May 1 - Stocks are mixed at midday, with the tech sector showing the greatest nerves ahead of today's policy statement from the Federal Reserve. The excitement is expected to come at 2 p.m. New York time when the Fed releases its updated monetary policy statement. No change to the interest rate is expected, but traders will be anxious to hear the tone of the message - especially that coming from Fed Chair Jerome Powell as he takes questions in the press conference 30 minutes later. He sounded a pretty dovish tone in March. Will his tone change today? We'll also be listening for any mention of slowing the pace at which the Fed is reducing the balance sheet.
The VIX slipped back below 16 at midday as stocks steadied. The dollar index continued to trade near 106.3 in choppy trade. Yields on 10-year Treasuries are trading near 4.65%, while yields on 2-year Treasuries are trading near 5.01%. The pivotal 5% level will be watched closely following the Fed's statement release. Crude oil prices broke below $80 for the first time in seven weeks this morning as chart support gave way, following a surprisingly build of U.S. inventories in the past week, as peace talks continue in the Middle East. The grain and oilseed sector was mixed at midday, with wheat giving back more of its recent big gains, while soybean prices bounced, with corn caught in the middle. Soymeal prices were again weaker today following a surprisingly early end to the Argentine oilseed labor strike, but soybeans managed to bounce anyway, with some support for soyoil. The EPA's new guidelines make it difficult for ethanol to qualify for sustainable aviation fuel, but that may open the door for more soyoil use. That said, today's bounce in soyoil prices hardly corrects the chart damage done by yesterday's break to new lows, with soybeans also in danger of a triple bottom on the charts, and triple bottoms often do not hold.
Today's JOLTS report revealed that there were 8.488 million job postings at the end of March, down from 8.813 million the previous month, and below analyst expectations of 8.7 million postings. This puts job postings at a three-year low, suggesting that the demand for workers is easing. The quit rate among workers was the lowest since the summer of 2020, suggesting that workers are not jumping from job to job in a bidding war as much as was previously the case as well. The layoff rate is still relatively low, suggesting that employers value the employees that they have, knowing how hard it was to get them in the first place. As such, they are reluctant to let them go, fearing that they'd have to work hard to refill those positions if needed again. Today's job opening number is still much higher than anything seen prior to the pandemic, but it is trending in the right direction for easing wage inflation pressures. The market took the data in stride, but it was generally supportive for stocks as Treasury yields pulled back modestly.
U.S. commercial crude oil stocks (excluding the Strategic Petroleum Reserve) rose by 7.3 million to 460.9 million barrels in the week ending April 26, putting them 3% below the five-year average for late April. Gasoline stocks increased by 0.3 million barrels, also putting them 3% below levels typically seen in late April. Distillate stocks dropped by 0.7 million barrels, leaving them 7% below seasonal levels. Ethanol stocks slipped to 25.5 million barrels during the week, down from 25.7 million the previous week, but up from the 23.4 million barrels in stocks a year ago. Ethanol production rose to 987K barrels per day in the week ending April 26, up from 954K the previous week, and up from 976K bpd in the same week last year. The production of ethanol utilized an estimated 97.9 million bushels of corn last week, up from 94.6 million the previous week, and up from 96.1 million bushels in the same week last year. Estimated marketing year to date corn use for ethanol totals 3.540 billion bushels, up 168 million bushels or 5.0% from the previous year's pace, and 87 million bushels above the seasonal pace needed to hit USDA's target for the year.
