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Markets retreat on concerns about about the pace of interest rate cuts

Dow sank 396, decliners over advancers better than 3-1 & NAZ pulled back 156.  The MLP index was up 1+ to the 287s & the REIT index dropped 4+ to the 374s.  Junk bond funds remained weak & Treasuries continued to be sold, raising yields.  Oil gained 1+ to the 85s & gold surged 35 to 2293 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Fed’s Mester still expects Rate Cuts this year, but rules out May

General Motors (GM) reported a 1.5% decline in first-qtr US vehicle sales compared to a year ago, as the overall auto industry normalizes after years of disruptions & volatile results.  The automaker said the decline to 594K vehicles sold during the first 3 months of the year was largely due to a 22.9% year-over-year decline in sales to fleet customers.  Retail sales to customers were up 6%.  GM's sales are below expectations for the overall industry, which Cox Automotive forecast to be up 5.5% from a year earlier.  Buick was the only GM brand to report a sales increase during the qtr, up 16.4% from a year earlier.  The GMC truck brand was off about 5%, while Cadillac & Chevrolet were both off about 2%.  GM reported sales of its full-size pickups totaled roughly 197K units during the first qtr, up 3.6% from a year earlier, marking its best performance during that time since the first qtr of 2020.  “GM gained retail market share year-over-year with strong mix and pricing, our inventories are in good shape heading into the spring, and production and deliveries of Ultium Platform EVs are rising, led by the Cadillac Lyriq. We’re on plan,” GM North America Pres Marissa West said.  Sales of its all-electric vehicles remained miniscule during the first qtr.  EV sales totaled 16K units, 2.8% of overall sales.  GM is in the process of ramping up production of its newest EVs, including the Cadillac Lyriq & the Blazer EV, while winding down sales of Chevrolet Bolt models, which were discontinued in Dec.  The stock fell 50¢.

GM U.S. vehicle sales fall 1.5% during the first quarter, underperforming others

US job openings rise modestly to 8.8 million in February in strong in strong labor market

Gold closed at a record for a 6th-straight session, pushing closer to the $2300 mark as the $ dipped & investors continue to move to the precious metal ahead of expected interest-rate cuts coming from central banks in the US & elsewhere.  Gold for Jun closed up $24 to settle at $2281 per ounce.  The precious metal pushed above the $2200 mark last week & is looking to push above the $2300 mark for the first time as the Federal Reserve is expected to begin lowering interest rates from 23-year highs this year, signaling 75 basis points of cuts this year & further cuts in 2025.  Lower interest rates ease the carrying cost of owning gold.  A lower $ following 5 days of gains helped push prices higher, making the metal more affordable for intl buyers.  The ICE dollar index was last seen down 0.23 points to 104.79.  Treasury yields were mixed. The 2-year note was last seen paying 4.705%, down 0.6 basis points, while the yield on the 10-year note was up 4.4 basis points to 4.364%.

Gold Rises Again to a Fresh Record on a Lower Dollar and Buying Momentum

West Texas Intermediate (WTI) crude oil rose to the highest in more than 5 months as supply remains tight amid signs of rising demand & geopolitical turmoil.  WTI crude for May closed up $1.44 to settle at $85.14 per barrel, the highest since late Oct, while Jun Brent crude, the global benchmark, was last seen up $1.46 to $88.88.  The rise comes as supply remains squeezed with OPEC+ continuing its voluntary cuts of 2.2M barrels per day.  The group will meet tomorrow with no policy changes expected prior to a ministerial meeting in Jun.  As well, Mexico also plans to limit an unspecified amount of exports as Pemex, its state oil company, opens a new refinery.  Geopolitical risk is also buoying prices after Israel yesterday attacked an Iranian consulate in Syria, killing the commander of the Iranian Revolutionary Guards Corps' Quds Force in Syria & Lebanon, raising the prospect of a wider Middle East war if Iran decides on a significant response to the strike.  Meanwhile, China over the weekend reported its manufacturing sector returned to growth last month, raising demand hopes for the #1 importer even as its key real-estate sector continues to struggle with a debt crisis, while demand from India remains solid.

WTI Closes at Highest Since October on Tight Supply and Fears of a Wider Middle East War

Strength in the stock market has been related to expectations for significant cuts in interest rates.  While inflation is substantially lower than the high rates in recent years, it remains stubbornly above where the Fed would like to see it.  Recent economic data is suggesting it may delay rate cuts which is not welcomed by investors.  Meanwhile, the economy is struggling more than the bulls want to see & the stock market remains overbought after a 5 month rally.  After stocks stayed in the dumps all day, there was limited buying in the last hour.  There are plenty of mixed signals to evaluate.

Dow Jones Industrials 

This post first appeared on VerySmartInvesting, please read the originial post: here

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Markets retreat on concerns about about the pace of interest rate cuts


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