Stocks declined on Wednesday due to election uncertainty with control of the House and Senate still up in the air. On Thursday stocks had a powerful rally following a better-than-expected inflation report with major stock indices posting substantial gains for the week. While October inflation came in better than expected, comments from Federal Reserve members show that we still have a long way to go before inflation is tamed. Cleveland’s Loretta Mester expressed concern that the FED may not go far enough in hiking interest rates. While headline inflation has come down for four months in a row, core inflation, excluding food and energy is little changed.
On Friday, major cryptocurrency exchange, FTX, filed for bankruptcy. However, this did not affect the stock markets.
Producer prices in China went negative year over year in October. Slowing inflation in China, due to weak property values and Covid restrictions, may help reduce the prices of goods exported by China.
Treasury bond yields fell with the 30-year bond at 4.057% and the 10-Year note at 3.819%. 30-year mortgage rates fell to 6.91%. Crude oil fell to $88.86 a barrel and natural gas fell to $6.307 per MMBTUs. The U.S. dollar index fell to 106.42 and gold rose to $1774.20 an ounce.
* China reported:
* Consumer prices in October were up 2.1% from a year earlier, down from 2.8% in September.
* Producer prices in October were down 1.3% from a year earlier.
* The U.K. economy contracted 0.2% in the third quarter.
* The National Association of Realtors reported that the median sale price of existing homes in the third quarter was up 8.6% from a year earlier. This was down sharply from the 14.2% rate in the second quarter. The inventory of existing homes for sale still remains low.
* The Commerce Department reported that wholesale inventories rose 0.6% in October. An increase in inventories may be the result of economic slowdown and may slow inflation. On an annual basis, inventories have grown 24.1% from a year ago.
* The Labor Department reported:
* The consumer-price index rose 0.4% in October, a slowdown from previous months. From a year ago the index is up 7.7%.
* Used car and truck prices fell 2.2% in October following a 1% decline in September. The used vehicle prices soared in 2021 on limited supply of new vehicles.
* Airline fares dropped 1.1%.
* Apparel fell 0.7%.
* Medical care fell 4% in October mainly due to a once a year drop in insurance premiums.
* Gasoline prices rose 4% in October, following three months of declines.
* Grocery prices rose 0.4% in October for the slowest increase since December of 2021.
* Sit-down restaurant prices rose 1.1%, the biggest monthly increase since records began in 2001.
* Excluding volatile food and energy, prices rose 0.3% in October and 6.3% from a year ago.
* Seasonally adjusted first-time claims for unemployment were 225,000, up from 218,000 in the prior week.
* The 4-week moving average of claims, designed to smooth out volatility, was 218,750 down from a revised 219,000.
* Field production of crude oil rose from 11.9MM BPD to 12.1MM BPD.
* Natural gas storage rose 79BN cubic feet and is slightly below the 5-year average at this time of year.
* Baker Hughes reported the number of active oil rigs rose 9 to 622. The number of active natural gas rigs was unchanged at 155.
* Factset reported with 91% of S&P500 companies reporting Q3 earnings, the blended earnings increase is 2.2%.
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Loren C. Rex, CFP®, MA Erik A Smith, AIF®
Founder / Emeritus President & C.E.O. 269-441-4143 517-795-2025
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.