Markets edge higher after yesterday's decline

Dow rose 206, advancers over decliners an impressive 4-1 & NAZ fell 25.  The MLP index added 1+ to the 288s & the REIT index went up 3+ to the 436s.  Junk bond funds inched higher & Treasuries had limited buying which let rates edge higher (more below).  Oil slid back pennies but remained above 70 on supply prospects & gold added 9 to 2688 (still in record territory).

Dow Jones Industrials

Amazon Web Services is investing over $500M in nuclear power, announcing 3 projects from Virginia to Washington State.  AWS, Amazon (AMZN)'s subsidiary in cloud computing, has a massive & increasing need for clean energy as it expands its services into generative AI.  It's also a part of AMZN's path to net-zero carbon emissions.  AWS announced it has signed an agreement with Dominion Energy (D), Virginia's utility company, to explore the development of a small modular nuclear reactor (SMR) near Dominion's existing North Anna nuclear power station.  Nuclear reactors produce no carbon emissions.  An SMR is an advanced type of nuclear reactor with a smaller footprint that allows it to be built closer to the grid.  They also have faster build times than traditional reactors, allowing them to come online sooner.  AMZN is the latest large tech company to buy into nuclear power to fuel the growing demands from data centers.  “We see the need for gigawatts of power in the coming years, and there’s not going to be enough wind and solar projects to be able to meet the needs, and so nuclear is a great opportunity,” said Matthew Garman, CEO of AWS.  “Also, the technology is really advancing to a place with SMRs where there’s going to be a new technology that’s going to be safe and that’s going to be easy to manufacture in a much smaller form.”  Virginia is home to nearly ½ of all the data centers in the US, with one area in Northern Virginia dubbed Data Center Alley, the bulk of which is in Loudon County.  An estimated 70% of the world’'s internet traffic travels thru Data Center Alley each day.  Dominion serves roughly 3500 megawatts from 452 data centers across its service territory in Virginia.  About 70% is in Data Center Alley.  A single data center typically demands about 30 megawatts or greater.  Bob Blue, its pres & CEO, said that the utility now receives individual requests for 60 - 90 megawatts or greater.  Dominion projects that power demand will increase by 85% over the next 15 years.  AWS expects the new SMRs to bring at least 300 megawatts of power to the Virginia region.  “Small modular nuclear reactors will play a critical role in positioning Virginia as a leading nuclear innovation hub,” said Virginia Gov Glenn Youngkin.  “Amazon Web Services’ commitment to this technology and their partnership with Dominion is a significant step forward to meet the future power needs of a growing Virginia.”  AMZN stock was off 1.46 & Dominion stock rose 1.63.

Amazon goes nuclear, to invest more than $500 million to develop small modular reactors

The National Retail Federation (NRF) projected that holiday spending will increase this year to a new record, totaling $979 - $989B, as consumers lean on e-commerce.  This reflects a growth of up to 3.5%, which would be the slowest pace in 6 years.  Last year, holiday sales grew 3.9% to $956B.  E-commerce is being credited as the primary driver of the retail sales growth for the 2024 holiday season, according to the NRF, the nation's largest retail trade group.  Specifically, online & other non-store sales are expected to account for $295B - $298B of the total spending, up from $273B last year, according to NRF estimates.  Notable differences between this year & last include the shopping period between Thanksgiving & Christmas being nearly a week shorter, totaling 26 days, & the economic impact of Hurricanes Helene & Milton.  Despite consumers still feeling pressures, particularly due to a sluggish US job market, NRF chief economist Jack Kleinhenz is optimistic "about the pace of economic activity and growth projected in the second half of the year."  "Household finances are in good shape and an impetus for strong spending heading into the holiday season, though households will spend more cautiously," Kleinhenz added.  Adobe projected earlier this season that online spending was going to be largely driven by a surge in discounts & the popularity of buy now, pay later services.  The buy now, pay later services, which allow consumers to pay in installments, will drive a record $18.5B in online spending, up 11.4% year over year.

Holiday spending projected to hit new record this year

The 10-year Treasury yield wavered slightly as bond traders digested the latest comments from Federal Reserve officials this week.  The 10-year Treasury yield   slipped 3 basis points to 4.008% & the 2-year Treasury yield was last at 3.929%, declining nearly 3 basis points.  1 basis point equals 0.01% & yields move inversely to prices.  On Mon, Minneapolis Fed Pres Neel Kashkari suggested that future interest rate cuts would be “modest” & reiterated that policy decisions would depend on economic data.  Elsewhere, Fed Governor Christopher Waller urged caution about any future rate reductions.  Yesterday, however, San Francisco Fed Pres Mary Daly said there's room for the central bank to lower rates further.  “We’re a long way from where it’s likely to settle,” she said.  “So the decisions that are really in front of us are ones about how quickly to adjust towards that level. But it’s quite possible that we will have a neutral rate of interest that’s a little higher than the interest rate that we came in with.”

10-year Treasury yield dips slightly as traders weigh Fed officials’ comments

Both the stock market & gold continue remain in or near record highs.  The stock market represents "risk on" & gold represents "risk off."  That is rare to see.