Markets struggle ahead of the Fed meeting on Wednesday

Dow went up 70, advancers over decliners about 3-1 NAZ rose 31.  The MLP index stayed in the 284s & the REIT index added 2+ to 360.  Junk bond funds crawled higher & Treasuries saw buying which reduced yields (more below).  Oil fell 1+to the 82s (more below) & gold was even at 2347.

AMJ (Alerian MLP Index tracking fund)

Treasury yields declined as investors looked ahead to the Federal Reserve policy meeting & economic data scheduled for this week.  The yield on the 10-year Treasury fell about 5 basis points to 4.62% & the 2-year Treasury yield was last almost 3 basis points lower to 4.973%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors are awaiting the Federal Reserve's meeting, which is set to begin tomorrow & conclude with an interest rate decision & press conference about discussions on Wed.  While markets are widely expecting interest rates to remain unchanged, traders will be closely watching for policy guidance from the central bank.  At the top of investors' minds are questions around how many rate cuts will take place this year & when they might begin.  This comes as recent economic data has suggested resilience from the economy amid persistent inflationary pressures.  Several key data releases are also slated for the week ahead, including the Apr jobs report.  This covers nonfarm payrolls as well as the latest unemployment figures & will provide fresh insights into how the labor market, & wider economy, is faring amid elevated interest rates & sticky inflation.

Treasury yields fall as investors look to Fed meeting

Crude oil futures fell today as the Secretary of State made a renewed diplomatic push in the Middle East to secure a cease-fire in Gaza & head off an Israeli offensive against Rafah.  A successful cease-fire agreement would likely further ease the geopolitical risk premium factored into oil prices on fears that the war in Gaza could trigger a broader conflict in the Middle East that disrupts crude supplies.  West Texas Intermediate Jun contract: $83.16 a barrel, down 69¢ (0.8%) &YTD US oil has gained 16%.  Brent Jun contract: $88.66 a barrel, down 84¢ (0.94%) & YTD the global benchmark has risen nearly 15% to Fed meeting.  A successful cease-fire agreement would likely further ease the geopolitical risk premium factored into oil prices on fears that the war in Gaza could trigger a broader conflict in the Middle East that disrupts crude supplies.  Israel is waiting for Hamas to respond to a cease-fire proposal in which 33 hostages would be released in exchange for Palestinian prisoners.  A Hamas delegation is expected in Cairo today to discuss the cease-fire proposal.

Oil prices fall as Secretary of State Blinken pushes for Gaza cease-fire

US cloud infrastructure provider Oracle (ORCL) is boosting its generative AI capabilities as cloud competition intensifies & more companies jump into AI.  The AI boom, fueled by the launch of chatbot ChatGPT in Nov 2022, is driving an increase in demand for cloud computing services & data centers, as large amounts of data are required in AI model training & the cloud provides access to vast data sets.  ORCL has been introducing generative AI capabilities into its cloud infrastructure & applications to complement the traditional AI already embedded in them.  “The classic AI is very good in terms of detecting patterns or predicting numbers ... but you cannot use large language models to predict numbers,” Rondy Ng, exec VP of applications development at ORCL, said.  “So we combined the predictive numbering capability with the explained ability in words. So the two together become very powerful and you need both. In the past many years, the number prediction part is already very mature. As part of the product we continue to evolve that and it’s not going to stop. Generative AI is basically the talk of the town right now,” Ng added.  In Mar, ORCL announced additional generative AI features embedded across applications in finance, supply chain, human resources, sales, marketing & service.  The generative AI capabilities can perform tasks such as generating financial reports & drafting job ads, improving productivity & reducing business costs, ORCL said.  “Generative AI services [are] basically a huge advantage comparing with our competition. The competition needs to work with different companies and cloud providers for that infrastructure and those kinds of services. We actually take everything into an integrated stack, and we consume that,” Ng said.  The stock fell 1.22.

Oracle boosts its generative AI capabilities as cloud competition heats up

This is an unexciting time while traders are waiting to learn more about what Fed members have to say about the future of interest rates at midweek.

Dow Jones Industrials