Markets fall with Nasdaq leading the decline

Dow dropped 154, decliners over advancers 2-1 & NAZ lost 194.  The MLP index was off 1+ to the 295s & the REIT index fell 2+ to the 422s.  Junk bond funds were mixed & Treasuries had a litle selling bringing slightly higher yields (more below).  Oil crawled higher in the 69s & gold rebounded another 20 to 2651.

Dow Jones Industrials

Target (TGT), a Dividend Aristocrat, shares tumbled after the retailer severely missed quarterly earnings estimates & cut its full-year profit guidance.  The retailer's stock fell 19% after it said it's taking a more cautious stance for the most critical qtr in the retail industry after seeing weakness in certain discretionary categories despite slashing prices on 2000 items this holiday season to drive traffic.  CEO Brian Cornell said the company "encountered some unique challenges and cost pressures" that impacted its bottom-line performance over the last 3-month period.  Among its challenges, Cornell said there was "continued softness" in certain discretionary categories "as consumers continue to spend cautiously."  The big-box retailer is now expecting store sales to be "approximately flat" during the 4th qtr.  It is also projecting that its full-year adjusted EPS will be $8.30 - $8.90.  It's an about-face from Aug when the company raised its full-year adjusted EPS to $9.00 - $9.70.  Over the summer, the company benefited from price cuts it made, with Cornell saying there was an "acceleration" in unit & $ sales trends during the 3-month period ending Jun 30.  Its adjusted EPS for the 3rd qtr was $1.85, down 20% from the estimate of $2.30.  Revenue notched $25.7B, missing expectations of about $25.9zB. "It's disappointing that a deceleration in discretionary demand, combined with multiple cost pressures, have caused us to take down our guidance after raising it last quarter," COO Michael Fiddelke said.  The sock sank 33 (21%) for the worst day in years.

Target shares plunge after lackluster sales ahead of holiday season

TJX (TJX) touted a “strong start” to the holiday shopping season, but its shares slid after the fast-growing retailer offered guidance that appeared to underwhelm expectations during its fiscal 3rd qtr, but it's expecting EPS for its holiday qtr to $1.12 - $1.14, behind expectations of $1.18.  Net income for the 3-month period that ended Nov 2 was $1.3B, or $1.14 per share, compared with $1.19B, $1.03 per share, a year earlier.  Sales rose to $14.1B, up about 6% from $13.8B a year earlier.  “Across the Company, customer transactions drove our comp sales increases, which tells us that our values and treasure hunt shopping experience are appealing to a wide range of customers,” CEO Ernie Herrman said.  “The fourth quarter is off to a strong start, and we are excited about our opportunities for the holiday selling season. In stores and online, we are offering consumers an ever-changing and inspiring shopping destination for gifts at excellent values, and feel confident that there will be something for everyone when they shop us.”  For its holiday qtr, TJX is expecting comparable sales to grow   2-3%, largely in line with the 3% uptick that had been expected.  TJX said changes to its pretax profit margin & earnings guidance for its holiday qtr are “due to the expected reversal of the third quarter benefit from the timing of certain expenses.”  TJX is standing by its comparable sales guidance of 3% growth for the full year, just shy of the 3.2% growth that had expected.  It raised its pretax profit margin outlook from 11.2% to 11.3%, which matching expectations, along with its EPS guidance.  It's now expecting full-year earnings to be $4.15 - $4.17, up from $4.09 - $4.13.  At the high end, its guidance is in line with the $4.17 that was expected.  The stock fell 77¢.

TJ Maxx parent hikes guidance as it touts ‘strong start     to holiday shopping

Treasury yields were higher as investors considered the geopolitical situation & assessed the latest economic data.  The yield on the 10-year Treasury was up by nearly 5 basis points at 4.426% & the 2-year Treasury  yield was last trading at 4.297% after rising by more than 2 basis points.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors considered the latest developments in the Russia-Ukraine war, with tensions between the US & Russia heating up over the conflict in recent days.  The US closed its embassy in Ukraine’s capital Kyiv, warning of a “potential significant air attack.”  That comes after Russian Pres Vladimir Putin updated the country's nuclear doctrine, lowering the threshold for a nuclear strike, after Ukraine for the first time used US-made long-range ballistic missiles to attack Russian territory.  Elsewhere, investors weighed the latest economic data, with new housing starts falling short of expectations in Oct & building permits slipping month over month.  More insights into the housing sector will come tomorrow in form of existing home sales data.

Treasury yields rise as investors weigh geopolitical tensions, economic data

Stocks fell ahead of critical tech stocks' earnings that could set the direction of markets for days to come.  The crucial litmus test for the artificial intelligence trade is Nvidia's (NVDA), currently slightly lower.  In the meantime threats from Russia are getting a lot of attention.

Markets recover as geopolitical fears recede

Dow was off 120, decliners modestly ahead of advancers 5-4 & NAZ gained 195.  The MLP index remained near 296 & the REIT index rose 2+ to the 424s.  Junk bond funds edged higher & Treasuries continued in demand, bringing lower yields.  Oil crawled higher in the 69s & gold jumped 21 to 2636 (more on both below).

Dow Jones Industrials 

Global stocks fell & investors fled to safe-haven assets, as global markets reacted to escalating tensions between the world's 2 largest nuclear powers: Russia & the US.  The pan-European Stoxx 600 stock index came off previous lows to end the trading day down 0.5% after hitting its lowest level since Aug.  In the US, many stocks reversed earlier losses.  The moves come after Russian Pres Vladimir Putin amended the country's nuclear doctrine that outlines the conditions that would prompt Moscow to deploy its nuclear arsenal.  While Moscow had signaled an interest in updating the doctrine months prior, the amendments are nevertheless being implemented within days of a US decision to allow Kyiv to use American-made long-rage missiles in Russian territory.  The Russian Defense Ministry said that Kyiv had already deployed US-made long-range ballistic missiles in an overnight strike in the Bryansk region in the west of the country.  The updated nuclear doctrine outlines the conditions that would prompt Moscow to deploy its nuclear arsenal &, critically, expands the circumstances under which it will consider nuclear retaliation.  Kremlin spokesperson Dmitry Peskov said the updated code now “states that the Russian Federation reserves the right to use nuclear weapons in the event of aggression with the use of conventional weapons against it or the Republic of Belarus, which creates a critical threat to sovereignty or territorial integrity. Aggression against the Russian Federation by any non-nuclear state with the participation or support of a nuclear state is considered a joint attack,” according to NBC News reporting.

Russia-U.S. tensions hit global markets as Putin lowers the threshold for a nuclear strike

The stock prices for H&R Block (HRB) & Intuit (INTU) fell after a report saying the Trump transition team is considering creating a free tax-filing app.  Pres Trump's “Department of Government Efficiency” has held “highly preliminary” discussions about creating the free tax-filing app.  DOGE will be led by billionaire Elon Musk & former Rep presidential candidate Vivek Ramaswamy & aims to slash gov spending.  A DOGE tax-filing app would represent a competitor for both HRB & TurboTax.  It's unclear where a new DOGE tax app would bridge with newer policies the Biden administration already implemented.  Under the Biden administration, the IRS in Mar rolled out a pilot Direct File program in 12 states, allowing qualified taxpayers to file directly through a gov portal.  The IRS also offers free filing services through its Free File program for taxpayers who make an adjusted gross income of $79K or less.  While both INTU & HRB have free filing options, neither have had stellar records when it comes to transparently offering those services.  H&R stock fell 4.96 (8%) & Intuit stock fell 34+ (5%).

H&R Block, Intuit stocks fall on news of a potential free tax-filing app by Trump transition team

Stellantis (STLA) is delaying the launch of its Ram electric pickup trucks from this year until the first ½ of 2025, as the trans-Atlantic automaker continues testing the vehicles.  CEO Carlos Tavares on declined to disclose details about what caused the delays or specific timing on the electric trucks, which include an all-electric “REV” model & an extended-range “Ramcharger” that's equipped with an electric generator & a gas engine.  “We are just facing a very significant amount of workload, and we want to be very prudent in the way we validate the products, so we take our time, and we make sure that we manage the peak,” Tavares said.  “We don’t want to rush. ... It’s better to take a few weeks more to validate properly than to rush and then to make mistakes in terms of quality. That’s what we are doing now.”  Tavares said work needs to be completed on the Dodge Charger Daytona & Jeep Wagoneer S EVs, which are expected to be released by the end of this year, before turning to the new trucks.  STLA's upcoming electric pickups are the first that will be built on the company’s new “STLA Frame platform” for its larger trucks & Jeep SUVs.   It is expected to be a “multi-energy platform” that''s capable of internal combustion engines & hybrids, as well as electric models using batteries, fuel cells and range-extended electric propulsion systems.  STLA has said the Ramcharger extended-range electric vehicle can operate as a zero-emissions EV until its battery dies & an electric onboard generator, powered by a 27-gallon, 3.6-liter V6 engine, kicks on to power the vehicle.  The stock fell 34¢.

Stellantis delays Ram electric pickups until 2025

Gold prices rose for a 2nd day as treasury yields ease & intl tensions run high after the Biden Administration permitted Ukraine to attack targets within Russia with US-supplied missiles.  Gold for Dec was last seen up $16 to $2360 per ounce.  Following months of pressure, the Biden Administration over the weekend said Ukraine can make limited missile attacks on targets within Russia, which Moscow said will mean it is now at war with NATO.  Gold's gain were supported by a softer $ & worsening US-Russia relations after the US approved Ukraine's use of long-range missiles against Russia.  The $ at last look was little changed with the ICE dollar index up 0.05 points to 106.33.  Treasury yields fell, with the 2-year note last seen down 1.5 basis points to 4.274%, while the 10-year note is down 4.3 points at 4.378%.

Gold Rises as Treasury Yields Ease and International Tensions Rise

Oil retreated after its biggest gain in more than 5 weeks as Europe's largest oilfield gradually restarted following a power outage.  Brent futures traded near $73 a barrel as Equinor ASA restored production at the Johan Sverdrup oil field in the North Sea to 2/3 of capacity after yesterday's halt.  Crude had surged 3.2% yesterday as the $ weakened, making commodities more attractive to investors.  Traders are also tracking the latest geopolitical tensions.  Ukrainian armed forces carried out their first strike in a border region within Russian territory with a ATACMS missile.  Pres Vladimir Putin pushed ahead with a pledge to update Russia's nuclear doctrine to expand the conditions for using atomic weapons, in a warning to the US.  Oil is still lower for the year as concerns around Chinese demand & plentiful global supply weigh on the outlook.  The Intl Energy Agency has forecast a potential surplus of more than 1M barrels a day next year as Chinese demand continues to falter, which could be even bigger if OPEC+ decides to revive output.  In the Middle East, Lebanon & the Hezbollah militia have agreed to a US proposal for a cease-fire with Israel, according to a top Lebanese official.  A US official cautioned that negotiations were ongoing.  Brent for Jan settlement was 0.4% lower at $73.04 a barrel & WTI for Dec, which expires tomorrow, dipped 0.5% to $68.80 a barrel.

Oil Retreats After Rally as North Sea Field Partially Restarts

Oil futures hold on to the previous day's gains with attempts at a move lower held back by increased geopolitical risk premium on reports that Ukraine fired US-supplied long-range missiles into Russia days after the US authorized their use, raising concerns of an escalation in the conflict.  Bearish views of the global supply & demand situation continue to cap rallies. With China finding it difficult to get back on a growth trajectory north of 5% & the US & Europe undergoing a cyclical slowdown, crude oil demand in 2024 & 2025 is set to grow at barely ½ of the 2M b/d pace seen over the 2022-2023 post-pandemic period.  WTI settles up 0.3% at $69.39 a barrel & Brent is flat at $70.31 a barrel.

Oil Futures Hold Gains in Volatile Session

Stocks recovered from steeper losses as fears over a nuclear escalation to the Russia-Ukraine war rattled markets.  Investors are assessing news that Pres Vladimir Putin has signed a revised nuclear doctrine that allows Russia to expand its use of atomic weapons.  Meanwhile, the tech-heavy NAZ reversed declines to gain almost 1%, boosted following a series of bullish notes from analysts.

Markets wobble after Russia-Ukraine tensions

Dow dropped 173 but a little above early lows, decliners over advancers 5-4 & NAZ  went up74.  The MLP index hovered in the 296s & the REIT index was up 1+ to the 423s.  Junk bond funds inched higher & Treasuries had buying which lowered yields more below).  Oil slid lower to the high 68s & gold rose 15 to 2629.

Dow Jones Industrials

Walmart (WMT), a Dow stock & Dividend Aristocrat, raised its outlook for the year after benefiting from increased spending on nonessential items & an uptick in pick-up & delivery orders.  The company, the largest US retailer & a key indicator of consumer sentiment, forecast net sales to grow 4.8-5.1%, up from its prior forecast of 3.75-4.75% sales growth.  It also continues to get a significant boost from higher earners.  "We had a strong quarter, continuing our momentum,"  CEO Doug McMillon said.  "In the U.S., in-store volumes grew, pickup from store grew faster, and delivery from store grew even faster than that."  The company reported that its 3rd-qtr revenue climbed more than 5% from the prior qtr to $169B, beating the estimate of $168B.  Adjusted EPS also beat estimates by 5¢.  In the 3-month period that ended Oct 31, sales at US stores jumped 5.3% due to "strength across merchandise categories and physical and digital channels."  The increase in discretionary spending marks a reversal of the trend seen in recent years, when inflation squeezed household budgets & forced many shoppers to focus on essential items.  For the prior 3-month period, US transactions grew 3.1% & the average ticket increased by 2.1% year over year.  The company said its also gaining more shoppers, primarily from upper-income households.   E-commerce sales rose 22% in the US, led in part by store-fulfilled pickup & delivery.  The stock

Walmart raises outlook as consumers spend more on nonessentials, order more deliveries

Lowe’s (LOW) beat quarterly earnings expectation, as outdoor do-it-yourself projects, the home professional business & stronger online shopping fueled sales.  Even with the better-than-expected results, the home improvement retailer is projecting a year-over-year sales decline.  The company updated its full-year guidance & now expects total sales of $83-83.5B, higher than its previous forecast for $82.7-83.2B.  It expects comparable sales to decline 3-3.5%, slightly better than the 3.5% to 4% drop that it had previously anticipated.  LOW's is lapping a year-ago period when the company lowered its outlook & sales tumbled nearly 13% year over year.  It also cut its full-year forecast in Aug as it predicted weak home improvement demand in the back ½ of the year because of high interest rates.  CEO Marvin Ellison said the retailer is still waiting for homeowners to tackle more projects.  Yet in the meantime, it has improved its online business, spruced up its store showrooms & made sure it offers same- & next-day shipping in almost every zip code.  “We don’t know when the inflection happens, but when it happens, we’ve been building a playbook to be prepared and positioned to get our fair share and get our unfair share of that market demand,” he added.  In the fiscal 3rd qtr, EPS fell to $2.99, compared with $3.06, in the year-ago period.  Revenue dropped from $20.5B in the year-ago qtr. adjusted EPS of $2.89 excluded gains associated with the company's sale of its Canadian retail business in 2022.  Comparable sales declined 1.1% year over year, due to weaker demand for bigger & pricier discretionary DIY projects.  That was offset, in part, by demand driven by preparation for and repairs from hurricanes Helene and Milton, along with growth in sales to home pros like contractors.  The stock

Lowe’s beats on earnings and hikes guidance, but expects sales to fall this year

Treasury yields slid as tensions between Ukraine & Russia increased.  The yield on the 10-year Treasury was lower by 5 basis points at 4.367% & the 2-year Treasury was down by 3 basis points at 4.251%.  The rise in yields came as investors flooded into the asset as a safe haven amid rising geopolitical tensions.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  Russian Pres Vladimir Putin warned the US that the threshold for the use of nuclear weapons had lowered. Under the new doctrine, Russia would consider using such weaponry if it — or allies — were met with “with the use of conventional weapons that created a critical threat to their sovereignty and (or) their territorial integrity.”  The new stance comes after Pres Biden allowed Ukraine to use US weapons to strike inside Russia.  It also follows news that Ukraine hit a Russian border city with US-made missiles.  The Russian military said in a statement that a “facility in Bryansk region at 03:25 tonight using six ballistic missiles.”  On the data front, new housing figures for Oct fell short of expectations in Oct as mortgage rates rose.  Privately owned new construction fell 3.1% from Sep & came in below the estimate for 1.34M.  Building permits also slipped 0.6% month over month & 7.7% from a year ago.  On building permits, the total of 1.42M represented a 0.6% monthly decline & missed the forecast for 1.43M.  Permits declined 7.7% from a year ago.

Treasury yields fall amid rising Ukraine-Russia tensions

US stocks recovered from steeper losses today as fears over a nuclear escalation in the Russia-Ukraine war rattled financial markets.

Markets pause but Nasdaq shares are in demand

Dow was even, advancers over decliners about 2-1 & NAZ went up 154.  The MLP index added 2+ to the 294s & the REIT index was up 2+ to the 421s.  Junk bond funds were mixed & Treasuries had selling which brought higher yields (more below).  Oil gained 1+ to the high 68s & gold rebounded 46 to 2616.

Dow Jones Industrials

Pres-elect Trump's return to the White House will no doubt bring changes to the automotive industry, as he has vowed to roll back many of the Biden administration's policies & replace them with his own.  While some of Trump's 2.0 agenda will be familiar from his first term, he added some planks to his platform during the last campaign that could reshape parts of the sector.  Trump has vowed to do away with the EV mandates imposed on the auto industry & the broader American public.  Scott Kunes, COO of Kunes Auto Group, said that dealers like him are excited to see what's coming down the pike in the next administration, particularly surrounding EVs & Trump's platform of deregulation.  "I think most of us have been screaming from the rooftops a little bit that we can't force this EV transition," Kunes said.  "And while we want to be good partners with our manufacturers, and we want to provide our consumers what they want, the [Biden] administration forcing this EV transition –  not only on the manufacturers, but us as dealers – has had a pretty serious detrimental effect to our business."  But unwinding some of the policies rammed through in the EV push over the past 4 years could prove complicated.  Kunes, whose company oversees more than 40 dealerships, said he does not expect a complete reset on the EV front, because manufacturers & dealers alike have far too much invested in them at this point.  But he is hoping the Trump administration will ease Biden's administration's emissions rules, which effectively require that nearly all new vehicles must be EVs by 2032.  Trump's transition team is looking to get rid of the $7500 federal tax credit for EVs enacted during the Biden administration.  But Kunes hopes Trump will keep those incentives in place, so dealers can continue to push the EV vehicles that are already on their lots.  "We are in a losing proposition here, because right now the consumers that have switched to EV mostly have done so through leasing, because they can take those tax incentives right up front, it affects the payment, and it really fits their budget well at that point," he explained.  Regardless of Trump's policies surrounding EVs, Autotrader & Kelley Blue Book Executive Editor Brian Moody said he does not anticipate significant changes in the industry in the short term on that front.

Inside Trump's plan for auto industry as president-elect sets sights on Biden rules

CVS (Health) (CVS) announced that it struck a deal with dissident investor Glenview Capital for four board seats, just a few weeks after the healthcare giant ousted former chief Karen Lynch.  Glenview CEO Larry Robbins will join the CVS board effective immediately, alongside 3 other directors, which CVS said emerged from a “productive discussion” with Glenview.  CVS’ board will expand to 16 members.  “In our discussions with the leadership at Glenview, we agreed that we can deliver greater value from our integrated businesses to all of our stakeholders,” CVS chair Roger Farah said in a release.  The other new directors are Leslie Norwalk, Guy Sansone & Doug Schulman.  Glenview amassed a sizable stake in the healthcare conglomerate & worked with management in the lead-up to Lynch's ouster.  “We appreciate the board engaging with us on a cooperative basis that allows all energies to be productively dedicated towards further strengthening this iconic company,” Glenview's Robbins said.  CVS has had a challenging year, driven in part by difficulties with its Medicare Advantage business.  It initiated a strategic review this fall & has begun to lay off workers in a multi-B $ cost-cutting drive.  The stock rose 2.85 (5%).

CVS strikes deal with activist Glenview Capital for four board seats

The 10-year Treasury yield ticked higher as investors looked ahead to fresh data & central bank commentary after closing out a week of gains.  The yield on the 10-year Treasury note rose 3 basis points to 4.457% & the 2-year Treasury yield traded less than 2 basis points higher at 4.318%.  Yields & prices have an inverted relationship & 1 basis point is equivalent to 0.01%.  Investors are continuing to digest comments from Federal Reserve Chair Jerome Powell, who suggested late last week that the central bank may be less aggressive in its rate-cutting agenda going forward.  It comes as inflation was seen ticking up slightly in Oct & as Pres-elect Trump's anticipated fiscal policies weigh on the wider economic outlook.  Yields have shot up in recent weeks in the wake of the election due in part to the hope that Trump's presidency could boost economic growth.  Fresh housing, consumer confidence & manufacturing data are all on the docket this week, with initial jobless claims on Thurs.

10-year Treasury yield ticks higher following week of gains

The stock market was a little higher amid fading optimism for interest-rate cuts.  Stocks are starting the week on the back foot as the prospect of higher-for-longer rates holds post-election bullishness in check.

Markets slump as Trump rally fades and investors eye Fed policy

Dow sank 305, decliners over advancers 2-1 & NAZ tumbled 427.  The MLP index was up 2+ to 292 & the REIT index inched up 1 to the 419s.  Junk bond funds fluctuated & Treasuries finished about even (more below).  Oil lost 1+ to just above 67 & gold fell 5 to 2577 (more on both below).

Dow Jones Industrials 

Oct retail sales grew from the prior month, reflecting continued resilience in the American consumer.  Retail sales rose 0.4% in Oct.  The forecast called for a 0.3% rise in spending.  Meanwhile, retail sales in Sep were revised up to a 0.8% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data.  Auto sales drove a majority of the gains in Oct's reading, with sales in the sector rising 1.6%.  Oct sales, excluding auto & gas, rose just 0.1%, below estimates for a 0.3% increase.  The control group in the release, which excludes several volatile categories & factors into the gross domestic product reading for the qtr, decreased by 0.1% in Oct, below estimates for 0.3% increase.  However, both categories saw large revisions for Sep sales.  Revisions showed sales in both groups increased 1.2% in Sep, up from a previous reading of 0.7% growth.  The report comes as investors continue to closely monitor the health of the US economy & the Federal Reserve dials back its restrictive interest rate policy.  To date, economic data has largely been better than expected, a welcome sign for investors as markets shift to accept the Fed may not slash interest rates as quickly as initially hoped.

Retail sales jump as consumers keep spending

Federal Reserve Bank of Chicago Pres Austan Goolsbee signaled he feels the central bank will likely end up cutting the policy rate by another qtr of a percentage point this year & a full percentage point further next year, as Fed policymakers projected in Sep.  "I think we are going to be looking at rates coming down over the next year along the line the dot-plot said," Goolsbee said, referring to Fed projections released in Sep that depict the rate-path forecasts of the Fed's 19 policymakers as dots on a chart.  The median view of that dot plot was for the Fed policy rate to end this year at 4.4%, a qtr of a percentage point below where it is today & to be 3.4% by the end of next year.

Fed's Goolsbee sees another 125 bps of rate cuts by end-2025

The highest Treasury yields in months reached today after a batch of strong economic data cast additional doubt on whether the Federal Reserve will cut interest rates again next month, proved appealing to bond investors.  The benchmark 10-year Treasury yield topped 4.5% for the first time since May after the release of retail sales data including hefty upward revisions.  A large block trade in 10-year note futures shortly afterward signaled that for at least 1 trader, that was cheap enough.  Within a few hours, the yield was back to around 4.43%, adding about $5M to the value of the block.  Yields extended their retreat from session highs as crude oil & US equity benchmarks declined, stoking demand for bonds.  10-year yields fell to about 4.40%, 2-year yields to about 4.27%, a drop of about 10 basis points from the day's high.  The market's earlier declines signaled a drop in confidence in an interest-rate cut next month as resilient economic data empowers Fed officials to take a more cautious approach to easing.

Treasury Yield Surge Draws Buyers After 10-Year Tops 4.5%

Gold edged lower following 5 losing sessions as the $ eased & Oct retail sales came in higher-than-expected.  Gold for Dec was last seen down $2 to $2570 per ounce.  The $ eased off a 2-year high early, with the ICE dollar index last seen down 0.07points to 106.6.  The rise comes as the Dept of Commerce reported retail sales rose 0.4% in Oct, matching the Sep rise but ahead of the consensus estimate for a 0.3% increase.  The rise showed the US economy remains solid, with Federal Reserve chair Jerome Powell saying the central bank has room to slow interest-rate cuts as inflation cools & the labor market remains robust.  "We are moving policy over time to a more neutral setting. But the path for getting there is not preset. In considering additional adjustments to the target range for the federal funds rate, we will carefully assess incoming data, the evolving outlook, and the balance of risks. The economy is not sending any signals that we need to be in a hurry to lower rates," Powell said in the text of a speech.

Gold Edges Lower as Dollar Falls to Two-Year High and October Retail Sales Beat Forecasts

Oil fell, deepening a weekly loss, on mixed economic & consumption data from China, the lingering impact from a stronger $ concerns that the market will flip to a supply glut next year.  Global benchmark Brent dropped below $72 a barrel & was down by around 3% this week. The Intl Energy Agency said it expects a surplus next year as demand growth in China slows, while global output swells.  The glut will be even bigger if OPEC+ presses on with plans to revive halted production.  Commodities have also struggled this week as a gauge of the $ rallied to the highest in 2 years, powering upward in the aftermath of Donald Trump's election victory.  Despite a retreat today, the US currency is set for its 7nth weekly gain, making raw materials priced in the greenback less appealing.  Brent for Jan settlement dropped 1.3% to $71.60 a barrel & WTI for Dec fell 1.4% to $67.76 a barrel.  In China, while figures today showed some encouraging signs for the wider economy after Beijing's latest round of stimulus, apparent oil demand still declined in Oct from a year earlier.  In addition, local refiners processed 4.6% less oil than in the same month of 2023.  Crude has been alternating between weekly gains & losses since mid-Oct, buffeted by tensions in the Middle East, the prospect of oversupply & shifts in currency markets.  YTD, Brent has retreated by more than 6%, after touching its lowest since 2021 in Sep.

Oil Heads for Weekly Drop as Glut Concerns and Dollar Take Toll

Stocks sank, on track for steep weekly losses as investors absorbed Chair Jerome Powell's signal that the Federal Reserve won't hurry to make interest-rate cuts.  His hawkish comments are casting a pall on markets as the initial optimism for Pres-elect Trump's policies starts to wear off.  The S&P has already reversed 1/3 of its post-election rally & the NAZ suffered a weekly loss of 3%.  Retail sales data today reflected continued resilience in the American consumer, a sign of the economic strength Powell suggested would allow the Fed to take its time.  Traders are back to puzzling over the Fed's path next year, a question already muddied by this week's inflation reports.  Today, traders are pricing in 62% odds of a rate cut at its Dec policy meeting, compared with 72% the day before.  Bets on a Jan easing stand at 74%, versus the previous 81%.  The Dow fell 544 this week.

Markets retreat as traders trim rate-cut bets

Dow dropped 264, decliners over advancers better than 2-1 & NAZ tumbled 379.  The MLP index was up 3+ to the 292s & the REIT index added 1+ to the 419s.  Junk bond funds were mixed & Treasuries saw selling which raised yields (more below).  Oil slid lower in the 68s & gold recovered 2 to 2575.

Dow Jones Industrials

Mortgage rates seem to have steadied.  That may be a good sign for the market, experts say.  The average 30-year fixed-rate mortgage in the US slightly dipped to 6.78% last week ending Nov. 14 barely changed from 6.79% a week prior, according to Freddie Mac data via the Federal Reserve.  “Even though it’s higher than it has been over the course of several weeks, it’s probably good news for homebuyers,” said Jessica Lautz, deputy chief economist & VP of research at the National Association of Realtors.  “When rates are moving around a lot, it makes a lot of uncertainty in the market,” Lautz said.  Mortgage rates declined this fall in anticipation of the first interest rate cut since Mar 2020.  But then borrowing costs jumped again this month as the bond market reacted to Trump's election win.  While the pres-elect has talked about bringing mortgage rates down, presidents do not control borrowing costs for home loans, experts say.  Instead, mortgage rates closely track Treasury yields & are partially affected by what happens with the federal funds rate.  “They foresee inflationary policies, whether it’s tariffs or greater government spending, the tax bill ... they’re pricing in more inflation,” said James Tobin, pres & CEO of the National Association of Home Builders.  “As the bond market reacts, mortgage rates are going to react to that, too.”  Less volatility can be a good sign, said Chen Zhao, chief economist at Redfin, an online real estate brokerage.  “High volatility by itself actually pushes mortgage rates even higher above treasury yields,” Zhao added.  “More stable rates also means that homebuyers don’t have to worry during their home search about what their budget allows for changing.”

Mortgage rates may be stabilizing. Here’s what to expect into early 2025

Treasury yields were higher, ending a week where the 10-year Treasury yield jumped amid new inflation data & comments from Federal Reserve Chair Jerome Powell that suggested the central bank may not be as aggressive next year with its rate-cutting campaign.  The 10-year Treasury yield was last higher by about 3 basis point to 4.451% & the 10-year rate ended last week around 4.31%.  The yield on the 2-year Treasury rose by nearly 5 basis points to 4.341% & the 2-year yield ended last week around 4.25%.  1 basis point equals 0.01% & yields & prices move in opposite directions.  Powell said yesterday that strong US economic growth means the central bank won't need to quickly cut interest rates.  “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in his speech.  “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”  The remarks come after the Fed cut interest rates by a qtr point last week.  Investors have lowered their expectations of a similar cut by the Fed at its next Dec meeting.  On the economic front, investors fresh retail sales data that showed an increase of 0.4% last month.  That's slightly above the forecast 0.3% increase.

10-year Treasury yield jumps on week as Fed not in a hurry to keep cutting rates

General Motors (GM) laid off roughly 1000 employees as the automaker attempts to cut costs & realign priorities amid changing market conditions.  The layoffs were across the business.  Some were due to poor performance, while others were part of a review to reorganize priorities by the automaker.  A majority of the employees impacted were in suburban Detroit at the automaker's global technical center in Warren, Michigan & a small number of hourly employees were included in the layoffs.  The company is targeting $2B in fixed cost reductions this year as it deals with slowing US sales, business deterioration in China & a shift in its “all-in” strategy for electric vehicles amid slower-than-expected consumer adoption.  “In order to win in this competitive market, we need to optimize for speed and excellence,” GM spokesperson Kevin Kelly said.  “This includes operating with efficiency, ensuring we have the right team structure, and focusing on our top priorities as a business. As part of this continuous effort, we’ve made a small number of team reductions.  We are grateful to those who helped establish a strong foundation that positions GM to lead in the industry moving forward.”  The stock fell 29¢.    

GM lays off 1,000 employees amid reorganization, cost-cutting

Stocks sank, on track for weekly losses, as investors absorbed Chair Jerome Powell's signal that the Federal Reserve won't hurry to make interest-rate cuts.  Powell's hawkish comments are casting a pall on markets as the initial optimism for Pres-elect Trump's policies starts to wear off.  Retail sales data reflected continued resilience in the American consumer, a sign of the economic strength Powell suggested would allow the Fed to take its time.  Oct sales rose 0.4% month on month, versus 0.3% expected, including a revision higher for Sep's reading to 0.8% from 0.4%.

Markets fall after Powell says the Fed is in no 'hurry' on rate cuts

Dow dropped 207 (near session lows), decliners over advancers better than 3-2 & NAZ was off 123.  The MLP index added 1+ to the 288s & the REIT index fell 3+ to the 409s.  Junk bond funds slid a little lower & Treasuries had more selling which raised yields.  Oil edged a little higher in the 68s & gold fell 5 to 2581 (more on both below).

Dow Jones Industrials 

Disney (DIS), a Dow stock, reported its fiscal 4th-qtr earnings, narrowly beating estimates as streaming growth helped propel its entertainment segment.  The streaming business' growth & profitability — combined with a blockbuster summer at the box office & further investments in the company's theme parks business — comes during a time of turmoil across the media industry.  DIS has been restructuring the Mouse House under the stewardship of returnee CEO Bob Iger, who's getting the company into shape before handing it off to a successor in early 2026.  Execs touted DIS's significant progress during the last year & said they’re “confident in the long-term prospects for the business,” issuing guidance that includes its fiscal 2025, 2026 & 2027.  During its fiscal 2025, the company expects high-single-digit adjusted earnings growth compared with the prior fiscal year.  The company expects double-digit adjusted EPS growth in both fiscal 2026 & 2027.  “I think the fact that we have had such a strong ’24 overall has been an important part of the guidance we are getting,” said CFO Hugh Johnston.  “If you think of the big initiatives we have invested, putting creativity back at the center of the company, and on top of that, we said we wanted to improve profitability and we are clearly doing that in a substantive way.”  EPS was 25¢, up from 14¢ during the same qtr last year.  Adjusting for 1-time items, including restructuring & impairment charges, EPS was $1.14.  Overall revenue was up 6% to $22.6B compared with the same prior fiscal qtr.  Total segment operating income increased 23% to $3.7B compared with the same period in 2023.  Revenue for the entertainment segment – which includes the traditional TV networks, direct-to-consumer streaming &films – increased 14% year over year to $10.8B after a hot summer at the box office.  Its combined streaming business, which includes Disney+, Hulu & ESPN+, reported operating income of $321M for the Sep period compared with a loss of $387M during the same period last year.  Company execs said they are confident streaming “will be a significant growth area” for DIS.  The stock rose 6.40 (6%).

Disney stock surges on streaming growth, guidance

Pres-elect Trump's transition team is planning to kill the $7500 consumer tax credit for electric-vehicle purchases as part of broader tax-reform legislation, 2 sources said.  Ending the tax credit could have grave implications for an already stalling US EV transition.  And yet representatives of Tesla (TSLA) — by far the nation's largest EV seller — have told a Trump-transition committee they support ending the subsidy, said the 2 sources.  Elon Musk, 1 of Trump's biggest backers & the world's richest person, said earlier this year that killing the subsidy might slightly hurt TSLA sales but would devastate its US EV competitors, which include legacy automakers such as General Motors (GM).  Repealing the subsidy, which has been a signature measure of Pres Biden's Inflation Reduction Act (IRA), is being discussed in meetings by an energy-policy transition team led by billionaire oilman Harold Hamm, founder of Continental Resources & North Dakota Governor Doug Burgum, the 2 sources said.  Trump's energy transition team views the consumer EV credit as an easy target, believing that eliminating it would get broad consensus in a Rep-controlled Congress as part of a larger tax-reform bill.  TSLA stock sank 19.06 (5%) & GM stock lost 8¢.

Trump’s transition team aims to kill Biden EV tax credit

Federal Reserve Chair Jerome Powell said that strong US economic growth will allow policymakers to take their time in deciding how far & how fast to lower interest rates.  “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said.  “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”  In an upbeat assessment of current conditions, the central bank leader called domestic growth “by far the best of any major economy in the world.”  Specifically, he said the labor market is holding up well despite disappointing job growth in Oct largely that he attributed to storm damage in the Southeast & labor strikes.  Nonfarm payrolls increased by just 12K for the period.  Powell noted that the unemployment rate has been rising but has flattened out in recent months & remains low by historical standards.  On the question of inflation, he cited progress that has been “broad based,” noting that Fed officials expect it to continue to drift back towards the central bank’s 2% goal.  Inflation data this week, though, showed a slight uptick in both consumer & producer prices, with 12-month rates pulling further away from the Fed mandate.  Still, Powell said the 2 indices are indicating inflation by the Fed's preferred measure at 2.3% in Oct, or 2.8% excluding food & energy.  “Inflation is running much closer to our 2 percent longer-run goal, but it is not there yet. We are committed to finishing the job,” said Powell, who noted that getting there could be “on a sometimes-bumpy path.”

Powell says the Fed doesn’t need to be ‘in a hurry’ to reduce interest rates

Gold traded at a 2-month low, falling for a 5th-straight session as the $ continued its post-election rally & rose to the highest in more than 2 years while another US inflation measure rose last month.  Gold for Dec was last seen down $11 to $2575 per ounce, the lowest since Sep 11. The Bureau of Labor Statistics reported the Oct Producer Price Index (PPI) rose by 0.2% from Sep, up from a revised 0.1% pace a month earlier, but met the forecast.  Core PPI, excluding 1-time items, rose by 0.3%, up from 0.2% & ahead of the estimate for a 0.2% rise.  The $ rose again following the data, with the ICE dollar index last seen up 0.19 points to 106.67, the highest since Oct 2022.  Treasury yields fell, with the 2-year note last seen paying 4.296%, up 0.4 basis points, while the yield on the 10-year note was down 5.8 points to 4.41%.

Gold Falls to Two-Month Low as Dollar's Post-Election Rally Continues

Oil rose after US data showed a drop for national gasoline inventories, but gains were capped by the Intl Energy Agency's (IEA) forecast of a large crude glut next year.  West Texas Intermediate climbed near $69 a barrel.  A US gov report showed that gasoline stockpiles slid to the lowest in 2 years.  Data also showed that inventories at the key Cushing, Okla, storage hub fell by the most in about 2 months, though the nation's total crude inventories posted a build.  The IEA warned that the oil market faces a surplus of more than 1M barrels a day next year, which could swell further if OPEC+ decides to press ahead with supply hikes.  Crude has alternated between weekly gains & losses since mid-Oct, with traders weighing OPEC+ supply moves, US monetary policy & the risks to oil-demand growth, especially in China.  Oil consumption in the world's largest importer will grow this year at just 10% of the rate seen in 2023, according to the EIA report.  The Middle East was also in focus.  Israel was rushing to prepare a cease-fire deal in Lebanon as the gov adjusted to the prospect of Trump's White House return.  WTI for Dec rose 0.8% at $68.95 a barrel & Brent for Jan was up 0.7% at $72.81 a barrel.

Oil Holds Gains as US Data Shows Declines for Gasoline Supplies

Oct inflation readings out this week have shown little progress toward the Fed's 2% inflation target, putting into question how deeply the Federal Reserve will cut interest rates in 2025.  The readings are adding to an overall picture of persistent, sticky inflation within the economy.  Economists don't see the data changing the Fed's outlook in Dec.  Markets agree with the CME FedWatch Tool currently placing a nearly 80% chance the Fed cuts rates by 25 basis points at the Dec meeting.  But investors are nervous about prospects for rate cuts next year.

Markets are little changed as postelection rally stalls

Dow slid back 17, decliners barely ahead of advancers & NAZ fell 39.  The MLP index was even in then 286s & the REIT index slid 1 to 421.  Junk bond funds were weak & Treasuries had modest buying which lowered yields slightly (more below).  Oil crawled up to 69 & gold dropped another 10 to 2576.

Dow Jones Industrials

Wholesale prices nudged higher in Oct, though largely in line with expectations & mostly consistent with the Federal Reserve cutting interest rates again in Dec, the Bureau of Labor Statistics reported.  The producer price index (PPI), which measures what producers get for their products, increased a seasonally adjusted 0.2% for the month, up one-tenth of a percentage point from Sep though matching the forecast.  On a 12-month basis, headline wholesale inflation was at 2.4%.  Excluding food & energy, core PPI rose 0.3%, also one-tenth more than Sep & also matching expectations.  The 12-month rate was at 3.1%.  Though the readings are above the Fed's 2% inflation goal, the trend is showing that price increases are generally moderating & inflation is being pushed by isolated factors.  Services rose 0.3% on the month, accounting for most of the PPI increase & was driven largely by a 3.6% surge in portfolio management prices.  Food prices fell 0.2% on the month while energy was off by 0.3%.  Goods prices nudged higher by 0.1% after falling the previous 2 months.  Wholesale prices nudged higher in Oct, though largely in line with expectations & mostly consistent with the Federal Reserve cutting interest rates again in Dec.  Food prices fell 0.2% on the month while energy was off by 0.3%.  Goods prices nudged higher by 0.1% after falling the previous 2 months.  Traders expect the Fed to follow up rate cuts in Sep & Nov with another qtr percentage point reduction at the Dec 17-18 meeting.  After that, market pricing points to the Fed skipping Jan & moving at a slower easing pace thru 2025.

Wholesale prices rose 0.2% in October, in line with expectations

The holiday shopping season may not be as merry for retailers this year, with a recently-released report suggesting they could see less sales growth over the festive period.  The growth rate for holiday sales will be roughly 3% this year, S&P Global Ratings predicted in the "US Holiday 2024 Sales Outlook" report.  It marks a slower pace than 2023, when holiday sales grew 4.7%.  S&P Global Ratings suggested retailers will "lean on deals to bring the holiday cheer" & put more money toward advertising to draw in more shoppers.  Some companies have already started rolling out discounts ahead of the holidays, something that the report said they might be doing to "pull forward sales" as shoppers "grow more cautious during the weeks leading up to the holiday, particularly during an election year & a shortened holiday shopping window."  Retailers will likely hold more "deal events" prior to Black Friday & Cyber Monday.  In 2024, those 2 major post-Thanksgiving shopping dates will fall on Nov 29 & Dec 2, respectively.  When it came to the consumer, S&P Global Ratings characterized them as "price-sensitive" & expected to "maintain tight budgets and seek value in the form of promotions as they enter the holiday season" amid the current economy & labor market.  For the 2024 holiday season, cost-cutting & inventory management strategies will "mostly offset promotional pressures" & help retailers see "flat margins."  S&P Global Ratings said retailers that "have the financial flexibility to compete on price and convenience will continue to fare better" during the holidays.  The report predicted value retailers that "cater to the more resilient middle and higher income consumer" & big box retailers with the "ability to effectively communicate value to consumers" will do better during the holiday seasons than other types.  "We expect other sectors, such as department stores and apparel retailers, will rely on higher discounts to increase traffic and manage inventory," it said.  "Furthermore, soft demand in specialty categories like consumer electronics and home furnishings will also necessitate promotional activity to spark demand."  Retailers who sell lots of discretionary products like department & furniture stores will "rely on promotions to generate demand" & "risk a disappointing holiday season" if they don't.  Over the course of Nov & Dec, retailers are expected to see $979-989B spent by holiday shoppers, the National Retail Federation separately predicted.

Holiday shopping may not be merry for retailers this year

Treasury yields were little changed as investors monitored a fresh batch of economic data & a flurry of speeches from Federal Reserve policymakers (some later today).  The 10-year Treasury yield traded marginally lower at 4.445%, while the yield on the 2-year Treasury fell less than 1 basis point to 4.275%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  The speeches come as investors & economists scrutinize what Pres-elect Trump's return to the White House could mean for US interest rates.  The central bank delivered its 2nd consecutive interest rate cut earlier in the month, in line with expectations, & traders see a decent chance of another trim in Dec.

Treasury yields are little changed as investors weigh economic data

Stocks are trading water with Powell's speech later today & the Trump-led sweep in focus.  Though the mood is muted, stocks are still riding high near records after the latest consumer inflation data kept hopes for a Dec rate cut on the table.  Initial jobless claims fell last week to 217K, their lowest level since May & less than the 220K claims expected.