Market Review: January 04, 2024

Closing Recap

Thursday, January 04, 2024





DJ Industrials




S&P 500








Russell 2000













U.S. stocks were mixed on Thursday as weakness in technology stocks (semi’s) pushed the Nasdaq lower again this week (SOX -5.8% in 3-days), while energy stocks declined, weighing on the S&P 500 which again tried to hold the 4,700 level (but failed). Rising bond yields weighed on high beta tech names, as strong economic data (ADP private payrolls and jobless claims) showed resilient labor markets. Next potential market catalyst Friday at 8:30 AM ET as Dec Nonfarm payrolls est. 170K (prior 199K), private payrolls est. 130K (prior 150K) and unemployment rate to rise to 3.8% from 3.7% due. Earlier today, there were more signs of a strong labor market as the ADP employment report showed the private sector added 164,000 jobs in December, above the 130,000 expected and weekly jobless claims came in at the lowest level since mid-October. There were pockets of strength as Healthcare (XLV) made it a 3rd day of gains to start 2024, along with strength in Financials (XLF) and Industrials (XLI). The Dow Jones Industrial average advance was led by AMGN, MRK, CAT, TRV, MMM. Earnings results today disappoint in food space (CAG) and Healthcare (WBA cuts dividend). Market sentiment still very favorable despite a few weak days to starts 2024 as Reuters noted about 78% of the S&P 500’s components traded above their 200-day simple moving averages on Tuesday, with the rate slipping to about 76% as of mid-day on Thursday – that is the highest since 2021. The CBOE Volatility index (VIX) remained around 14. Markets finished at the lows of the day heading into the jobs data.

Economic Data

  • ADP said December private payrolls reported at 164K above the 130K estimate.
  • Weekly Jobless Claims fell to 202K from 220K prior week and below est. 216K; the 4-week moving average fell to 207,750 from 212,500 and continued claims fell to 1.855M from 1.886M prior week; the insured unemployment rate fell to 1.2% from 1.3% prior week (prev 1.3%).
  • S&P Global December final composite PMI at 50.9 (vs flash 51.0) and U.S. S&P Global December final services PMI at 51.4 (vs flash 51.3).

Commodities, Currencies & Treasuries

  • Oil prices reversed lower, with WTI crude down -$0.51 or 0.7% to settle at $72.19 per barrel, down from earlier highs of $74 per barrel as massive weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw and weighed on energy related stock prices. Brent Crude futures settled at $77.59/bbl, down 66 cents, 0.84%. Front-month natural gas futures for Feb rose 15.3cs, or 5.7%, to settle at $2.821 per MMBtu, highest close since the end of November. Gold prices rise $7.20 to settle at $2,050 an ounce, the middle of range of day ($2,058.10 high and $2,043.30 low).
  • Treasury yields extended gains to start the year, with the 10-year yield holding around 4% all afternoon, up over 9-bps after jobs data suggested the U.S. labor market remains strong and tempered expectations of an interest rate cut by the Federal Reserve at its March meeting. Markets also await key jobs data tomorrow morning. The yield on the benchmark 10-year is up about 15 basis points over the first three trading days of the new year. The two-year yield was up about 6.75 basis points at 4.38%.





WTI Crude















10-Year Note




Sector News Breakdown


  • In Auto research: Wolfe Research upgraded GM from Peer Perform to Outperform with $42 tgt as believes that OEMs (as opposed to suppliers) should disproportionately benefit from a more moderate rate environment. Wolfe downgraded RIVN from Outperform to Peer Perform as continues to believe in RIVN’s long-term strategy but believes that Investors will need more insight into demand for the company’s R1 platform.
  • Monthly auto sales data: Ford Motor (F) said U.S. sales climb 7.1% to nearly 2M vehicles in 2023 and in the U.S. sold 25,937 EVs in Q4, up 24% over Q3 sales.
  • FSR introduced a dealership model as it abandons direct sales, to boost deliveries, test-drive network.
  • NKLA said it made 42 hydrogen-powered fuel cell electric trucks and delivered 35 units to dealers in 2023.
  • QS shares jumped after Volkswagen’s battery subsidiary said lab tests of QuantumScape solid-state batteries showed promising results.

Retail, Consumer Staples & Restaurants:

  • Retailers: GES and SHOO downgrade to Hold from Buy at Jefferies saying entering ’24, sees risks to the space, driven by a more price-sensitive consumer and are particularly cautious on the wholesale channels. Evercore upgraded FIVE from In Line to Outperform and raised tgt to $245 citing rising spend intention across their survey work, potential benefits from initiatives (helium/remodels) medium to long term, and improvement in its RSLI. Wells Fargo a broad sector call in Staples, Retail, Food sector as downgraded BJ, FIVE, UNFI saying they see choppiness ahead for a defensive sector given fundamental concerns and soft-landing optimism.
  • In Food: CAG Q2 sales fell -3.2% y/y to $3.21B missing the $3.24B estimate, while Organic net sales declined -3.4%; cut organic net sales growth and profit forecasts for FY24; sees annual organic net sales to decrease between 1.0% and 2.0%, compared with its earlier forecast of about 1% growth and EPS $2.60-$2.65 down from prior $2.70-$2.75 as warned of a slower recovery in demand for its packaged meals and snacks. LW boosted its annual adj. EPS outlook to $5.70-$6.15 from prior $5.50-$4.95, betting on higher prices for its frozen potato products at fast food chains and said continue to benefit from inflation-driven price strategies primarily initiated last year. SFM was upgraded to In Line at Evercore saying positive traffic/positive share trends likely enable SFM to grow into its multiple. CALM said the net average selling price for eggs per dozen was $1.458 for conventional eggs in Q2, down -49.4% y/y and net average selling price for specialty eggs was $2.277 per dozen, compared with $2.370 per dozen y/y, a decline of -3.9%.
  • Specialty Retail: MAT was downgraded to neutral from Buy at Roth MKM cuts citing expectations that results in the first half of the year will be pressured as the company ended 2023 with excess inventory on retail shelves. WW shares slip after LLY launches website for weight-loss drugs. YETI was downgraded to Hold from Buy at Canaccord as believes the company performed well in Q4 despite emerging competitive pressures. PTON shares jumped after saying it will bring its workout content to short-form video platform TikTok in an exclusive partnership.
  • In Beverages: Carrefour said overnight it will no longer sell PEP products like Pepsi, Lay’s crisps and 7up because they had become too costly. DEO was downgraded to Hold from Buy at Argus saying the company has been seeing costs rise, due primarily to supply-chain disruptions, higher freight rates and glass prices. Markets await earnings results from STZ in the beverage sector tomorrow morning.
  • In Restaurants: FWRG downgraded to Hold from Buy, PZZA downgraded to Sell from Hold, YUM downgraded to Hold from Buy at Stifel saying without the cover of grocery store price increases, Stifel believes it will become increasingly difficult for restaurants to raise prices without sacrificing traffic performance, especially among lower-income consumers. MCD CEO notes middle east war causing `meaningful’ impact, which weighed on shares.

Homebuilders, Building Products, Home Furnishing:

  • In Home Improvement/Building Products: HD was upgraded to Overweight from Equal Weight at Barclays and raised tgt to $372 as sees an opportunity for demand stabilization across the broadlines, hardlines and food retail space in 2024 from consumable volume to big ticket discretionary. Truist downgraded BLD, BLDR, and IBP to Hold on its views that dramatic outperformance in 2023 on these stocks will result in rotation to others in its group in 2024, and multi-family is only 10-15% of sales, but will see a substantial correction causing unit and margin falls that limit upside.
  • In Homebuilders: TOL named top pick in sector at Wells Fargo and upgraded FERG to overweight saying with the December rally, they see less room for error but ~9x they still offer compelling value. They also downgraded FND to EW from OW in Hardlines, prefer HD saying they leans optimistic into ’24 for group as lower rates justify a risk-on pivot, but it’s a delicate balance w/ 1H Street ests too high & Hardlines +17% since Nov 1 (+11% SPX).


  • In E&P: APA has agreed to buy CPE in a stock-swap deal valued at about $4.5 billion, including assumed debt; APA will issue 1.0425 shares, worth $38.31 based on APA’s Wednesday closing price of $36.75, for each share of Callon, a nearly 14% premium to Callon’s closing price of $33.65. ; CRC guides Q4 total production to 82-84 Mboe/d vs. prior 82-85 Mboe/d and consensus 83.4 Mboe/d (~60% oil). Guides Q4 total capital to $65-75M; guides Q4 FCF to $40-$60M vs. cons $70.8M.
  • In Utilities: AEE downgraded from Buy to Neutral at Bank America and cut tgt to $77 PT following December’s order by the Illinois Corporation Commission (ICC) in AEE’s electric rate case, sees reason to be more cautious on the story. WEC downgraded from Neutral to Underperform at Bank America and cut tgt to $78 noting shares still trade at a ~11% premium to the broader utility group, a level BAML sees as at risk, still. Keybanc upgraded shares of ED to Sector Weight saying NY remains a below average jurisdiction, in their view and view ED’s multiple as rich for the jurisdiction while they downgraded NWE to SW due to the lack of NT catalysts.
  • In Solar/Renewables: ENPH and RUN both downgraded to Sector Weight from Overweight at Keybanc in sector 2024 outlook noting declining interest rates and equipment inventory glut are both positives for downstream players including residential installers RUN and NOVA, as well as HASI which participates in the space financially.  On the other hand, equipment manufacturers such as SEDG and ENPH appear to have their hands full with inventory issues for the time being, (RUN downgrade due to a recent valuation rebound). Raymond James upgraded GTLS to Strong Buy, XYL upgraded to Market Perform and downgraded both SPWR, ITRI to Market Perform saying after three years of rotation out of story stocks and resulting multiple compression, RAJA’s benchmark index forecast for 2024 is a gain of 20-30% – but, as always, clean tech is a stock picker’s market.
  • In Industrials: EMR was upgraded to Buy from Neutral at Mizuho and raised tgt to $118 saying transformational portfolio actions now in full motion driving upshift in growth, margins should begin to differentiate in ’24+. In heavy duty trucking, watch shares of CMI and PCAR were active after ACT Research released preliminary December Class 8 net order figures of 26,500 units (20,900 on a seasonally adjusted basis). Orders in December decreased 13% y/y and 37% seq. as demand seemingly slowed given the current challenging freight markets fundamentals. LNN Q1 EPS $1.36 vs. consensus $1.27 and revs $161.4M vs. est. $163.4M; operating income $21.1mn vs. est. $19.7mn.

Banks, Brokers, Asset Managers:

  • In Banks: CMA upgraded from Neutral to Buy at Goldman Sachs saying despite the recent regional bank rally to end the year, shares are down ~29% from peak levels compared to down ~21.5% for KRE as higher rates pressured TBV as well as funding costs through both deposit beta and a higher mix of expensive wholesale funding (FHLB). TFC upgraded from Neutral to Buy at Bank America as sees the risk/reward as attractive. STT downgraded to Underperform from Neutral at Bank America as it expects the stock to lag the broader banks space (especially credit sensitive retail banks) in a soft-landing scenario and potentially the investment banks if capital markets activity rebounds.

Bitcoin, FinTech, Payments:

  • In Crypto: BTBT said in December 2023, company produced 169.5 Bitcoin, a 19% increase compared to prior month; MARA said record BTC Production of 1,853 Bitcoin in December and 12,852 BTC in 2023 (now holdings over 15,000, total cash & Bitcoin of $1.0B as of December 31, 2023); note crypto rolled yesterday on media report suggesting a BTC ETF will not get approval.
  • In FinTech: PYPL was downgraded from Outperform to Perform at Oppenheimer saying with Braintree Q323 volume growing ~32% YoY and likely to remain in the mid- to high 20s medium term, nearly any non-transaction expense growth makes increasing operating margins difficult.
  • In Consumer Finance/Credit cards: JP Morgan with several changes as they upgrade AXP to Overweight as see as a safe-haven from deteriorating household balance sheets; the firm downgraded RKT to Underweight (said already fully discounts potentially higher volumes in 2024/25), SLM to Neutral (financial outlook fully in estimates/valuation), and COF to Neutral following rally on positive credit outlook. Goldman Sachs said they remain constructive on credit card stocks into 2024 as credit losses are poised to peak, and focus has now shifted to normalization in EPS and returns (top picks: AXP, COF, ALLY).
  • In Insurance: Evercore/ISI with several changes as they downgraded CNO from In Line to Underperform following a strong ’23 year for the stock; downgraded AFL from In Line to Underperform as think the stock as expensive vs most peers on a price to free cash flow basis; while firm upgraded PFG from Underperform to In Line saying fundamental trends have been mixed in ’23 but not what Evercore would describe as bad with softer flows. Morgan Stanley upgraded ALL from Equal Weight to Overweight and up tgt to $171 from $117 saying higher personal auto growth and lower underwriting losses will drive stronger earnings growth in 2024 and beyond.

Biotech & Pharma:

  • ACET shares jumped after saying it is expanding development of its experimental CAR-T cell therapy, ADI-001, into autoimmune diseases with plans to start an early-stage study in Q2 to test the therapy in lupus nephritis patients.
  • AXSM provided FY’24 anticipated catalysts: AXS-07 for migraine NDA resubmission 1H; AXS-14 for fibromyalgia NDA submission Q1; Phase 3 SYMPHONY trial of AXS-12 in narcolepsy Q1; Phase 3 ADVANCE-2 trial of AXS-05 for Alzheimer’s disease agitation 1H; Phase 3 FOCUS trial of solriamfetol in ADHD in adults 2H.
  • CVS said that effective 4/1/24, ABBV’s Humira will be removed from their major national commercial template formularies and instead cover Humira biosimilars. Humira will continue to be an option for its customers with Choice and Standard Opt Out commercial formularies.
  • GLYC said its sickle cell disease therapy candidate has met its main and secondary goals in an early-stage study evaluating its safety; said the therapy’s compound also has potential application in inflammatory diseases.
  • IFRX said its experimental inflammatory drug, INF904, was well tolerated with no safety concerns in an early-stage study (drug targets C5a receptor that modulates inflammatory responses and obesity).
  • LBPH announced an upsized underwritten public offering of 10M shares, priced at $21/shr, a 6.25% discount from its last closing price of $22.40.
  • LLY announced the launch of digital health services for U.S. patients with obesity, migraine, and diabetes, saying its new LillyDirect platform will offer access to independent healthcare providers and home delivery of certain Lilly drugs through third-party dispensing services.
  • MRK upgraded to outperform from market perform at TD Cowen citing visible growth and a compelling valuation and raised tgt to $135 from $125.
  • NVO said it entered research collaboration agreements with OMGA and Cellarity on new treatments for obesity management.
  • XERS said it expects to be cashflow positive for Q4, report total revenue at the high end of its previous guidance of $160M-$165M, and end 2023 with over $72M in cash, cash equivalents, and short-term investments, exceeding its previous guidance of $65M-$70M.

Healthcare Services & MedTech movers:

  • In Healthcare Servies: WBA posted Q1 revenue and EPS ahead of street, though operating results were mixed with stronger US Pharmacy and Int’l Retail, balanced by weaker US Retail, reaffirmed its FY24 guidance; said it was “evaluating all strategic options to drive sustainable long-term shareholder value” cuts quarterly dividend 48%.

Internet, Media & Telecom

  • In Internet: Perplexity, a startup going after Google’s (GOOGL) dominant position in web search, has won backing from Jeff Bezos and venture capitalists betting that AI will upend the way people find information online, the WSJ reported. The company’s product, which they call an answer engine, is used by about 10mn people monthly.
  • In Media: FOXA upgraded from Underperform to Peer Perform at Wolfe saying the co is better positioned for the streaming transition than other media incumbents through its concentration in sports & news along with low-risk FAST strategy (Tubi); NXST announced it has reached a new comprehensive multi-year distribution agreement w/ FUBO; VZ was upgraded to Outperform at Wolfe saying with Verizon’s network, brand, and "value" bundling strategy competitively strong, the firm sees the company exiting one of its toughest positions strategically from 2022/2023. CHTR and DIS announced that the ad-supported version of Disney+ is now available in all Spectrum TV Select packages nationwide at no additional cost.

Hardware & Software movers:

  • AAPL received its second analyst downgrade to start the year as Piper lowered to neutral from citing broader handset weakness and cut their price target to $205 per share from $220 (follows Barclays’ downgrade Tuesday).
  • EPAM was upgraded to Outperform at Wolfe with $355 tgt citing the potential for demand stabilization and continued supply-side progress.
  • MDB was downgraded to Neutral from Buy at UBS and cut tgt to $410 from $475 following the 108% gain in 2023, the second best-performing growth software stock last year, and with the stock now matching the peak forward revs multiple of ~16x revs (on street estimates) over the last two years, cuts on valuation.


  • Auto-related semiconductors weaker after MBLY said it expects that Q1 revenue will be significantly below same period last year (forecasts Q1 revs down about 50% y/y) and will see revenue normalized during the remainder of 2024. MBLY cited excess inventory at customers, which they believe to be 6-7mn units of EyeQ® SoCs. MBLY forecasts 2024 operating loss to be in range of ($468M-$378M) – shares of ON, NXPI, AMBA, STM, WOLF were pressured.
  • Piper upgraded MU to Overweight at Piper and raised tgt to $95 while downgrading AAPL (valuation + iPhone/macro concerns), MCHP (auto/industrial exposure end mkt concerns), MTSI (valuation), QRVO (slowing handset growth + valuation), SWKS (customer risk + slowing handset growth) to Neutral. Overall, the firm sees strong CY24 for GPU, Gen-AI compute, but challenging 1H’24 for analog, handset, and consumer end markets; NVDA remains top large-cap pick, ON top mid-cap pick and PI top small-cap pick.
  • KeyBanc named AMD, MKSI, MU, NVDA, TER as top ideas in 2024 semi outlook saying they expect 2024 semiconductor revenue (ex-memory) to return to growth and increase 8%, as it expects inventories to normalize in 1H nearing the end of the cyclical destocking process, followed by a 2H recovery. KEYB expects generative AI to remain a key demand driver for data centers, with PC, smartphone, and server to resume modest growth.
  • Bernstein downgraded ADI to Market Perform from Outperform in semi 2024 outlook saying they suspect some selectivity will be required in the space this year. Bernstein likes AVGO as its top pick, with core numbers that have been reset offset by a strong AI story; still sees NVDA as the best way to play AI; continues to like QCOM as smartphones bottom but says thinks the story gets a little murkier in analog-land as they cut ADI and maintain caution on NXPI and TXN, Lastly says INTC and AMD (both rated MP) feel a little out over their skis to US, but the narratives could carry them for a while.


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.