Dow dropped 139, decliners over advancers 2-1 & NAZ sank 164. The MLP index was off 1+ to 251 & the REIT index recovered 1+ to the 328s. Junk bond funds inched higher following selling selling & Treasuries saw more selling, driving yields higher (more below). Oil was up 1 to go over 90 & gold jumped 20 to 2001.
AMJ (Alerian MLP Index tracking fund)
Treasury yields ticked lower after rising to multiyear highs a day earlier as investors digested comments by Federal Reserve Chair Jerome Powell. The yield on the 10-year Treasury fell to 4.976%, down around 1 basis point & the 2-year Treasury yield was trading around 5.125%, down around 5 basis points. Yesterday, the 10-year Treasury yield topped 5% for the first time since 2007. Yields & prices move in opposite directions & one basis point equals 0.01%. The move past 5% came after Federal Reserve Chair Jerome Powell warned that lower economic growth was likely needed to bring down stubbornly high inflation. He said said he didn't believe monetary policy was too tight as it stands. “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” He added, “Does it feel like policy is too tight right now? I would have to say no.” Fed fund futures pricing reflects a nearly 99% likelihood that the central bank will keep rates the same at the conclusion of its Nov meeting, according to the CME FedWatch Tool. That's up from about 94% a week earlier.
10-year Treasury yield retreats after rising to 5%
Atlanta Federal Reserve Pres Raphael Bostic said he doesn't envision interest rate cuts happening until well into 2024. Though he cited progress on inflation & a slowing economy, the central bank official said that there's still a lot of work to be done before the Fed reaches its inflation goal of 2% annually. “I would say late 2024,” Bostic replied when asked for a time frame when the first decrease could come. The Fed has raised its key borrowing rate 11 times since Mar 2022 for a total of 5.25 percentage points. While Bostic said he doesn't see policymakers easing anytime soon, he has been explicit in insisting that rates have hit a “sufficiently restrictive” level where they don’t need to be raised anymore. However, he cautioned that the road back to acceptable levels of inflation could be a long one. “There’s still a lot of momentum in the economy. My outlook says that inflation is going to come down but it’s not going to like fall off a cliff,” Bostic added. “It’ll be sort of a progression that’s going to take some time. And so we’re going to have to be cautious, we’re going to have to be patient, but we’re going to have to be resolute.” Bostic is not a voting member this year of the rate-setting Federal Open Market Committee, but will get a vote in 2024.
Fed’s Raphael Bostic doesn’t foresee rate cuts coming until ‘late 2024’
American Express (AXP), a Dow stock, reported Q3 profit that beat
expectations, helped by resilient spending from its wealthy customers
who shrugged off concerns about an economic downturn. AXP, which caters to a premium customer base, has largely been able
to mitigate the hit from inflation & the Federal Reserve's rate hikes,
which have made borrowing costly & reined in discretionary spending. CEO Stephen Squeri said " Travel & Entertainment
(T&E) spending remained robust... Restaurant spending was again one
of our fastest-growing T&E categories," AXP reported EPS of $3.30, up from $2.47 a year earlier. The forecast was for $2.94, according to LSEG IBES data. In
a sign of caution, however, AXP boosted its provisions for credit
losses to $1.23B, up 58% from last year, to account for the
increased likelihood of consumers defaulting on their debt. It also said its EPS & revenue for the full year
would be in line with the prior forecast. The company has previously
said it expects to earn $11.00-11.40 per share in 2023. Analysts have been expecting 11.07. Revenue, net of interest expense, surged 13%, to $15.38B. The stock fell 6.30 (4%).
If you would like to learn more about AXP, click on this link:
club.ino.com/trend/analysis/stock/AXP_aid=CD3289&a_bid=6aeoso5b6f7
AmEx's third-quarter profit beats estimates on buoyant spending
The effects of high interest rates are getting thru to investors, making more of them nervous. Oil continues to be in demand & gold is seeing heavy buying by nervous investors. Now more are aware that these rates could be around for some time. Dow has been trending sideways around 33-34K for most of the year, with the next breakout looking like it will go below 33K. Times remain tough.
Dow Jones Industrials
No comments:
Post a Comment