Markets rise and gold sets a new record

Dow rose 83, advancers over decliners 3-2 & NAZ gained 100.  The MLP index was flat staying near 289 & the REIT index was even in the 442s.  Junk bond funds were a little higher & Treasuries saw limited buying which reduced yields slightly.  Oil went up 1+ to the 71s & gold soared 29 to a new record at 2682 (more on both below).

Dow Jones Industrials 

US home buyers are gaining tens of thousands in purchasing power as mortgage rates drop.  With 30-year fixed mortgage rates declining from 7.79% in Oct 2023 to 6.2% last week, home buyers in the 100 largest US cities have gained a median of $70K in additional buying power for the same $2100 monthly payment, according to a Realtor.com analysis.  A US buyer can now afford a home $70K more expensive than what they were planning to purchase last year.  The findings are based on the monthly payment for a median-priced home in the US a 20% down payment & a 6.2% mortgage rate.  The analysis applied the same method to each of the 100 largest cities, calculating how much extra buying power homebuyers have in each local market compared with last year.  Those savings will likely grow, too.  With the Federal Reserve cutting its benchmark federal funds rate by 50 basis points last week, mortgage rates are forecasted to decline to 6% or less at some point in 2025.  If that happens, additional buying power for homebuyers in the 100 largest metro areas would increase to $85K for a median-priced home, compared with Oct 2023, according to the analysis.

Mortgage rates dip, U.S. homebuyers gain thousands in additional spending power

Nvidia (NVDA) CEO Jensen Huang is done selling the chipmaker's stock for the time being, cashing in more than $700M under a prearranged plan.  The 61-year-old exec in mid-Mar adopted a trading plan for the sale of up to 6M NVDA shares by the end of the first qtr of 2025.  Huang has hit that threshold months ahead of schedule after a flurry of transactions between Jun 13 - Sep 12.  Even though the sales were made under a 10b5-1 plan, which allows insiders to sell shares under a preplanned structure, NVDA shares seemed to get a boost from the update today.  The chipmaker has been the biggest beneficiary of the artificial intelligence boom, with shares rallying more than 140% this year.  NVDA briefly topped a $3T market cap earlier this year, & its dominance has grown so big that it tends to influence the broader market & investor sentiment.  The stock rose 4.61.

Nvidia shares pop as CEO may be done selling shares after hitting preset limit

Israeli Pres Isaac Herzog threatened further military action against Hezbollah 1 day after Israel launched airstrikes across Lebanon, killing more than 550 people in the country's deadliest day in nearly 2 decades.  It marks a dramatic escalation of hostilities between Israel & Iranian-backed Lebanese militant group Hezbollah following nearly 12 months of strikes since the start of the Israel-Hamas war in Gaza, stoking fears of an all-out regional war.  Thousands of Lebanese residents in the country's south are fleeing their homes amid the bombardments, with many receiving automated text messages & calls telling them to evacuate.  Israel's gov issued warnings to people in areas of Lebanon where it was targeting Hezbollah.  Asked if Israel will launch a full-scale ground operation in Lebanon, Herzog insisted that his country did not want war.  “Israel is not interested, did not want this war, and is not interested in going to war with Lebanon,” Herzog said.  “But Israel has been attacked from Oct. 8 from Lebanon endlessly. And if you look at the situation today, Hezbollah has launched missiles and rockets all over the northern part of Israel. So we will do whatever it takes to bring our citizens back home and enable calm in our cities. That’s the situation.”  “We’ve shown our capabilities, and we have much more on the way, if they will continue,” Herzog added.  Hezbollah has continued firing rockets into northern Israel since the attack, most of which have landed in open areas or been intercepted by air defenses.  On Sat, the group launched a salvo of more than 100 missiles into northern Israel, wounding at least 5 people, Israeli authorities said.  Hezbollah said the strikes were in response to the previous week's pager & device detonation attack that killed 38 people, including some children, & injured more than 3K.  It says the attacks were carried out by Israel, which has not commented.

‘Much more on the way, if they will continue,’ Israel’s president warns Hezbollah

Gold reached another all-time high as weak consumer confidence data bolstered the case for deeper interest-rate cuts from the Federal Reserve this year.  Bullion rose 1.2% to a record $2659 an ounce, beating the previous high set yesterday.  US consumer confidence unexpectedly fell in Sep by the most in 3 years on concerns about the labor market & the outlook for the broader economy.  The $ fell along with Treasury yields.  Gold has advanced since the Fed lowered its benchmark interest rate by ½ a percentage point last week, building on what was already a record-setting year for the precious metal.  Federal Reserve Governor Michelle Bowman said today the central bank should lower interest rates at a "measured" pace, arguing that inflationary risks remain & that the labor market has not shown significant weakening.  That's in contrast to recent comments from other Fed officials who have described the risks to achieving the central bank's 2 goals, maximum employment & stable inflation, as roughly balanced or leaning toward employment.  US economic data due later this week, including personal consumption expenditure figures, will also likely play into market expectations of the central bank's next moves.  Lower rates are often seen as positive for non-interest bearing gold.  Apart from the expectations of Fed rate cuts, bullion's roughly 29% rally so far this year has also been supported by robust purchasing by central banks & haven demand amid conflicts in the Middle East & Ukraine.  Spot gold rose 1.1% to $2656 an ounce.

Gold Hits Another Record as Weak US Data Bolsters Rate-Cut Case

WTI crude oil futures jumped by 1.7% to settle at $71.5 today, driven by China's sweeping economic stimulus measures & rising geopolitical tensions in the Middle East.  China's central bank unveiled its largest stimulus package since the pandemic, featuring increased funding & significant rate cuts, in a bid to revive growth amid fears of a prolonged economic slowdown.  In the Middle East, Israeli airstrikes on Hezbollah positions in Lebanon, resulting in hundreds of casualties, stoked fears of a wider regional conflict that could draw in Iran, a key OPEC member.  Adding to supply concerns, US oil producers in the Gulf of Mexico began evacuating rigs & halting production as a powerful hurricane threatened to disrupt offshore operations for the 2nd time in 2 weeks.

Oil Prices Soar on China's Stimulus and Rising Geopolitical Tensions

Stocks struggle to maintain momentum from the recent rally.   Investors are digesting China's launch of aggressive stimulus that lifted market spirits & a weaker-than-expected reading on consumer confidence.  The Fed's jumbo rate cut last week kicked off the rally, & yesterday, several policymakers hinted the door is open for more big moves.  Today, Fed governor Michelle Bowman explained she dissented to last week's ½ percentage point interest rate cut because upside risks to inflation remain prominent.  At the same time, gold continues its rally.