline customers about getting to a deal in the weeks before the original vote.  But that optimism didn't pan out, as workers on Sep 13 voted 95% against an initial tentative labor deal.  The process of ending strike has turned more fraught, with federally mediated talks breaking down mid-week.  Late Fri, Jon Holden, pres of the striking workers' union, IAM District 751, pushed for a return to negotiations.  “CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats used to intimidate and crush anyone that stands up to them,” he said.  “Ultimately, it will be our membership that determines whether any negotiated contract offer is accepted. They want a resolution that is negotiated and addresses their needs.”  The stock fell 2.16.

Boeing factory strike crosses 1-month mark as pressure mounts on new CEO

America's middle class is feeling the squeeze like never before.  Primerica''s latest Financial Security Monitor report for the 3rd qtr found 55% of middle-income households now rate their personal financial situation negatively, a 6-point jump from the previous survey.  "For the first time in a year, a majority of middle-income households are feeling negative about their personal finances," said Glenn Williams, CEO of Primerica.  "In fact, this latest report represents the highest negative rating we’ve seen since we began fielding the survey exactly four years ago."  Middle-income households' view of the economy has deteriorated, too, over the past 3 months.  A significant majority, 73%, said they have a negative view of the nation's economic health, up 1 point from the prior reading.  The findings also indicated growing uncertainty about the economy, with 34% saying they are unsure about the economy's direction, a sharp increase of 15 points from last qtr.  The survey polled households making $30-130K annually, & 40% of respondents cited inflation as their top worry, up 8% from the previous quarterly survey.  The Labor Dept said the consumer price index (CPI), a broad measure of how much everyday goods like gasoline, groceries & rent cost, rose 0.2% in Sep from the prior month & was up 2.4% from a year ago.  High inflation has created severe financial pressures for most US households, which are forced to pay more for everyday necessities like food & rent.  Price hikes are particularly devastating for lower-income Americans, because they tend to spend more of their already-stretched paycheck on necessities & therefore have less flexibility to save money.  "Families continue to list inflation as their No. 1 concern, with the stress it brings spilling over into worry about being able to afford everyday essentials like food or groceries and going to the doctor as well as managing their rising credit card debt," Williams said.  Concerns about credit card debt among middle-income Americans is also on the rise.  44% said they are more worried about their credit card debt than they were a year ago, which is a 9% jump from last qtr & the highest level of concern since the question was first introduced in Mar 2023.  "The results of our survey reflect the accumulating financial stress middle-income families are facing," Williams said.  "Recent cost of living increases are slowing and we have to remember many fell behind financially and are still recovering."

Middle-income households' with negative view of their personal finances surges to new high

The European Central Bank (ECB) is on course to deliver its 3rd interest rate cut of the year at its meeting this Thurs, as policymakers say inflation risks are easing faster than previously expected.  Headline price rises in the euro area cooled to 1.8% in Sep, below the central bank's 2% target.  Core inflation, which strips out the more volatile components of energy, food, alcohol & tobacco, hit a 2½ year low of 2.7%.  Those figures have broadly continued to fall even after the ECB cut interest rates by 25 basis points in Jun & again by the same amount in Sep, with the central bank taking its key rate, the deposit facility, from a record high of 4% down to 3.5% across the 2 sessions.  Today money markets had priced in not only another 25-basis-point reduction during the Oct meeting, but also a follow-up cut to 3% at its next & final gathering of the year in Dec.  Expectations for faster monetary easing have built since the ECB's Sep 12 meeting, amid a series of dovish comments from officials & cooler-than-expected inflation prints from euro area states, including Germany.  Bank of France Governor Francois Villeroy de Galhau last week described an Oct rate cut as “very likely” & said such a step “won’t be the last.”  “Victory against inflation is in sight,” Villeroy told radio station France Info, noting that some volatility & upticks in the headline rate could follow.

European Central Bank set for third interest rate cut of the year in meeting this week

Stocks rose to fresh record highs as investors prepare for more big bank earnings to test the rally & the chances of an economic soft landing.  Tech stocks led the gains although advancers & decliners were pretty much equal.  Earnings reports will take center stage this week.

Markets rise on producer price inflation data

Dow advanced 409, advancers over decliners better than 3-1 & NAZ was up a more modest 60.  The MLP index was flattish in the 289s & the REIT index rose 3+ to the 425s.  Junk bond funds were a tad higher & Treasuries had modest buying which reduced yields.  Oil slid back pennies in the 75s as investors monitor the Middle East & gold surged 35 to 2674 (more on both below).

Dow Jones Industrials 

US consumer sentiment slipped in Oct amid lingering frustration over high prices, a survey showed.  The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 68.9 this month, compared to a final reading of 70.1 in Sep.  The forecast called for a preliminary reading of 70.8.  "While inflation expectations have eased substantially since then, consumers continue to express frustration over high prices," said Surveys of Consumers Director Joanne Hsu.  "Still, long run business conditions lifted to its highest reading in six months, while current and expected personal finances both softened slightly."  The survey's reading of 1-year inflation expectations rose to 2.9% from 2.7% in Sep & its 5-year inflation outlook dipped to 3.0% from 3.1% in the prior month.  "With the upcoming election on the horizon, some consumers appear to be withholding judgment about the longer term trajectory of the economy," said Hsu.

US consumer sentiment slips in October

Tesla (TSLA) shares tumbled after the electric vehicle company's long-awaited robotaxi event failed to impress investors.  CEO Elon Musk unveiled the firm's Cybercab self-driving concept car — a low, silver 2-seater, with no steering wheels or pedals — at the company's “We, Robot” event, & hyped his company's ambitions to create a fleet of autonomous vehicles & robots.  Musk said the company hopes to be producing the Cybercab before 2027, but offered no details on where the cars will be manufactured.  He said consumers would be able to buy a Tesla Cybercab for a price tag under $30K.  He also said he expects TSLA to have “unsupervised FSD” up & running in Texas & California next year in the company's Model 3& Model Y electric vehicles.  FSD, which stands for Full Self-Driving, is TSLA's premium driver assistance system, available today in a “supervised” version for Tesla electric vehicles.  In addition to the Cybercab, Musk also announced plans to produce an autonomous, electric Robovan that can carry up to 20 people, or be used to transport goods.  He said it will “solve for high density,” transporting a sports team, for example.  Analysts, meanwhile, said that Musk failed to make the case that TSLA is an artificial intelligence company during the event.  Analysts noted that Musk didn't offer any details on improvements to its FSD system or say anything about rumored plans of a tie-up between TSLA & xAI, Musk's AI company.  The stock sank 21+ (9%).

Tesla shares drop 8% after robotaxi reveal ‘underwhelmed’ investors

JPMorgan Chase (JPM), a Dow stock, CEO Jamie Dimon sees risks climbing around the world amid widening conflicts in the Middle East & with Russia’s invasion of Ukraine showing no signs of abating.  “We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse,” Dimon said.  “There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history,” he added.  The intl order in place since the end of World War II is unraveling in light of conflicts in the Middle East & Ukraine, rising US-China tensions, & the risk of “nuclear blackmail” from Iran, North Korea & Russia, Dimon said.  “It’s ratcheting up, folks, and it takes really strong American leadership and Western world leaders to do something about that,” Dimon continued.  “That’s my No. 1 concern, and it dwarves any I’ve had since I’ve been working.”  The ongoing conflict between Israel & Hamas recently hit the 1-year mark since Hamas' attack on Oct 7, 2023, sparked war, & there have been few signs of it slowing down.  Tens of thousands of people have been killed as the conflict has broadened into fighting on multiple fronts, including with Hezbollah & Iran.  Dimon also said that he remained wary about the future of the economy, despite signs that the Federal Reserve has engineered a soft landing.  “While inflation is slowing and the U.S. economy remains resilient, several critical issues remain, including large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Dimon added.  “While we hope for the best, these events and the prevailing uncertainty demonstrate why we must be prepared for any environment.”

Jamie Dimon says geopolitical risks are surging: ‘Conditions are treacherous and getting worse’

Gold rose over 1% after a US inflation data cemented prospects of a rate cut next month, restraining the $ below recent highs, while safe-haven demand stemming from the geopolitical tensions in the Middle East also lifted the bullion.  Spot gold rose 1.1% to $2658 per ounce, up for the 2nd straight session, & US gold futures settled 1.4% higher at $2676.  US producer prices were unchanged in Sep, pointing to a still-favorable inflation outlook & supporting expectations of Fed rate cut next month.  This follows data yesterday showing US consumer prices rose slightly more than expected last month, but the annual increase in inflation was the smallest in more than 3½ years.  The $ held below a 2 -month high against a basket of peers today.  On the physical front, gold dealers in India charged premiums for the first time in 2 months this week as the upcoming festival season attracted some jewellery buying.

Gold Extends Gains Over 1% as US PPI Data Solidifies Rate Cut Hopes

Oil prices edged lower but were on track for the 2nd straight weekly increase as investors weighed factors such as possible supply disruptions in the Middle East & Hurricane Milton's impact on fuel demand in Florida.  Brent crude oil futures were down 21¢ (0.3%) at $79.19 a barrel.  US West Texas Intermediate crude futures slipped 25¢ (0.3%) to $75.60 per barrel.  For the week however, both benchmarks were headed for gains of more than 1%.  Crude benchmarks spiked so far this month after Iran launched more than 180 missiles against Israel on Oct 1, raising the prospect of retaliation against Iranian oil facilities.  Israel has yet to respond.

Oil down on Florida fuel demand outlook but headed for weekly gains on Middle East worries

Stocks gained as investors weighed the likely impact of mild inflation data.  Investors continue to parse the latest consumer inflation data, which failed to clearly signal the Fed's next move on interest rate cuts.  They are also getting ready for a tricky earnings season.  Dow is up 533 in Oct, largely coming last week.  With all the uncertainty out there, gold remains popular with dubious stockholders.