Dow went up 260 to another record, advancers over decliners 3-2 & NAZ advanced 108. The MLP index retreated 3+ to the 283s & the REIT index fell 4+ to the 434s. Junk bond funds fluctuated & Treasuries had limited selling which brought slightly higher yields. Oil sank 2+ to the 67s & gold jumped 14 to a whopping 2698 (more on both below).
Dow Jones Industrials
Mortgage rates barely moved this week, but long-term notes declined to the lowest levels Americans have seen since 2022. Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage ticked down to 6.08% from last week's reading of 6.09% & the average rate on a 30-year loan was 7.31% a year ago. "Although this week’s decline was slight, the 30-year fixed-rate mortgage trended down to its lowest level in two years," said Sam Khater, Freddie Mac's chief economist. "Given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for many homeowners to trim their monthly mortgage payment," Khater added. "Meanwhile, many looking to purchase a home are playing the waiting game to see if rates decrease further as additional economic data is released over the next several weeks." Many would-be buyers & sellers are holding out to see if rates fall further. Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey. The average rate on the 15-year fixed mortgage rose slightly to 5.16% from 5.15% last week. One year ago, the rate on the 15-year fixed note averaged 6.72%.
Long-term mortgage rates drop to two year low
US sales of new vehicles are expected to have struggled during the 3rd qtr amid economic & political uncertainties, as well as elevated interest rates and prices, according to industry forecasters. Sales are projected to fall roughly 2% during the 3rd qtr compared with the same time in 2023, to about 3.9M vehicles sold, according to Cox Automotive & Edmunds.com. That would be a roughly 5% decrease compared with the 2nd qtr of this year. Analysts note that the Federal Reserve's decision last week to cut rates was a step in the right direction, but it does not necessarily guarantee a major uptick in auto sales thru the rest of the year. “2024 has been a volatile year for the new vehicle market, and more of the same is expected in Q4,” said Charlie Chesbrough, Cox Automotive senior economist. “Affordability remains the main obstacle to a stronger market, but it is improving, so we remain optimistic on the outlook for industry sales.” Both Cox & Edmunds expect light-duty US vehicle sales to total about 15.7M vehicles in 2024. Edmunds has maintained its guidance since the beginning of the year, while Cox lowered it from an initial forecast of 16M. Jessica Caldwell, Edmunds' head of insights, said the current market is just too expensive for many consumers, limiting the number of Americans who can purchase a new vehicle. “Who can afford new cars seems to be the big issue. People, on average, are having to finance $40,000 for a new car,” she said. “The new market is quite limiting for a lot of buyers.” The average transaction price for a new vehicle is down from a year ago but remains elevated compared with historical levels at $48K, according to Cox.
U.S. new vehicle sales expected to have struggled during third quarter
Orders for US durable goods were flat in Aug, the Commerce Dept reported. The result was much better than anticipated. The forecast called for a 3% fall in orders for durable goods, products made to last at least 3 years. Durable good orders rose a revised 9.9% in Jul, up slightly from the prior estimate of a 9.8% gain. Core capital goods orders, which exclude volatile sectors like transportation & defense, rose 0.2% last month after a 0.2% drop in Jul. Shipments of core goods, which are factored into GDP, rose 0.1% in Aug. Details of the report were stronger than expected. Transportation orders fell 0.8% in Aug after a strong 34.6% gain in the prior month. Orders for motor vehicles & parts rose 0.2% after a 3.5% drop in Jul. Orders excluding transportation rose 0.5% & excluding defense goods fell 0.2%. Orders for primary metals & fabricated metals rose in Aug as did orders for machinery & computer equipment. Huge swings in durable goods orders over the past few months has masked weakness in the manufacturing side of the economy. Core orders are up a modest 0.3% over the past year. Economists had been hopeful for a pickup in business spending this year but now have pushed any improvement to next year.
Durable-goods orders were flat in August, beating forecasts of a sharp declines
Gold prices continue their ascension, with the front-month contract setting yet another record-high, closing up 0.4% to $2669 an ounce. It's the 7th consecutive day that gold has finished higher, closing at record highs for 6 of those sessions. Fear of gold overextending itself appear minimal, as interest rate cuts have materialized with more expected to come. Analysts say there is no reason to sell gold since the Fed's projected rate path is supportive. Gold has gained almost 30% this year, with the rally gaining momentum after the Fed's ½-point cut last week. The precious metal has also been supported by strong central bank purchases & heightened geopolitical tensions driving haven demand.
Gold Hits Another Record in 7-Day Win Streak
Oil prices settled sharply lower as Saudi Arabia reportedly will abandon its unofficial $100
price target as it looks set to proceed with an OPEC+ to boost output in
Dec. Brent oil
futures fell 2.7% to $70.97 a barrel, while West Texas Intermediate
crude futures dropped 2.9% to settle at $67.67 a barrel. A report said that Saudi
Arabia, the world's top oil exporter, is preparing to abandon its
unofficial price target of $100 a barrel for crude as it prepares to
increase output. The Organization of the Petroleum
Exporting Countries, which is traditionally lead by the Saudis, along
with the group's allies including Russia, together known as OPEC+, have
been cutting oil output to support prices. Earlier this month, the group decided to
push back plans to gradually phase out the additional cuts of 2.2M bpd over the course of a year by 2 months to Dec. Sources said that OPEC+ is set to
proceed with plans to increase oil output on Sep despite the
recent fall in oil prices as the impact would likely be blunted by some
pledges from members to make deeper cuts to comply offset the production
that was in excess of the agreed quotas.
Oil prices slump on oversupply concerns as Saudi-led OPEC+ eyes production hike
Stocks were looking positive again thanks to a triple-dose of optimism for the AI trade, the health of the US economy & China's stimulus push, which could reverberate thru US markets. A final update from the US gov on 2nd qtr GDP growth beat expectations, while weekly jobless claims unexpectedly fell to the lowest levels in 4 months. Meanwhile, China's top leaders signaled they are pulling out the stops to revive its moribund economy with new pledges to lift fiscal spending, halt the property crisis, & support the stock market. A big jump in mainland stocks set the CSI 300 on track for its best week in a decade.
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