Market Review: January 03, 2024

Closing Recap

Wednesday, January 03, 2024





DJ Industrials




S&P 500








Russell 2000













U.S. stocks finished lower on Wednesday as 2024 is starting off a little bumpy for global stock markets. Minutes from the December FOMC policy meeting (at 2:00 PM today) had a little something for everyone: They showed that “several participants observed that circumstances might warrant keeping policy rates at their current level longer than they currently anticipate”. Minutes showed “in projections almost all participants indicated their baseline implied a lower federal funds rate would be appropriate by the end of 2024”. Also, “many participants remarked that an easing in financial conditions beyond what is appropriate could make it more difficult for the Committee to reach its inflation goal.” Overall, the Fed Minutes suggested that rate hikes are over, but offered no timetable on cuts (where markets anticipate a March cut). Stocks fell, then rallied after the minutes’ release before a late day slide pushed major averages down sharply on the day.


Stock markets stayed under pressure as the commentary from the Minutes did not echo the overly dovish view that Fed Chair Powell exhibited during his press conference a few weeks ago when discussing future rate cuts in 2024. CNBC’s economist Steve Liesman noted “the Fed minutes do not show any evidence of the 6 rate cuts some have called for/expected – rates cuts will probably happen but weren’t telegraphed in these minutes”.  With today’s declines, the Nasdaq and S&P 500 post their first back-to-back losses to kick off a New Year since 2015, and each fell for the 4th straight day, with the Nasdaq off its worst one day return since October. Economic data earlier was mixed as Job openings (JOLTs data) slide to a three-year low of 8.8Mm as number of quits plunge to pre-covid levels, showing strength in the economy while the ISM data showed contraction in manufacturing for a 14th consecutive month. Market leaders were Energy, Utilities, and Healthcare for a second day, while Technology, Consumer Discretionary, Industrials, and REITs all fell over 1%. The Smallcap Russell 2000 tumbled late day, falling well over 2% in a late day slide. The Dow, S&P 500 and Nasdaq 9-week win streaks looking in jeopardy on this abbreviated trading week, though we get jobs data tomorrow and Friday which could shake things up.


Some interesting stats: 1) The VIX averaged 16.9 in 2023, the least-volatile year for US equity markets since 2019…historical average for the VIX since 1990 is 19.6. 2) U.S. stocks (SPX) have outperformed international stocks in 8 out of the last 10 years with a cumulative 10-year return of 211% (12%/year) vs. 61% (4.8%/year) for international equities. 3) a record 85% of Americans now say it’s a bad time to buy a house, according to Reventure; two years ago, just ~30% of Americans thought it was a bad time to buy a home; even in 2008, during the worst housing crisis of all time, this metric did not top 85%. 4) total US debt hits $34 trillion for the first time in history, putting US debt up 100% since 2014.

Economic Data

  • ISM U.S. manufacturing activity index rose to 47.4 in December from 46.7 in November and above consensus 47.1 9but marked the 14th consecutive month of shrinking activity); prices paid index slipped to 45.2 in December from 49.9 in November; new orders index 47.1 in December vs 48.3 in November and the employment index 48.1 in December vs 45.8 in November.
  • U.S JOLTS job openings for November actual: 8.79M vs. 8.73M and slightly below est. 8.821M.

Commodities, Currencies & Treasuries

  • Oil prices climbed as WTI crude rose $2.32 or 3.3% to settle at $72.70 per barrel, boosted by news of a disruption at Libya’s top oilfield which added to fears that tensions in the Middle East could reduce global oil supplies. The gains put both WTI and Brent up for the first time in five days. Protests forced a full shutdown of production at OPEC member Libya’s 300,000 barrel per day (bpd) Sharara oilfield. Oil prices also climbed due to continued attacks on vessels in the Red Sea by Houthi fighters and as Iran’s semi-official Tasnim news agency says more than 100 people were killed and close to 190 injured in the explosions near a cemetery in southern Iran.
  • The U.S. dollar was broadly stronger as some have toned down their dovish expectations for the scale of rate cuts by the Fed this year (calls for now less than double the Fed’s outlook of 75-bps cuts by end of 2024). The Euro falls to fresh two-week low vs US dollar around $1.09 after the dollar dropped over 2% in 2023 on rising rate cut bets. The Fed dovish pivot in December has changed the yield/dollar landscape.
  • Gold prices dropped -$30.60 to settle at $2,042.80 an ounce, falling to a near two-week low as the dollar strengthened and Treasury yields rose ahead of the minutes from the Federal Reserve’s latest policy meeting for cues on the timing of potential interest rate cuts. Treasury yields fell over 3bps to end near lows around 3.90%.





WTI Crude















10-Year Note




Sector News Breakdown


  • In Autos: TSLA shares fall for a 4th day, RIVN extends losses after delivery data Tuesday disappointed; shares of GM fall after the company said it is offering $7,500 incentives on its electric vehicles that lost a U.S. government tax credit this week. GM said last month all its EVs would temporarily lose eligibility except the Chevrolet Bolt, adding the Cadillac Lyriq and Chevy Blazer EV are losing the credit because of two minor components. GM posted a 14.1% rise in annual U.S. auto sales, aided by demand for its SUVs and pickup trucks; said sales rose to about 2.6M vehicles in 2023, compared with 2.27M units a year earlier.
  • In Auto Suppliers: MGA downgraded to Neutral from Buy at Goldman Sachs as they believe the company’s relatively slower content per vehicle growth compared to its broader tier 1 coverage will limit EPS/FCF improvement especially as auto production growth moderates. Goldman downgraded AUR to Sell announced initial clinical data from Achieve trial in DM1 patients and Deliver trial in Duchenne muscular dystrophy patients.

Retail, Consumer Staples & Restaurants:

  • In Restaurants: BLMN announced that it has entered into a cooperation agreement with activist investor Starboard Value (owns 9.7% of BLMN shares). In connection with the agreement, the company has appointed Dave George (former COO of Darden Restaurants) and Jon Sagal (partner at Starboard) to its board of directors. In Research, WEN was downgraded from Overweight to Equal Weight at Barclay’s saying fundamental challenges are likely to prevail near-term in terms of accelerating unit and comp growth and upgraded YUM to Overweight with $146 tgt as believes the quick-service segment will benefit from trade-down to value.
  • In Food & Beverages: KDP was downgraded from Overweight to Equal Weight at Morgan Stanley with part one of its two-part thesis playing out (EPS visibility), and part two (a topline rebound) more uncertain. KO shares rose for an 8th straight day in beverages.
  • In Retail: Piper said they most favor companies with strong (and distinctive) drivers out to 2025 that rely less on a strong spending recovery. For large cap, most favor DLTR, for mid-cap most favor Wayfair (W), and for small cap, they most favor MCW. For 2024 Beauty & Wellness outlook, Piper named ULTA and PRGO as their top ideas and downgraded XPOF to Neutral.

Homebuilders, Building Products, Home Furnishing:

  • Housing data: the weekly Mortgage Bankers Assoc data showed the weekly mortgage applications index fell -10.7%, the purchase index falls -7.6% and the refinance index falls -18.1% as the avg. 30-year mortgage rate climbs 5 bps to 6.76% in the latest week.
  • In Building Products: PGTI has received a takeover offer from privately held Miter Brands for a $41.50 all-cash offer which compares to the $41.00 stock and cash offer from DOOR. Masonite’s current offer is a combination of $33.50/PGTI share in cash and $7.50/PGTI share in Masonite stock.

Energy, Industrials and Materials

  • In Oil E&P Sector, Mizuho downgraded 8 stocks and upgraded 3: XOM, OXY, AR, GPOR, CPR, CRGY all downgraded to Neutral and SWN, CRK downgraded to Underweight while upgraded CIVI (E&P), PBF (in refiners) and CNX (coal) – saying while micro fundamentals for the industry remain constructive, macro headwinds likely leave oil and natural gas prices trading in relatively tight ranges and temper Mizuho’s enthusiasm.  Thus, Mizuho recommends defensive stock selection in the sector heading into 2024 and says the top picks are CVX, CTRA and CIVI.
  • In Industrials: ROK was upgraded from Neutral to Buy at UBS and raise tgt to $360 from $305 as shares have de-rated to a 5yr low into the early innings of US Reshoring momentum, a multi-decade opportunity that should accelerate ROK’s long-term growth algorithm.
  • In Aerospace & Defense: MRCY downgraded to Underperform at Jefferies with $30 tgt as the strategy shift extends into FY25, guidance needs a reset. CACI was also downgraded by Jefferies, cutting to Hold citing relatively disappointing org growth of 6% in past 2Qs vs peers +12%, FY24-26E growth of 5% vs peers 5% despite 3 large contracts anchoring growth and margin risk.
  • In Packaging: PTVE was upgraded to Buy at Citigroup while the firm downgraded OI, AVY, SLGN to Neutral as they updated estimates noting packagers meaningfully underperformed in 2023 (+3% vs S&P +24%) as extended destocking and consumer trade-down hit volumes, driving est. lower throughout the year. Citi’s preferred names are CCK and GPK noting each trade at a discount multiple, are poised to grow earnings in ’24, and have specific improvement catalyst.

Banks, Brokers, Asset Managers:

  • In Banks: Wedbush top picks include FHN, FCNCA, MTB, EWBC, FITB, & WAL into earnings as expects a stable Q4 for banks with light at the end of the tunnel for NIM compression but expect continued negative credit migration. Wolfe Research with bank rating changes as they upgraded Citigroup (C) to Outperform and $58 target while downgraded NTRS to Underperform from Peer Perform. Evercore ISI several changes in regional bank sector, downgrading RF, SNV to In-line from OP, cuts CFR to underperform and upgraded HBAN to Outperform.
  • Brokers/Exchanges: Goldman Sachs upgraded AMP and STT to Buy as sees better exposure to rate cuts than the Street appreciates. For AMP raise tgt to $453 as looks for solid mid-teens 2023-25E EPS growth CAGR supported by durable cash revenues, expense discipline, and continued capital returns trajectory and ups tgt on STT to $92 from $69 as sees upside to net interest income in 2024/25. The firm also downgraded CME to Sell on slower EPS growth ahead from a normalization in interest rates volatility and rising competition and cuts BX, SCHW, and RJF to Neutral.
  • In Financial Services: Bloomberg reported INTU is being questioned by US lawmakers who say federal tax credits the company received could have been better spent to build a free government alternative to Intuit’s popular online tax preparation software, TurboTax. MMS was downgraded to MP from OP at Raymond James given concerns that fundamentals could decelerate mid-year.
  • In Crypto: Bitcoin prices fall over 7% to lows below $42,000 before bouncing, after topping $45K the day prior (21-month highs), weighing on several stocks’ prices COIN, HUT, MSTR, RIOT, MARA. The market continues to wait for spot bitcoin ETF approvals by federal regulators, which are expected to come around Jan. 10.
  • In Lending/Finance: SOFI downgraded from Market Perform to Underperform at KBW and cut tgt to $6.50 from $7.50 citing recent outperformance (+43% since Q3 earnings) but also a re-underwriting of its model. RKT was also downgraded to Underperform at KBW on valuation and on the company’s relative weakness in the purchase market.
  • In Consumer Finance: DFS was upgraded to Overweight from Neutral at Piper and named it a top pick for 2024 saying the headwinds impacting the co throughout 2023 should show better in 2024, such as default rates on credit cards to show improvement off easier comps, a potential re-start of stock repurchases in mid-2024 and more clarity on regulatory issues that remain an overhang.
  • In Insurance: JPMorgan upgraded UNM to Overweight while downgraded LNC to Underweight, and EQH and PRU to Neutral saying their long-term fundamental outlook for the life insurance business remains cautious, but it is bullish on stocks. JPM believes that consensus Q423 projections PFG and UNM are too low, while numbers for CRBG, RGA, and PRU seem high. GL and MET are their top picks and remain Underweight on BHF and PFG.

Biotech & Pharma:

  • AGIO shares rose after saying the global Phase 3 ENERGIZE study of mitapivat in adults with non-transfusion-dependent (NTD) alpha- or beta-thalassemia achieved its primary endpoint of hemoglobin response, and that statistical significance was also achieved for both key secondary endpoints.
  • ARWR 15.8M share Secondary priced at $28.50.
  • BMY was downgraded to Neutral from Buy and cut tgt to $60 from $68 saying sales performance from new launches has been mixed; even with impressive aggregate growth of the new launch portfolio (~87% in 2022, ~81% in 2023e), there has not been breakout product demand that has raised peak sales forecasts.
  • DYN shares jumped as announced initial clinical data from Achieve trial in DM1 patients and Deliver trial in Duchenne muscular dystrophy patients. Shares of SRPT slipped following the competing treatment as SRPT’s treatment showed a 0.06% change in dystrophin levels at 6 months in patients treated with the drug vs. DYN’s therapy increased the dystrophin protein levels by 0.28% at six months.
  • ESPR shares slipped after Esperion and Daiichi Sankyo Europe announced a $125M amendment to their collaboration, including resolution of pending litigation.
  • FWBI rose after RothMKM raised its price tgt to $40 from $11 after the co recently signed a non-binding term sheet to acquire ImmunogenX to gain Phase 3-ready latiglutenase for celiac disease.
  • GSK was upgraded to Buy from Hold and AZN downgraded to Hold from Buy at Jefferies.
  • PFE said that Canada’s health regulator approved its gene therapy for the treatment of a rare inherited bleeding disorder called hemophilia B.
  • TEVA upgraded from Underweight to Neutral at Piper and raise tgt to $12 from $8 saying it is becoming clear that senior leadership’s greater lean into brand assets likely translates into less in the way of downside risk, particularly as Teva gradually chips away at its overall debt burden.
  • In Medical Devices: Needham downgraded MASI to Hold from Buy saying the Apple Watch royalties might be significant but are far from certain and are now mostly priced into MASI shares in Needham’s view.

Internet, Media & Telecom

  • In Telecom: VZ was upgraded to Overweight and $45 tgt at Keybanc saying Verizon should show better postpaid phone net add performance this year and its broadband subscriber growth is far outpacing AT&T’s. TMUS said it added Hulu to its streaming suite.
  • In Media: DIS and activist investor ValueAct Capital Management L.P. have entered into an information-sharing agreement while the entertainment giant undergoes a transformation. ValueAct Capital Management agreed to support Walt Disney Co.’s slate of board nominees at the upcoming 2024 shareholder meeting.

Hardware & Software movers:

  • In Storage: PSTG will replace PDCO in the S&P MidCap 400, and Patterson Companies will replace CHS in the S&P SmallCap 600 effective prior to the opening of trading on Friday, January 5.
  • In Software: SentinelOne (S) to acquire Indian cloud security firm PingSafe to expand its cloud capabilities in a cash-and-stock deal; co did not disclose details of the deal.


  • The SOX Index fell for a 4th straight day after hitting all-time highs last week, down over 6% during this brief stretch. Among drivers this year for the sector include concerns over rising interest rates, geopolitical tensions between U.S. and China and supply-demand challenges persist, while secular tailwinds include continued investment in artificial-intelligence (AI) infrastructure, growing chip-design complexity, and automotive chip content.
  • Citigroup revised down DRAM and NAND markets’ S/D ratio projections for 1H23E to bake in weaker-than-expected server demand amid rising macro uncertainties, but it also revises up S/D ratio forecasts for 2H23E and 2024E to reflect the impact of Samsung’s downward memory CAPEX revision and potential impact of the China memory ban.
  • In 2024 semiconductor outlook, Wells Fargo said they are positive on fundamental set up and says MU their top pick, prefers NVDA vs AMD at current levels, ALGM, ON & EDA/IP names (ARM, CDNS, SNPS) are also top ideas while the firm downgraded shares of AMBA & MXL to Equal weight from overweight.
  • INTC said it was forming a new independent company around its artificial intelligence software efforts with backing from digital-focused asset manager DBRG and other investors.
  • MBLY was downgraded to Outperform from Strong Buy at Raymond James and cut tgt to $48 from $50 given RAJA’s view that Supervision volumes and AMaaS revenue will take longer to materialize than the Street is modeling.
  • NVDA was initiated at Neutral and $410 tgt at Davidson as sees as an important leader in accelerated computing and expect impressive 20% CAGR from 2022 levels across cycles…but believes out-year consensus expectations are unlikely to materialize and will start reverting to trend line within the next 2-6 quarters.


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.