Markets slipped lower with stocks and gold near records

Dow slid back 31, decliners over advancers 2-1 & NAZ were off 82.  The MLP index added 1 to the 255s & the REIT index declined 2+ to the 397s.  Junk bond funds inched higher & Treasuries had limited selling which brought higher yields.  Oil was up pennies in the 71s & gold fell 9 to 2074.

AMJ (Alerian MLP Index tracking fund)

Treasury yields were higher as investor attention remained focused on the path ahead for the economy & monetary policy.  The yield on the 10-year Treasury  was up nearly 3 basis points to 3.877% & the 2-year Treasury yield was last around 2 basis points higher at 4.299%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  As investors look ahead to the outlook for 2024, questions remain as to when & how often the Federal Reserve will cut interest rates.  The central bank said earlier this month that it expects to cut rates 3 times next year, however some investors are hoping for further reductions.  Markets are broadly pricing in the first rate cut to take place in Mar 2024, according to CME Group's FedWatch tool.  Uncertainty has also continued about the state of the US economy & whether the Fed will achieve a soft landing to avoid a recession even as interest rates remain elevated.  US bond markets will close early today & remain closed Monday in celebration of the new year holiday.

Treasury yields tick higher as investors prepare for the new year

Aircraft manufacturer Boeing (BA), a Dow stock, is urging airlines to inspect 737 MAX airliners for a possible loose bolt in the jet's rudder control system, the Federal Aviation Administration (FAA) said.  The FAA said that it is "closely monitoring targeted inspections" of Boeing 737 MAX airplanes after BA notified operators of newer single-aisle airplanes to look at specific tie rods that control rudder movement to see if there is any loose hardware.  BA recommended the inspections after an intl operator of the 737 MAX found a bolt with a missing nut during routine maintenance on a mechanism in the rudder control linkage.  The company also found an additional undelivered aircraft with a nut that wasn't properly tightened.  "The issue on the particular airplane has been remedied," BA said.  "Out of an abundance of caution, we are recommending operators inspect their 737 MAX airplanes and inform us of any findings. We informed the FAA and our customers and will continue to keep them aware of the progress."  BA noted that there have been no in-service incidents caused by this issue & that flight crews routinely conduct checks before departing the airport gate that would alter them if the rudder weren't functioning properly.

Boeing, FAA urge operators to inspect 737 MAX jets for loose bolt

US patients & drugmakers will get a first glimpse of how much Medicare can negotiate down drug prices in 2024, setting the precedent for a controversial process that may affect what seniors pay for dozens of medications by the end of the decade.  It could also be a pivotal year for the lawsuits that drugmakers have filed against the price talks.  Decisions could come down in some of the cases next year, which could eventually escalate the issue to the Supreme Court.  Pres Biden's Inflation Reduction Act, which passed in a party-line vote last year, gave Medicare the authority to directly hash out drug prices with manufacturers for the first time in the federal program's nearly 60-year history.  Medicare is negotiating prices for the first round of 10 prescription drugs in a bid to make those costly treatments more affordable for older Americans.  By the fall, the federal gov will publish the agreed-upon prices for those medications, which will go into effect in 2026.  The outcomes of the talks will have huge stakes for the pharmaceutical industry, which views the process as a threat to its revenue growth, profits & drug innovation.  The final prices will determine how much revenue the companies that make the drugs can expect to lose in a few years.  The figures will also give other drugmakers an idea of how much their sales could be affected if their medications are selected for future rounds of negotiations.  But the final agreed-upon prices are also significant for patients, who will get a first look at how much money the talks will save them at a time when many older people increasingly struggle to afford medications.

Medicare drug price negotiations will face major tests in 2024

Volume is thin as traders close out positions for 2023.  The tremendous advance in 2023 is attributable to the Nov-Dec rally.  It will be a major challenge to replicate such performance going forward.

Dow Jones Industrials