Markets slump as rising Treasury yields rattle investors' nerves

Dow dropped 407 (near session lows), decliners over advancers 5-1 & NAZ pulled back 99.  The MLP index was off 2+ to the 273s & the REIT index declined 3 to 361.  Junk bond funds dipped lower & Treasuries continued to be sold, bringing higher yields.  Oil slid down to just above 79 & gold was off 17 to 2338 (more on both below).

Dow Jones Industrials 

A Goldman Sachs exec & finance industry veteran will take over as the new pres of the Cleveland Federal Reserve.  The central bank district announced that Beth M Hammack, 52, will be the next leader of the central bank district when Loretta Mester steps down June 3.  Hammack assumes the office officially on Aug 21.  In the interim, Cleveland Fed First VP Mark S Meder will serve as the pres.  “It is a great privilege to serve the Fourth District, and the country, in fulfilling our mission of fostering a strong, stable economy in which all Americans have the opportunity to prosper,” Hammack said.  “I cannot wait to lead the Bank’s talented team, who deliver every day on our important mission.”  As the Fed contemplates its next moves with monetary policy, the Cleveland pres plays an important role this year as a voter on the rate-setting Federal Open Market Committee.  Mester mostly has been known for her more hawkish views, meaning she often has favored tighter economic policy to meet the central bank's inflation mandate.  In a recent speech, she offered several recommendations to her colleagues on improving communications, including more detailed post-meeting statements to provide greater explanation about the committee's actions.  Hammack comes to the Cleveland Fed after serving with Goldman Sachs since 1993 in multiple roles, having been a partner since 2010 after being named managing director in 2003.  Most recently, she served as global finance director.

Goldman Sachs partner Beth Hammack to succeed Mester as Cleveland Fed leader

Stellantis (STLA) plans to offer a $25K all-electric Jeep vehicle in the US “very soon” to better attract mainstream consumers amid slower-than-expected electric vehicle adoption, CEO Carlos Tavares said.  Tavares disclosed few details about the upcoming vehicle, saying it will be priced around $25K in the US to emulate STLA's pricing of the Citroen e-C3 SUV, a low-cost model starting at €23K, about $25K in Europe.  “In the same way we brought the 20,000 Euro Citroen e-C3, you will have a $25,000 Jeep very soon,” he said.  “We are using the same expertise because we are a global company and this is totally fluid across the engineering world of Stellantis.”  STLA currently offers an all-electric version of its Avenger SUV in Europe, starting at about €35K (about $38K).  The vehicle is not sold in the US, where the automaker has focused on plug-in hybrid electric Jeep vehicles.  Offering a new EV for around $25K has long been a target for automakers.  The importance of such a vehicle has grown more apparent as Chinese automakers such as BYD & Nio grow their sales of less-expensive EVs outside of China.  “If you ask me what is an affordable BEV, I would say 20,000 euros in Europe and $25,000 in the U.S.,” Tavares said.  “So our job is to bring the safe, clean and affordable BEV to the U.S., $25,000. We’ll do it.”  The stock fell 63¢.

Stellantis CEO says $25,000 Jeep EV coming to the U.S. ‘very soon’

Dick's Sporting Goods (DKS) said customers are spending more on new sneakers & athletic gear, leading the retailer to raise its full-year earnings guidance.  The big-box sports store's comparable sales grew 5.3% during its fiscal first qtr, well ahead of the 2.4% growth that was expected.  Growth was driven by a 2.7% increase in transactions, meaning more customers are shopping at DKS & a 2.6% jump in average ticket values, showing that shoppers are spending more, too. Its 3-month period that ended May 4 was $3.30 compared with $3.40 a year earlier.  Sales rose to $3.02B, up about 6% from $2.84B a year earlier.  “We saw growth across all of the different areas of our business. Footwear, apparel, total hard lines, all grew,” CEO Lauren Hobart said.  “The consumer is absolutely putting a priority on a healthy and active lifestyle. You see people running and walking, being outdoors. But I think the most important thing is that we are providing them with an experience that they’re clearly choosing and that’s both through the products that we have in our stores, as well as the experience that we provide in-store and online.”  The strong qtr led DKS to raise its full-year guidance, but the company is remaining cautious for the back ½ of the year.  The retailer is now expecting EPS of $13.35 - $13.75, up from its estimate of $12.85 - $13.25 & is ahead of the $13.25 that analysts had expected.  The retailer's caution was reflected in its sales guidance, which fell a bit flat after its first-qtr revenue beat.  DKS now expects comparable sales to rise 2-3%, compared with previous guidance of up 1-2%.  The low end of that range is only in line with the 2% growth that analysts had expected.  DKS is expecting full-year revenue of $13.1 - $13.2B, which is also in line with estimates of $13.16.  “What we have done today in terms of the full-year guidance, is it reflects the results that we posted here in Q1 and we maintained largely our expectations for Q2 through Q4,” finance chief Navdeep Gupta said.  “There’s a little bit of a disconnect with the external consensus expectation but I would say, you know, we are appropriately cautious as we think about Q2.”  The stock jumped 30.92 (16%).

Dick’s Sporting Goods stock surges 15%, as retailer says shoppers are spending on sneakers, apparel

Gold prices slumped amid rising Treasury yields, boosting demand for the Greenback due to hawkish comments by a Federal Reserve (Fed) official.  Consequently, sentiment shifted sour, the $ climbed & the XAU/USD is down 0.9%.  Stocks were in the red, while US yields from the belly to the long end of the curve rose 4-6 basis points.  Meanwhile, a scarce economic docket today kept traders digesting Minnesota Fed Pres Neel Kashkari's hawkish comments from yesterday.  He said that Fed officials hadn’t disregarded rate hikes while adding that if they cut borrowing costs, it would be twice toward the end of 2024.  Data-wise, the US Conference Board (CB) revealed that May's consumer confidence improved, yet Americans began to worry about a possible recession in the next 12-18 months, wrote Dana Paterson, The Conference Board's Chief Economist.

Gold Price Tumbles on Wednesday as Rising US Yields Boost Greenback

West Texas Intermediate (WTI) crude oil closed lower, dropping as the $ rose despite expectations OPEC+ will roll current production cuts into the high-demand 3rd qtr, squeezing global inventories.  WTI crude oil for Jul closed down 60¢ to settle at $79.23 per barrel, while Jul Brent crude, the global benchmark, was last seen down 48¢ to $83.74.  The drop came as the $ rose, with the ICE dollar index last seen up 0.44 points to 105.06.  OPEC+ will meet virtually on the weekend to decide on whether to extend voluntary quota cuts slated to expire at month's end into the 3rd qtr, with the cartel widely expected to roll the cuts forward.  The meeting comes as the US summer driving season is underway, raising demand for gasoline & supporting prices, though a strong $ supported by high interest rates could offset demand gains.  The market is waiting for further US inflation data coming on Fri that is likely to influence the Federal Reserve's rate policy.

WTI Crude Closes Lower Ahead of Expected Extension of OPEC+ Voluntary Production Cuts

Stocks began the day substantially lower & the bulls remained on vacation all day.  A spike in Treasury yields unsettled investors.  Stronger-than-expected consumer confidence indicates signals rate cuts are still down the road.  After raised expectations for rate cuts coming earlier this year, investors are getting impatient!!