Markets push higher as hiring remains robust in the US economy

Dow gained 341 (near session high), advancers over decliners 3-2 & NAZ was up 219.  The MLP index hardly budged in the 288s & the REIT index pulled back 2+ to the 427s.  Junk bond funds saw only little change & Treasuries had more selling which brought higher yields.  Oil was fractionally higher to the 74s & gold dropped 11 to 2667 (more on both below).

Dow Jones Industrials 

Consumer sentiment extended its early-month climb, ultimately rising more than 3% above Aug This increase was seen across all education groups & political affiliations.  Furthermore, all 5 index components gained, led by a 6% surge in 1-year business expectations.  The expectations index is now 13% above a year ago & reflects greater optimism across a broad swath of the population.  While sentiment remains below its historical average in part due to frustration over high prices, consumers are fully aware that inflation has continued to slow.  Sentiment appears to be building some momentum as consumers' expectations for the economy brighten.  At the same time, many consumers continue to report that their expectations hinge on the results of the upcoming election.  Relative to Aug, consumers across political parties are increasingly expecting a Harris presidency, though about 2/3 of Reps still expect Trump to win.

Consumer sentiment builds momentum as inflation continues to slow

Mortgage rates are up slightly, with long-term notes lifting off a 2-year low from last week.  "The decline in mortgage rates has stalled due to a mix of escalating geopolitical tensions and a rebound in short-term rates that indicate the market's enthusiasm on rate cuts was premature," said Sam Khater, Freddie Mac's chief economist.  "Zooming out to the bigger picture, mortgage rates have declined one and a half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise," Khater continued.  "As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year."  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 also rose slightly to 5.25% from 5.16% last week.  1 year ago, the rate on the 15-year fixed note averaged 6.78%.

Mortgage rates start rising again as experts point the blame

General Motors (GM) has temporarily halted vehicle production at 2 US factories that assemble highly profitable large pickups & SUVs due to impacts to suppliers as a result of Hurricane Helene.  The automaker canceled shifts Thurs & Fri at a plant in Flint, Michigan, that produces its heavy-duty trucks as well as at Arlington Assembly in Texas, which produces full-size SUVs such as the Chevrolet Tahoe, Cadillac Escalade & GMC Yukon.  A GM spokeswoman did not speculate on when the plants were expected to restart production.  However a message to workers in Arlington viewed said production at that plant was expected to resume Mon.  “We are working with these suppliers to resume operations as quickly and safely as possible for their employees and communities, as we seek to minimize impacts on our plants,” GM said.  Hurricane Helene made landfall in Florida late last week & hit the southeastern US & parts of western North Carolina particularly hard.  At least 215 people have died & hundreds are still missing.  GM declined to disclose what suppliers are impacted or where they are located.  Jeffrey Morrison, GM VP of global purchasing & supply chain, said the hurricane & the port workers strike were disruptive events for the automaker. The strike ended yesterday & dockworkers returned to the job today.  The stock rose 70¢.

GM halts production at two major U.S. plants due to Hurricane Helene

Gold prices slipped after a stronger-than-expected US jobs report poured cold water on expectations for an aggressive rate cut from the Federal Reserve next month, boosting the $.  Spot gold was down 0.2% at $2649 per ounce after touching a record high of $2685 last week & US gold futures settled 0.4% lower at $2667.  US job growth accelerated in Sep & the unemployment rate slipped to 4.1%, further easing pressure on the Fed to deliver another 50 basis point rate cut at its Nov. 6-7 policy meeting.  Gold stumbles as a strong payrolls report seems likely to lock in 25 bps in Nov.  The dollar index jumped to a 7-week high after the data, making bullion more expensive for overseas buyers.

Gold Falls as Stronger US Jobs Data Shrinks Hopes of Big Fed Rate Cut

The real-time price of Brent crude oil is at $77.87 per barrel, and the price of WTI crude oil is at $74.49 per barrel. Oil prices are customarily quoted in dollars (USD) around the world, not only in the US or when referring to US crude oil.

Read more at: https://commodity.com/energy/oil/price/

Brent oil settled at 77.87 (up 4.2%) per barrel & the price of WTI crude settled at 74.49 (up 4.9%) per barrel.

The jobs report swung forecasts toward a smaller interest-rate cut from the Federal Reserve next month.  Over 90% of bets are on a 25 basis point cut, as opposed to a larger 50 basis point cut, according to the CME FedWatch Tool.  Dow in Oct was up 22 this week & it seems like the economy has a ton of problems to deal while a very close presidential race is on the minds of everybody.

Markets edge higher after a strong jobs report

Dow was off 1, advancers over decliners about 3-2 & NAZ went up 66.  The MLP index wavered in the 289s & the REIT index fell 4+ to the 425s on higher interest rates.  Junk bond funds were mixed & Treasuries saw heavy selling, raising yields substantially (more below).  Oil gained 1 to the 74s (more below) & gold was up 7 to 2686.

Dow Jones Industrials

Private sector payrolls grew faster than expected, with 223K jobs added against a prediction of 125K.  Manufacturing payrolls declined by 7K in Sep, a steeper drop than the decrease of 5K that was estimated.  Employment at food & drinking establishments rose by 69K,well above the average monthly gain of 14K over the past 12 months.  Job growth in the health care industry slowed to 45K after averaging 57K a month over the past year.  Average hourly earnings for all employees on private nonfarm payrolls increased by 13¢ (0.4%) to $35.36 an hour.  That brings gains over the past 12 months thru Sep to 4%.  The labor force participation rate was unchanged for the 3rd consecutive month at 62.7% in Sep, little changed over the course of the year.  The number of people who are considered to be long-term unemployed, defined as being jobless for 27 weeks or more, was little changed at 1.6M & up from 1.3M a year earlier.  The long-term unemployed account for 23.7% of all unemployed people.  Multiple jobholders increased by 121K to 8.66M, accounting for 5.3% of the workforce.  Part-time workers declined by 95, while the number of full-time workers rose by 414K.

US economy added 254,000 jobs in September, well above expectations

Treasury yields jumped as investors digested a better-than-expected Sep jobs report.  The 10-year Treasury yield rose more than 11 basis points at 3.961% & the yield on the 2-year Treasury was more than 17 basis points higher at 3.888%.  Yields & prices have an inverted relationship & 1 basis point equals 0.01%.  Nonfarm payrolls grew by 254K in Sep, significantly exceeding the consensus estimate of 150K.  The report points to a solid economy, but it also signals to the market that the Federal Reserve is more likely to move forward with smaller rate reductions ahead.  The CME Group's FedWatch tool shows traders are now pricing in an 91% chance of a qtr percentage point rate cut in Nov.  The central bank lowered rates by a jumbo-sized ½ percentage point in Sep.

10-year Treasury yield soars after jobs report blows past expectations

US crude oil is on pace for its best week since Mar 2023, after Pres Biden indicated that the White House is discussing a possible strike by Israel on Iran's crude facilities in retaliation for Tehran's ballistic missile attack earlier this week.  US benchmark West Texas Intermediate & global benchmark Brent have gained nearly 9% this week.  West Texas Intermediate Nov contract is $74.27 per barrel, up 56¢ (0.8%) & YTD US crude oil has gained more than 3%.  Brent Dec contract is $78.26 per barrel, up 64¢ (0.8%) & YTD, the global benchmark has risen more than 1%.  Though oil prices have surged this week on geopolitical tensions, they have risen from a low baseline.  Just last month, prices hit their lowest level in nearly 3 years as bearish sentiment swept the market on soft demand in China & plans by OPEC+ to increase production.

Crude oil set for best week since Mar 2023 on Mideast risk

Stocks climbed as investors welcomed a key monthly jobs report that showed hiring remains robust in the US economy.  The Middle East crisis & a return to work at US ports also stayed in high focus.  Stocks are looking to recoup weekly losses, as the markets have shown some resilience in the face of a rough week of worrying headlines.  In recent days, a huge ports strike, devastation from Hurricane Helene, & the prospect of a wider Mideast conflict brought the potential to lift prices & fan inflation.  Additionally, the US dockworkers strike ended after a tentative wage deal was agreed late yesterday, though some issues remain to be settled later this year.

Markets hesitate as Mideast caution grips investors

Dow was up 39, advancers over decliners 5-4 & NAZ gained 14.  The MLP index fell 2 to 285 & the REIT index slid 2+ to 433.  Junk bond funds drifted lower & Treasuries continued to see selling which brought higher yields.  Oil edged higher above 70 & gold retreated 15 to 2675 but still in record territory (more on both below).

Dow Jones Industrials 

Pres Biden & his administration are sticking to their position of not invoking the Taft-Hartley Act to force Intl Longshoremen's Association (ILA) dock workers back on the job at East & Gulf coast ports where a strike is hitting day 2 today, a political decision that reflects the power of unions 1 month out from an election but risks losing some progress on what is the #1 issue for many voters: the economy.  Rhetoric from Cabinet secretaries, including Transportation Secretary Pete Buttigieg & acting Labor Secretary Julie Su, has become sharper in recent days, pointing the finger at the ports ownership & ocean carriers.  But right now, there is no sign of any progress bringing the ILA & port owners back to the table for a new round of negotiations, according to sources.  And there remains a big risk on the other side of the political decision-making: wage increases that are a win for workers but ultimately ripple thru the economy in the form of higher prices, both domestically & around the world.  Much of the focus about the economic impact of the ports strike to date has been focused on the direct hit to the economy from the massive trade shutdown, & the ways in which supply chain congestion & delays can result in higher prices being passed along to consumers, which will become a bigger factor the longer a strike persists.  But maritime & business experts are also warning about the risk of persistent wage inflation making its way into supply chain prices that the Federal Reserve has recently been successful in taming.  “The wage increase would indeed be passed on and eventually be paid by the importers,” said Lars Jensen, CEO of Vespucci Maritime, a maritime shipping consultant.  “The inflationary impact would vary dramatically depending on the value of the goods inside the container,” he said, adding the influence would be an even bigger impact for agricultural exporters.

Biden said he won’t intervene in the port strike. That could backfire

Stellantis (STLA) US new vehicle sales continued a yearslong free fall during the 3rd qtr, despite CEO Carlos Tavares' attempts to correct what he has called “arrogant” mistakes.  The trans-Atlantic carmaker reported US sales of 305K from Jul thru Sep, a 19.8% decline from the 3rd qtr of 2023 & an 11.5% decrease from the prior & months of this year.  STLA was expected to be the worst sales performer of major automakers during the 3rd qtr.  Auto industry forecaster Cox Automotive had projected a sales decline of roughly 21% for the carmaker.  Cox & fellow forecaster Edmunds expect 3rd-qtr sales industrywide will be down roughly 2% compared with a year earlier.  Still, STLA said its initiatives to boost sales & correct past mistakes are starting to pay off.  The automaker cited a market share increase during the 3rd qtr from 7.2% to 8% as well as an 11.6% reduction in its US vehicle inventory.  “We continue to take the necessary actions to drive sales and prepare our dealer network and consumers for the arrival of 2025 models,” Matt Thompson, head of US retail sales said.  All of STLA' brands except for its niche Fiat unit experienced sales declines in the 3rd qtr, led by more than 40% reductions for Chrysler & Dodge.  Its Ram truck brand recorded a roughly 19% fall, while Jeep was off about 6% year over year.  The stock was off 7¢.

Stellantis U.S. auto sales extend free fall in third quarter

Eli Lilly (LLY) will spend $4.5B to build a center aimed at finding better ways to manufacture its medicines.  The facility, called the Lilly Medicine Foundry, will house development of new manufacturing methods with an eye toward efficiency.  It's a strategy that's already paying off with LLY's obesity & weight loss drugs Mounjaro & Zepbound, & LLY wants it to propel the rest of its pipeline.  The foundry serves a dual purpose: researching new manufacturing procedures, then putting them into practice with production of drugs for clinical trials.  The facility will be the first of its kind to combine research & production in a single location.  “The idea is to take molecules from a bench in a lab to scaled for medicines in a pharmacy, and this research and development site will do that work,” CEO David Ricks said.  The center, which is slated to open in late 2027, will be equipped to make small molecules, biologics & genetic medicines.  It will be near a $9B manufacturing complex LLY is building in Lebanon, Indiana, to produce pharmaceutical ingredients like tirzepatide, the active ingredient in Mounjaro & Zepbound.  The investments are part of its plan to build upon its success with Mounjaro and Zepbound, which are riding a wave of popularity in so-called GLP-1 drugs.  Mounjaro & Zepbound are expected to bring in $50B alone by 2028, almost twice the company's entire full-year revenue in 2022.  That gives LLY more freedom to invest, but it also puts pressure on the company to find & develop more new medicines to keep growing in the years to come.  LLY is already charting its future beyond tirzepatide.  The company also wants to develop more drugs for Alzheimer's disease & other neurodegenerative conditions like amyotrophic lateral sclerosis (ALS).  The stock rose 6.65.

Eli Lilly to build $4.5 billion research and manufacturing center

Gold inched lower, hitting a pause after rallying more than 1% in the previous session, as traders hunkered down for more US economic cues & developments on the Middle East conflict.  Spot gold was down 0.5% at $2649 per ounce.  Prices had jumped over 1% yesterday after Iran launched missile strikes on Israel.  US gold futures settled 0.8% lower at $2669.  Further limiting gold's run was strength in rival safe-haven $ which made greenback-priced bullion more expensive for other currency holders.  Gold is seeing a bit of a sell-off on a stronger $.  Gold has climbed over 28% so far this year & was still within sight of its record high of $2685 per ounce as fears of more escalation in the Middle East lingered, including retaliation by Israel.  Bullion is considered a safe investment during times of political uncertainty & thrives in a low interest rate environment.

Gold Rally Cools as Traders Eye Mideast Developments, US Data

Oil prices edged up on worries that the escalating conflict in the Middle East could threaten oil supplies from the world's top producing region, but a large build in US crude inventories limited gains.  Brent futures rose 34¢ (0.5%) to settle at $73.90 per barrel & US West Texas Intermediate crude climbed 27¢ (0.4%) to settle at $70.10 per barrel.  Yesterday, Iran fired more than 180 missiles at Israel, its biggest ever direct attack on the country.  Israel & the US vowed retribution for the attack, a sign that conflict in the region is intensifying.  Israel's retaliation could include targeting Iranian oil production facilities among other strategic sites.  Today, Iran said its missile attack on Israel was over, barring further provocation & added that any Israeli response to its attack would be met with widespread destruction.  In another escalation of the conflict, the Israeli military today sent regular infantry & armored units to join ground operations in southern Lebanon against Iran-backed Hezbollah.

Middle East Conflict Lifts Oil Prices Despite Large US Crude Build

Stocks have been under pressure his month as geopolitical concerns grip the market, dispelling the upbeat mood around hopes for US interest rate cuts.  At the same time, oil has extended a surge that saw prices spike over 5% yesterday, the most in almost a year.  In addition the strike by port workers could crimp the economy & there is a lot of damage to clean after Hurricane Helene.  All is in not well in the economy.

Markets slip on escalating Middle East tensions

Dow edged up 28, decliners over advancers 4-3 & NAZ added 22.  The MLP index slid 1+ to the 286s & the REIT index dropped 4+ to the 431s.  Junk bond funds drifted lower & Treasuries saw selling, driving yields higher.  Oil jumped 1 to almost 71 on growing tensions in the MidEast (more below) & gold dropped 22 to 2667.

Dow Jones Industrials

Tesla (TSLA) reported posted its 3rd-qtr vehicle production & deliveries report.  Total deliveries Q3 2024 were 463K total production was 469K.  The forecast expected deliveries of 463K in the period ending Sep 30.  Deliveries are not defined in TSLA's financial disclosures, but are the closest approximation to units sold reported by the company, 1 of the most closely-watched metrics by analysts.  In the year-ago period, TSLA reported 435K deliveries & production of 430K EVs.  Last qtr, the company reported 444K deliveries & production of 411K vehicles. TSLA is facing increased competitive pressure, especially in China, from companies like BYD & Geely, along with a new generation of automakers, including Li Auto & Nio.  TSLA hasn’t issued specific guidance for 2024 deliveries, but execs have said they expect a lower delivery growth rate this year versus last despite the company having added a new vehicle, the angular stainless steel Cybertruck, to their lineup.  Musk has promised TSLA self-driving cars for years, but the company has yet to deliver.  Meanwhile competitors like Waymo & Pony.ai have begun operating commercial robotaxi services.  The stock dropped 9.24 (3.6%).

Tesla stock slips after EV maker misses estimates on deliveries

Private sector hiring picked up in Sep, indicating the labor market is holding its ground despite some signs of weakness, payrolls processing firm ADP reported.  Companies added 143K jobs for the month, an acceleration from the upwardly revised 103K in Aug & better than the 128K forecast.  While hiring increased, the rate of pay growth took another step down.  The 12-month gain for those staying in their jobs nudged lower to 4.7%, while tumbling to 6.6% for job switchers, down 0.7 percentage point from Aug.  Job gains were fairly widespread, with leisure & hospitality leading at 34K, followed by construction (26K), education & health services (24K), professional & business services (20K) & other services (17K).  Information services was the lone category posting a loss, down 10K.  Service providers accounted for 101K of the total, with goods producers adding the rest.  From a size standpoint, all of the growth came from companies with more than 50 employees.  Small firms saw a loss, with those employing fewer than 20 workers down by 13K.

Private payrolls show better-than-expected growth of 143,000 in September

US crude oil rose nearly 3% as traders fear Israel could target Iran's oil infrastructure in retaliation for a ballistic missile attack.  Israel's ambassador to the UN, Danny Danon, vowed yesterday that Israel will exact a “painful” response against Iran.  His threat came hours after the Islamic Republic launched around 180 ballistic missiles at Israel in retaliation for the assassination of top Hamas & Hezbollah leaders.  West Texas Intermediate Nov contract is $71.86 per barrel, up $2.03 (2.9%) & YTD US crude has gained less than 1% & Brent Dec contract is $75.50 per barrel, up $1.94 (2.64%) & YTD the global benchmark, is down about 2%.  The geopolitical risk premium, however, should remain moderate given high spare oil capacity globally & the fact that there have been limited actual production disruptions.  OPEC+ is planning to increase oil production in Dec.  US output has been set records & demand in China, the world's largest crude importer, has also been soft this year.

Crude oil jumps nearly 3% as Israel vows ‘painful’ response to Iran missile attack

Escalating Israel-Iran tensions fanned worries about a wider Middle East conflict, prompting caution in the market as Israel weighs response to Iran missile attack.  Growing geopolitical concerns grip the market, dispelling the upbeat mood around hopes for US interest rate cuts.  At the same time, oil has extended a surge that saw prices spike over 5% yesterday, the most in almost a year.  In focus are the chances the run-up in oil prices could push up US inflation, disrupting the progress made by the Federal Reserve.  At the same time, MidEast tensions & the US port strike risk hampering supply chains, spurring concerns about the US economy, just when investors were becoming confident in a "soft landing."

Markets slide in volatile trading after Iran attacks Israel

Dow finished down 173 in a very choppy session, decliners over advancers 4-3 & NAZ sank 278.  The MLP index crawled up to the 286s & the REIT index fell 3+ to the 435s.  Junk bond funds remained slightly higher& Treasuries continued to see buying which lowered yields.  Oil climbed 2 to go over 70 on increased war activity in the MidEast & gold jumped 24 to 2683 (more on gold at new highs below).

Dow Jones Industrials 

Increases in sales of electric vehicles & small crossovers helped General Motors (GM) report slightly better-than-expected sales during the 3rd qtr.  The automaker reported a 2.2% drop in 3rd-qtr sales compared with a year earlier, slipping to 659K vehicles sold.  Auto industry forecasters such as Cox Automotive & Edmunds had expected GM’s sales to be down by more than 3% during that time.  GM's 3rd-qtr sales are expected to be in line with the overall industry.  Cox Automotive & Edmunds project 3rd-qtr sales industrywide will be down roughly 2% compared to a year earlier.  GM's sales were assisted by a roughly 60% year-over-year increase in EVs during the qtr, to roughly 32K units sold.  Still, EVs made up only 4.9% of the company’s total 3rd-qtr sales.  GM forecasts its market share was 9.5% of the US EV market, up 3 percentage points from the first qtr of this year.  While GM has withdrawn most of its previously announced electric vehicle targets, the automaker believes its EV sales momentum is finally building thanks to an expanding lineup of all-electric vehicles, spanning a price range of $35K - $300K.  “We are definitely outstripping the industry in terms of growth, in terms of EVs,” Rory Harvey, GM pres of global markets, including North America, said last month.  “We have the most comprehensive EV lineup out of any manufacturer in the industry, in the U.S., at the moment.”  The stock was up 4¢.

GM reports 2.2% decrease in third-quarter sales, but EVs make gains

The US housing market has remained stagnant, with just 25 out of every 1000 homes changing hands in 2024, according to recent data from real estate firm Redfin.  The first 8 months of the year marked the lowest turnover rate in at least 30 years, according to Redfin, which conducted an analysis of housing turnover by comparing the first 8 months of 2024 across different metro areas, home & neighborhood types.  It is using turnover as a way to measure housing availability.  Comparatively, there were 37% fewer homes sold this year compared with during the middle of the COVID-19 pandemic buying frenzy.  In 2021, 40 of every 1000 homes changed hands.  There were also 31% fewer homes sold compared with 2019.  Elevated mortgage rates & record-high home prices with just enough demand to keep pushing prices up have sidelined potential buyers & sellers, creating this low turnover, according to Redfin economists.  Even though there is more inventory compared to a year ago, the firm said there are still far fewer homes listed for sale compared to pre-pandemic levels.  On top of that, many buyers & sellers are holding off due to the economic & political uncertainty.  They are taking a "wait-and-see approach" amid discussions of a potential recession & an intense presidential election between 2 candidates with contrasting economic & housing policies, Redfin said.  The turnover rate has fallen across all property types in all areas over the past year, though condos & townhouses had the biggest declines.

Housing turnover rate hits lowest level in 30 years

Iran launched a ballistic missile attack on Israel in retaliation for its recent killing of Hezbollah leader Hassan Nasrallah & an Iranian commander in Lebanon.  The attack came on the heels of Israel's deployment of ground forces into south Lebanon, escalating its offensive on Hezbollah, a militant group backed by Iran.  “In response to the martyrdom of Martyr Haniyeh, Seyyed Hassan Nasrallah, & Martyr Nilforoushan, we have targeted the heart of the occupied territories,” Iran's Revolutionary Guard said after missiles began appearing in the skies over Israel.  “Should the Zionist regime respond to Iran’s operation, it will face crushing attack,” Iran’s paramilitary organization added.  Abbas Nilforoushan was an Iranian Revolutionary Guards deputy commander, who was killed with Nasrallah in a bombing by Israel last Fri in Beirut.  Ismail Haniyeh was the political commander of the Hamas terror group, who was killed in Jul by an Israeli strike on Tehran, the capital of Iran.  Israel has been engaged in a brutal war on Hamas since the group launched the Oct. 7 terror attack on Israel from Gaza.  Israel Defense Forces said it had identified about 180 missiles fired toward Israel from Iranian territory.  Most of those missiles were intercepted by Israeli defense systems, but there were some reported hits & other damage is being assessed.  There were only 2 people reported lightly injured from shrapnel from the missile attack in the Tel Aviv area, according to Israeli authorities.  There were also some minor injuries reported across Israel involving people moving to safe spaces.  A White House official today warned that any direct attack on Israel by Iran “will carry severe consequences for Iran.”  “We are actively supporting defensive preparations to defend Israel against this attack,” an official said.  That official & a Defense Dept official said that Iran was expected to target military & gov sites, not civilian locations.

Iran launches missile attack on Israel for killing of Hezbollah leader, general

Gold prices jumped over 1% on safe-haven demand as fears of a full-out war in the Middle East escalated after Iran fired ballistic missiles at Israel.  Spot gold gained 1% to $2661 per ounce, after hitting an all-time high of $2685 & US gold futures settled 0.9% higher at $2690.  Iran fired a salvo of ballistic missiles at Israel in retaliation for Israel's campaign against Tehran's Hezbollah allies in Lebanon.  Gold is used as a safe investment during times of political & financial uncertainty.  It's instinctive safe-haven buying but unless an Iranian missile gets thru & does serious damage in Israel it may be similar to the Apr attack with similar ordnance that was almost completely intercepted.

Gold Jumps Over 1% on Safe Haven Demand After Iran's Attack on Israel

Oil prices climbed about 3% after Iran fired a salvo of ballistic missiles at Israel in retaliation for Israel's campaign against Tehran's Hezbollah allies in Lebanon.  Brent futures gained $1.86 (2.6%) to settle at $73.56 a barrel, while West Texas Intermediate (WTI) crude rose $1.66 (2.4%) to settle at $69.83.  Earlier in the day, both crude benchmarks were up by over 5%.  Alarms sounded across Israel & explosions could be heard in Jerusalem & the Jordan River valley after Israelis piled into bomb shelters.  In the Red Sea, meanwhile, another Iran-backed group, the Houthis in Yemen, claimed responsibility for attacking at least 1 of 2 vessels damaged off the port of Hodeidah.  The Houthis have launched attacks on intl shipping near Yemen since last Nov in solidarity with the Palestinians in the war between Israel & Hamas in the Gaza Strip.  Before news that Iran was planning a missile attack, the oil market was trading down near a 2-week low as the outlook for increased supplies & tepid global demand growth outweighed fears over an escalating Middle East conflict & its impact on crude exports from the region.

Oil Prices Rise 3% After Iran Launches Missiles at Israel

After Iran fired over 100 ballistic missiles at Israel, pushing oil prices for West Texas Intermediate & Brent to their biggest increases in nearly a year.  Meanwhile, new jobs & manufacturing data kicked off the new qtr as investors searched for further clues on the future of the Federal Reserve's easing cycle after Fed Chair Jerome Powell hinted the central bank is not in a rush to rapidly cut rates.  Job openings surprisingly increased in Aug, furthering the narrative that while the labor market is cooling, it's not rapidly slowing.  New data showed there were 8.04M jobs open at the end of Aug, an increase from the 7.71M seen in Jul.  US manufacturing held steady in Sep.  The Institute for Supply Management (ISM) said its manufacturing PMI was unchanged at 47.2 last month.  Despite holding steady, the reading still came in weak, as a PMI below 50 indicates a contraction in the manufacturing sector.  Trading was highly volatile today.

Markets pull back while oil spikes on rising Middle East tensions

Dow went down 295, decliners over advancers 2-1 & NAZ declined 392.  The MLP index was up about 1 to the 286s & the REIT index fell 3 to the 435s.  Junk bond funds inched higher & Treasuries had heavy buying which reduced yields sharply.  Oil jumped 2+ to about 71 on war fears in the Mideast (more below) & gold shot up 22 to 2681.

Dow Jones Industrials

Israel has launched a ground incursion into Lebanese territory, with markets on edge over the possibility of a serious escalation in the conflict between the Jewish state, the Hezbollah militant group & Iran itself.  In a statement today, Israel's Defense Forces said they had begun “limited, localized and targeted ground raised” against targets in southern Lebanon that they say pose an “immediate threat to Israeli communities in northern Israel.”  The Israeli air & artillery forces are supporting the offensive, the IDF added.  A senior White House official, meanwhile, said that the US has seen indications Iran is preparing to “imminently” launch a ballistic missile attack on Israel.  Any direct attack on Israel by Iran “will carry severe consequences for Iran,” the official noted.  Oil prices moved sharply higher today, with Brent crude futures with Dec expiry trading at $73.83 per barrel, up 3% on the previous settlement, & the front-month Nov WTI contract was 3.3% higher at $70.34 per barrel.  Isreal's ground incursion into Lebanon marks a shift in its military attention away from the Gaza Strip, where it has been carrying out a retaliatory campaign in response to Oct 7 terror attack carried out by Palestinian militant group Hamas.  Iran-backed Hezbollah & Israel, meanwhile, have been trading cross-border fire since last year, when the Lebanese group declared solidarity with the Palestinian cause.  The Israeli offensive in Lebanon comes after the IDF assassinated Hezbollah chief Hassan Nasrallah on Sep 27, rattling the group's command structure & follows a devastating bombing campaign that has killed more than 1000 people in Lebanon & displaced 1M people to date.

Israeli forces launch ground offensive in Lebanon as markets fear escalation

US port workers are starting to speak out on the picket line, providing a better understanding of the top issues union members are advocating for.  "I started 27 years ago and my wages increased only $25 over the 27 years," Joe Mosquera said.  "So to me, I believe that we've taken less than we've deserved in the past. So now it's time," he added.  The Intl Longshoremen's Association (ILA), which represents 45K dockworkers, began its first strike since 1977 after its 6-year contract with the US Maritime Alliance (USMX), which represents port employers, expired yesterday.  Negotiations between the ILA & USMX have been deadlocked thus far over the union's demands related to wage hikes & compensation, as well as protection from automation at ports.  "We are just looking to be paid fairly and for the goods we take care of every day. And we did not stop during COVID, and we don't want to stop right now," Mosquera explained.  "We are willing to go back as soon as they decide that they'll give us a fair contract."  USMX reportedly made a new offer to the ILA yesterday that would've raised wages by nearly 50% over the new contract as well as tripling employer contributions to retirement plans, better health care & kept language about automation in the deal.  Sources said that the ILA rejected the offer & didn't make a counter.  "What's fair is whatever my union president is willing to negotiate to. But to be low-balled, he's not going to agree to that," Mosquera said.  ILA Pres Harold Daggett claimed the initial negotiation offers "didn’t work out," but the group is "always willing to sit down when the right number is hit."

Port workers speak out on picket line: We’ll be here ‘as long as it takes’

PepsiCo (PEP) is buying Mexican-American food company Siete Foods for $1.2B, marking the company's first food acquisition in 5 years.  Like many food companies, PEP has been trying to shift its portfolio to include healthier options in recent years, usually through acquisitions.  Recent additions include Bare Snacks, Health Warrior & PopCorners.  Soon that will also include Siete.  Founder Veronica Garza started the company in 2014, when she began selling grain-free tortillas.  Since then, its portfolio has grown to include tortilla chips, taco shells, salsas &seasonings, often designed to accommodate different dietary restrictions.  “We look forward to expanding our multicultural portfolio with these incredible products and even more consumers discovering and enjoying Siete,” PEP CEO Ramon Laguarta said.  The deal is expected to close in the first ½ of 2025, assuming it receives regulatory approval.  Deal-making has picked up this year for packaged food companies, who are turning to acquisitions to drive sales growth as shoppers buy less of their products.  PEP stock went up 57¢.

PepsiCo to buy tortilla chip maker Siete Foods for $1.2 billion

Stocks were sold on reports that Iran is preparing a potential missile strike against Israel.  The major strike at east coast ports that could cost GDP $5B daily did not help matters.  Also early monthly economic data for Sep was inconclusive.  There are plenty of problems for investors to deal with.