Market Review: January 11, 2024

Closing Recap

Thursday, January 11, 2024





DJ Industrials




S&P 500








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Resiliency remains the word for US markets as major averages recover off sharp losses following a December inflation report that showed figures above consensus. U.S. stocks finished the day mixed, bouncing sharply off the morning lows ahead of another round of inflation data tomorrow morning (Dec PPI) and a handful of banking earnings results (JPM, Citi, Wells). A combination of “hotter” December CPI data this morning, a pop in Treasury yields, and more cautious comments from Fed speakers (Mester) was enough to push major averages down (but not out) early on Thursday. U.S. inflation data for December came in stronger-than-expected casting into doubt expectations of a U.S. Federal Reserve rate cut in March. Annual CPI inflation rose to +3.4% in December, from +3.1% in November, stronger than the consensus forecast by economists of +3.2%. The initial move for stocks was higher as the S&P 500 (SPX) traded briefly above its all-time closing of 4,796.55, a level last seen on Jan. 3, 2022 (but did not close above). Fed Reserve Bank of Cleveland Loretta Mester later said in a Bloomberg interview that March is probably too early for a rate cut, saying the Fed needs to forecast more evidence. "I think the December CPI report just shows there is more work to do, and that work is going to take restrictive monetary policy," she said. Between Mester’s comments calling March premature for interest-rate cuts, and the consumer price index (CPI) data coming in above expectations, we saw a good size pullback in sectors that tend to benefit from lower rates for financing (such as solar, biotech, consumer lenders) and dividend paying sectors falling amid higher yield expectations (such as utilities and REITs). The other big story today was Bitcoin as 11 spot Bitcoin ETFs were approved by the SEC last night, leading to big swings/high volume in the space (more below).


As of mid-afternoon: @charliebilello noted Market expectations for Fed Funds Rate path: Jan 31, 2024: Pause, March 20, 2024: 25 bps cut to 5.00-5.25%, May 1, 2024: 25 bps cut to 4.75-5.00%, June 12, 2024: 25 bps cut to 4.50-4.75%, July 31, 2024: 25 bps cut to 4.25-4.50%, Additional cuts to 3.28% by Jan 2026. This outlook is already forecasting less cuts than was expected just over a week ago following the CPI report. Fed’s Barkin, Mester and Goolsbee all said today in different speeches that they need to see more data before rate cuts (not exactly what forecasts are currently baking in).


Despite the signs of inflation decelerating over the last several months into today’s slightly higher figures, Edward Lawrence tweeted: "With the Dec 2023 CPI inflation report: Overall Inflation increased 17.6% from Month President Biden came into office. All food is up 33.7% from Jan 2021. All shelter costs is up 18.7% from Jan 21 to Dec 2023. All energy up 32.8% from Jan 21. Electricity up 27.1% from Jan 21." Bottom line, prices remain sharply higher over the last 2-years.

Economic Data

  • The December consumer price index (CPI) rose +0.3% above the +0.2% estimate (and prior month +0.1%) and on a y/y basis, rose +3.4% above the est. +3.2% (prior month +0.1%). Core CPI, or excluding food & energy rose +0.3% m/m vs. +0.2% expected and rose +3.4% y/y, topping the +3.2% expectations.
  • Shelter inflation was up 6.15% YoY in Dec, down from 6.51% in Nov and the lowest since July 2022. Rent inflation was up 6.47% YoY in Dec, down from 6.87% in Nov and the lowest since July 2022. The annual increase in consumer prices has cooled from a peak of 9.1% in June 2022.
  • Weekly jobless claims fell to 202K from 203K prior week and vs. consensus 210K; the 4-week moving average fell to 207,750 from 208,000 prior week; continued claims fell to 1.834M from 1.868M prior and vs. consensus 1.871M; the US insured unemployment rate fell to 1.2% from 1.3% prior week.
  • The U.S. federal government posted a December deficit of $129B, up $44B or 52% from a year earlier as outlays rose while receipts fell. The Treasury said that outlays for December rose 3% to $559B, a December record, partly because of higher Social Security outlays and interest on the public debt. Receipts for the month fell 6% to $429B.

Commodities, Treasuries and Currencies

  • U.S. crude oil futures settle at $72.02/bbl, up 65 cents, 0.91% while Brent crude futures settle at $77.41/bbl, up 61 cents, 0.79%, though prices pulled off earlier highs (initially higher on reports an oil tanker was boarded by people in military-style uniforms off the coast of Oman. Gold prices fell -$8.60, or 0.42% to settle at $2,019.20 an ounce.
  • Bitcoin prices were all over the place, erasing initial gains after climbing to a two-year high above $49,000 as the SEC approved 11 exchange-traded funds (ETFs) that invest directly in Bitcoin, broadening access to the cryptocurrency. But prices later spun below $45,000, taking crypto stocks lower in tandem in a “sell the news” type moment.
  • Treasury yields finished down on the day after big swings. The 10-yr yield was at 3.98% prior to the CPI report, jumped as high as 4.07% after slightly higher-than-expected inflation data triggered a bonds selloff, then finished back near lows. Yields peaked in the morning, with the 10-yr falling back below 4% late day ahead of the PPI. The US Treasury sold $21B in 30-year notes at a yield of 4.229% vs. 4.230% when issued prior, as the bid-to-cover ratio was 2.37, as primary dealers take 14.52% of U.S. 29-year 10-month bond sale, direct 17.71% and indirect 67.77%.





WTI Crude















10-Year Note




Sector News Breakdown


  • CHPT said it is reducing its workforce by about 12% as the reorganization is expected to lead to about $14M in restructuring charges and said annual operating expense savings are expected to be around $33M.
  • HTZ said to sell over one third of all its electric vehicles due to low demand and higher costs and use a portion of the money raised to buy Ice cars; going forward, hertz global will continue to actively manage total size of its EV fleet. HTZ said it is expecting to report an adj EBITDA of negative $120M-$130M.
  • LCID said it produced 2,391 Vehicles and Delivered 1,734 vehicles during Q4 vs. est. 1,696.
  • NIO signs cooperation framework agreements on battery swap with Anhui Jianghuai Automobile Group and Chery Automobile respectively.
  • In Ride Hailing: LYFT downgraded from Buy to Neutral at Goldman Sachs saying they see a more balanced risk-reward skew in the equity following a nearly 35% increase in the company’s share price since its last Q3’23 earnings results in early November.

Retail, Consumer Staples & Restaurants:

  • In Online retail: CHWY was upgraded from Equal Weight to Overweight at Barclays and raised tgt to $30 from $19 as anticipate revenue growth will trough in F1H24 and reaccelerate in the back half as customer growth stabilizes and Canada begins to ramp.
  • In Restaurants: YUM was downgraded from Overweight to Equal Weight at Wells Fargo saying its bullish ’23 thesis, predicated on accelerating comps/units/margins has largely played out. PZZA price tgt was raised at both Wedbush and Keybanc following its presentation at the ICR Conference.
  • In Grocers: Bloomberg reported Washington State attorney general is planning to file a lawsuit to block supermarket chain KR near-$25 billion acquisition of ACI.

Homebuilders, Building Products, Home Furnishing:

  • In Homebuilders: KBH shares slumped as Q4 EPS $1.85 vs. est. $1.69 and Q4 revs fell -14% y/y to $1.67B vs. est. $1.62B (both above consensus) but lowered its F2024 revenue target to $6.4B-$6.8B from $6.5B-$7.0B driven by a slightly lower community count growth (12% vs. prior of 15%) and the order shortfall in F4Q (F4Q23 orders were 1.9k versus 2.4k consensus – Q4 backlog fell -28% y/y to 5,510 vs. est. 6,166). SDHC announced the pricing of the initial public offering of 7,692,308 shares of its Class A common stock at a price to the public of $21.00 per share.
  • In Home Furnishing: WSM was upgraded to Outperform from Neutral at Wedbush and boosted its tgt to $230 from $175 saying although home improvement furnishings demand weakened in 2023 on the back of spiking interest rates, plummeting existing home sales, consumer spending shifting to services – the firm believes many of these key drivers are bottoming or reversing, which should translate to stronger demand in 2024.

Energy, Industrial and Materials

  • In Oil E&P and Equipment: CHK to acquire rival SWN for $7.4 billion through a deal that would create one of the largest US natural gas producers. Chesapeake will pay $6.69 per share . RRC downgraded to Hold from Overweight and cut estimates at Benchmark. SUN announces sale of West Texas assets for approximately $1.0B, acquisition of European liquid fuels terminals, and reaffirms 2024 adjusted ebitda guidance range.
  • In Utilities: overall sector pressured by the “hotter” CPI report and speculation it could push the Fed’s rate cuts out further into 2024 (lifting yields and hitting dividend payers).  AEP was downgraded to Neutral from Buy at Mizuho following a challenging rate decision in WV, the latest regulatory misstep by AEP in a yearlong streak of challenging decisions, which include the failed KY Power sale to Algonquin, a negative decision in Texas on plans to construct renewable generation, and a tough rate decision in OK. BMO Capital upgraded SO to Outperform from Market Perform and raise tgt to $77, SRE to Outperform from Market Perform with $84 tgt while downgraded LNT to Market Perform from Outperform as sees better risk-adjusted opportunities within the high-quality compounders bucket.
  • In Solar: SPWR downgraded to Neutral from Positive at Susquehanna and lowered the price target to $4, primarily given the slow recovery in California and the company’s relatively higher exposure to the market. RothMKM noted on 12/29/23, Auxin filed a complaint to remove Biden’s two-year holiday on AntiCirc AD/CVD tariff collections and said the surprise is a positive for FSLR, potential for retroactive tariffs, potentially very negative for CSIQ. Solar related names among worst performers (ENPH, SEDG, ARRY) after the hotter CPI (raises concern of rate cuts pushed out) – recall the group among best movers late December after the Fed apparent pivot.
  • In Lithium sector: Deutche Bank downgraded ALB from Buy to Hold and lowered its price target by $20 to $135 as believes a more cautious view over the near-to-medium term is prudent given the uncertainty and volatility in lithium prices. DBAB downgraded LAAC to Hold as views Cauchari-Olaroz as being a de-risked producing asset, being a JV with Ganfeng Lithium, and acknowledge further potential value could be unlocked with the Pastos Grandes basin. Lasty, DBAB downgraded SQM to Hold as believes the current terms of the proposed MoU are not favorable to SQM in the medium to long-term – coupled with their more neutral approach of the Lithium industry for 2024 and onwards.
  • In Aerospace and Defense: LHX was upgraded to Overweight from Neutral at JP Morgan saying despite rising global defense spending and geopolitical tensions prompting comparisons to the 1930s, US Defense stocks lagged in 2023 and JPMC’s sense is that investors are not much more excited about 2024. But the firm said wants to consider how the narrative can change in 2024, given the potential for positive developments over the next few months. The Federal Aviation Administration said it is launching a formal investigation into the Boeing (BA) 737 MAX 9 after a cabin panel loss led to an Alaska Airlines emergency landing Friday.
  • In Paper & Packaging: Wells Fargo upgraded GEF (as containerboard + URN fundamentals become more compelling) and SEE to Overweight (given increased focus on day-to-day execution combined w self-help initiatives and mostly de-risked 24 expectations) and tweaked their balanced ‘barbell’ approach to be a bit more pro-cyclical given signs that de-stocking is largely complete and early signs of margin expansion in containerboard.

Banks, Brokers, Asset Managers:

  • In Banks: Citigroup Inc (C) said it recorded a $1.3 billion reserve build in q4 related to increases in transfer risk associated with exposures outside the U.S.; $1.7B charge to operating expenses in quarter. Earnings results tomorrow morning is expected from: BAC, BK, BLK, C, JPM, and WFC. The banking sector was generally weaker heading into results this morning after a good rally in December.
  • In Asset Managers: Monthly assets under management data: 1) AB preliminary assets under management increased 4% to $725B during December 2023 from $696B at the end of November. 2) APAM preliminary assets under management as of December 31, 2023, totaling $150.2B. 3) BEN preliminary month-end assets under management (AUM) of $1.46 trillion at December 31, 2023, compared to $1.41 trillion at November 30, 2023. 4) IVZ preliminary month-end assets under management (AUM) of $1,585.3B, an increase of 2.8% compared to the previous month-end. 5) LAZ preliminary assets under management as of December 31, 2023 totaled approximately $246.7B from $233.9B end. 6) TROW preliminary month-end assets under management of $1.45 trillion as of December 31, 2023. Preliminary net outflows were $9.4B for December 2023, and $28.3B for the quarter-ended December 31, 2023. 7) VCTR assets under management of $166.6B as of December 31, 2023, and average assets under management for December of $163.5B. 8) VRTS preliminary assets under management of $172.3B as of December 31, 2023.

Bitcoin, FinTech, Payments:

  • In Crypto: The Securities and Exchange Commission (SEC) approved 11 exchange-traded funds (ETFs) that invest directly in Bitcoin, broadening access to the cryptocurrency and giving a boost the crypto industry. The ETF’s will be listed on Nasdaq, NYSE, and the CBOE. Cathie Wood says bitcoin ETF approval makes her $1.5 million bull case more likely . Bitcoin ETFs & reported fees: Grayscale (GBTC) 1.5%, Hashdex (DEFI) 0.9%, Valkyrie (BRRR) 0.49%, Invesco (BTCO) 0.39%, Wisdom Tree (BTCW) 0.3%, Franklin (EZBC) 0.29%, Blackrock (IBIT) 0.25%, Fidelity ($FBTC) 0.25%, VanEck (HODL) 0.25%, Ark 21 (ARKB) 0.21% and Bitwise (BITB) 0.2%.
  • In Consumer Finance/Payments: MA was upgraded from Perform to Outperform at Oppenheimer saying even with depressed consumer spending levels, MA could produce >11% EPS growth as expense cuts offset declining revenue growth and buybacks increase. FI was upgraded to Outperform from Perform at Oppenheimer noting many investors understand Clover’s importance to the FI franchise, but the company’s continued VAS penetration expectation through 2026 is impressive and adds an upward bias for sustaining high total company margin expansion.

Biotech, Pharma, and Healthcare Services/MedTech:

  • ACOR said it will regain global commercialization rights to the multiple-sclerosis drug Fampyra after partner BIIB opted to end a license and collaboration agreement at the end of this year.
  • CYTK shares slumped after the WSJ reported NVS has backed away from its pursuit of the company, putting a damper on the prospects of a deal for the promising heart-drug developer .
  • EBS said entered a procurement contract with the Department of Defense for a maximum value of up to $235.8M.
  • GMED preannounced Q4 revenues which are expected to be ~$615.5M, which comes in above the Street’s $602.5M estimate. The company also guided FY’24 sales to be in the range $2.450B-$2.475B, slightly below Consensus’ $2.475B.
  • ITGR guided Q4 preliminary sales guidance of $411-$413M above estimate of $405M and said agreed to buy privately held Pulse technologies for about $140M.

Internet, Media & Telecom

  • In Telecom: shares of AT&T (T), VZ, FYBR declined late day after the WSJ reported the EPA reports finding more than 100 readings with elevated lead near cables in ‘high priority’ probe; companies say their own tests show low lead levels. The Environmental Protection Agency sent letters requesting telecom companies to meet with the agency about their lead-sheathed phone cables, in a new phase of an investigation. .
  • In social media: MTCH, BMBL shares pressured int online dating apps as Citigroup noted app-specific trends saw a continuation at Tinder and Bumble, as Tinder trends remain challenged, with little improvement in the US despite the November app refresh, while Bumble’s global growth continues to decelerate.
  • In Music industry: TD Cowen raised SPOT tgt to $206 from $149 saying they remain bullish on content ownership in the music industry, contributing to its Outperform ratings on UMG, WMG, and SONY while is more cautious on the digital music aggregation industry, with Spotify at a Market Perform raying.
  • In Advertising: WPP was downgraded to Sell at UBS as thinks organic growth is likely to be below consensus and the sector in both 2024 and the medium term and expects FCF to remain at depressed levels in 2024. UBS also initiated shares of OMC with a Buy and $117 tgt and IPG a Neutral and $36 tgt.
  • In Internet: NFLX is seeing strong growth of its advertising-based plan, having recently eclipsed 23M global monthly active users, up from >15M just over two months ago – Variety reported.
  • In Towers: Raymond James raised tgts on AMT to $221 from $184, CCI to $124 from $104, and SBAC to $316 from $253 saying they remain positive on the Tower sector, given its view that: 1) a stabilizing and potentially declining interest rate environment should benefit Tower stock multiples. 2) most of the fundamental bad news (E.G., Sprint churn and broader U.S. leasing slowdown) is priced in. 3) Towers remain attractively valued relative to Data Centers and other REIT sectors compared to historical levels, even after the recent upward move.

Hardware & Software movers:

  • In Software: Citigroup upgraded shares of APPN, SMAR to Buy/High Risk saying following a challenging ’23 with 16/19 stocks in CITI’s coverage lagging the IGV, it expects some broadening of software performance (esp. in SMID-cap) as more dovish monetary policy and stabilizing budgets take hold in ’24. Citi said they prefer growthier names with less estimate risk and a shift in the valuation towards profitability. DOCU shares popper late afternoon after Reuters reported that Bain Capital, Hellman & Friedman competing to acquire the co .
  • In IT Services: INFY reported better than feared Q3/FY24 results while also narrowing FY/24’s C/C revenue growth guidance (raising lower end by 50 BPTS and lowering upper end by 50 BPTS as well).
  • In PC Sector: Global shipments of personal computers rose in Q4 from the prior year, the first increase in quarterly shipments after eight straight quarters of declines, according to research firm Gartner. AAPL PC shipments rose by more than 7% in Q4, while LNVGY and HPQ shipments rose about 3% and nearly 6%, respectively. DELL shipments fell 8%. For the full year, PC shipments fell nearly 15%, with units shipped falling below 250M for the first time since 2006.


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.