Outside Markets
Equities: Putin played the nuclear card Tuesday, but the shock and awe wore off over the course of the session and Wall Street refocused on the technology sector. Stocks were mixed at the end of the day with Nasdaq gaining 195 points and the Dow Jones down 120 points. The S&P 500 was the tiebreaker with a modest increase to above 5,900 points.
Nvidia led tech stocks higher as Tesla, Super Micro Computer and Alphabet also posted gains. Walmart was also higher after a positive earnings report, but Moderna and other pharmaceuticals slumped.
The economic news of the day was led by a decline in housing starts in October. The Census Bureau reports a 3.1% decline to 1.31 million, a decline from 1.35 million in September. Analysts had predicted 1.35 million starts. Stubbornly high mortgage rates and weather-related disruptions in the south were blamed for the slowdown.
Dollar: The Russia-Ukraine missile flap was enough to stir up world currency markets on Tuesday. Putin’s nuclear blustering saw relatively little response from the United States and faded as the day wore on. The result was a modest gain for the dollar, which rose against the euro and the yen but declined versus the sterling and Canadian dollar. The Dollar Index jumped above 106.5 during the session but ended the day little changed at 106.1.
Meanwhile, the People’s Bank of China moved to put a leash on speculative selling of the yuan and to curb volatility. Analysts said the move was more likely made to preserve the yuan’s flexibility and its image as an alternative to the dollar, but traders will likely prefer to let the currency market determine its value.
Treasuries: The overnight missile strike on Russia by Ukraine, using a U.S.-made weapon, proved to be enough to drive Treasuries yields lower on Tuesday. Analysts said the prospect of the war escalating caused a level of flight to safe-haven assets, which trimmed the 10-year yield a tad to 4.38% and the 2-year to 4.27%.
Traders also received a hint at what the next monthly jobs report will hold when it is released Dec. 6. The Bureau of Labor Statistics reported Tuesday that unemployment was stable overall last month with the rate lower in three states, higher in one state (Iowa) and stable in the other 46.
The head of Brazil’s central bank warned Tuesday that inflation remains a concern amid doubts the nation can get its debt portfolio under control. According to Reuters, Roberto Campos Neto said a “positive fiscal shock” is required to tackle the structural nature of the issue.
Meanwhile, one of Trump’s leading choices to be his Treasury secretary was nominated to run the Commerce Department instead. Cantor Fitzgerald CEO Howard Lutnick has been a leader of the Trump transition team and, as Commerce secretary, will oversee tariffs.
Energies: Crude prices posted modest gains on Tuesday as the market mulled over the latest deterioration of the situation in Ukraine. December WTI rose less than a dollar and stopped at the moving average around $69.50. Brent inched up less than a dime and was slightly above $73 at the end of the day.
Wednesday’s weekly inventory reports were expected to show another decline in U.S. crude supplies, although the range of estimates went as high as a 2.5-million-barrel increase.
Meanwhile, Europe is likely to see less natural-gas consumption by power plants this winter. S&P Global said higher output by nuclear and hydro power plants will reduce the need for gas-powered electricity despite a spike in production this month due to light wind and reduced wind power.
Metals: December gold futures moved higher in choppy trading Tuesday but remained in the $2,600 range. Putin’s latest ominous warnings reportedly inspired some “safe haven” buying but the prospect of U.S. interest rates remaining firm made buyers cautious. In addition, analysts told Reuters that many traders have accumulated enough gold to make another bull run less likely.
Silver remained moderately above $31 while December palladium continued to rally and climbed back above $1,000. Analysts said the market sees steady demand for palladium in catalytic converters trumping the potential impacts of new tariffs.
December copper made some progress in climbing off the recent lows Tuesday and closed near the day’s high of $4.15. The firm dollar and the new developments in Ukraine provided some short-term support this week but analysts said China’s sluggish demand and ample supply continued to weigh on prices.
Livestock: Cattle futures jumped more than $2 on Tuesday ahead of a Cattle on Feed (COF) report at the end of the week that is expected to show higher marketing and placements in October. February live cattle was most active and plowed through the resistance level to $188 while front-month December was also higher at above $186.
January feeder cattle also rose above the resistance level and finished around $252 after setting a 3-month high of $252.425. Technical selling reportedly continued to pressure the hog market on Tuesday. Hog futures slumped less than a dollar, but enough to knock December below $80 and February below $83 – above the support level and below the moving average.
Cattle on Feed will be released on Friday at 2 p.m. CST as will the monthly Cold Storage report. The latest estimates for the COF call for an on-feed herd of more than 12 million head on Nov. 1, around 101% of 2023. October placements and marketings were seen at 105% of last year.
Live Cattle: Some analysts monitoring the cutouts were seeing pent-up holiday demand that is giving packers incentives to keep the slaughter low and prices up. After two days, however, the week’s slaughter totaled 244,000 compared to 233,000 the week before with a holiday week coming up. The beef cutout was mixed with choice rising $1.51 to $308.79 late Tuesday while select fell $3.54 to nearly $272 on 135 loads. The choice rib primal was more than $100 over the select version.
Feeder Cattle: Old Man Winter was moving into North Dakota this week, but the southern Plains will be dry and relatively mild in the coming days. The Oklahoma City auction reported moderate packer demand with many head being returned to pasture or feedlots. North Platte said there was good demand and a “higher undertone,” but only 12% of the feeders were above 600 pounds.
Lean Hogs: The slaughter as of Tuesday was well ahead of last week at 978,000, although that was about even with the total from a year ago. Cash prices sagged to $82.49 but were a dollar higher in Iowa/Minnesota. The late cutout was down $2.39 at $94.68 compared to the 5-day average around $96.