Market Review: January 16, 2024

Closing Recap

Tuesday, January 16, 2024





DJ Industrials




S&P 500








Russell 2000













U.S. stocks finished weaker, but strength in the semiconductor index (SOX) helped by AMD, AVGO and NVDA helped pare losses in the Nasdaq, but the Smallcap Russell 2000 fell over 1% and the Dow underperformed behind BA weakness. Ten of the eleven S&P sectors were in the “red” led by weakness in Energy, Industrials, and Materials, and NYSE breadth favored decliners over advancers by nearly 4:1 margin, but the S&P 500 was only down -0.5% and the Nasdaq -0.4%. Stocks were cruising along higher early morning, paced by gains in tech but things got bumpy after Fed Governor Christopher Waller said the U.S. is "within striking distance" of the Federal Reserve’s 2% inflation goal, but the central bank should not rush towards cuts in its benchmark interest rate until it is clear lower inflation will be sustained. Waller said they should proceed "methodically and carefully," not come through the sort of large, fast reductions used when the Fed is trying to bail out the economy from a shock or a pending downturn. Note U.S. short-term interest-rate futures imply less than 60% chance of Fed rate cut in March, vs more than 70% chance seen before Fed’s Waller speech. Treasury yields popped initially on the Waller comments with the 10-yr to 4.05%, briefly dipped, and then moved higher (didn’t take out highs around 4.12% after CPI print 2-weeks ago). Still, markets held up relatively well as the dip was modest. The U.S. dollar hit a one-month high as Treasury yields climbed on growing speculation that the Federal Reserve may ease on aggressive rate cuts.  Airlines hammered after SAVE/JBLU merger was terminated by a Federal judge.


This week we get more follow through earnings in the banking/financial sector (SCHW, USB, CFG tomorrow after MS, GS, this morning) before the tech earnings onslaught next week. The World Economic Forum in Davos opened on Monday with a heavy agenda scheduled in the next three days before it concludes on Friday noon. WEF organizers said more than 2,800 leaders from 120 countries, including more than 60 heads of state, are due to participate at the annual meeting. Major averages remain strong, with no drastic pullbacks thus far in 2024 (any drop has been bought up quickly, much like most of 2023). In an interesting stat, major averages remain somewhat resilient: “The S&P 500 hasn’t declined by 2% or more for 225 consecutive trading days – this is the longest streak since a 351-day stretch that lasted from Sep 2016 to Feb 2018. Will that trend continue into the heart of earnings season and many Fed speakers this week?

Economic Data

  • The lone piece of economic data showed very weak manufacturing in the NY Fed region as NY Fed’s empire state current business conditions index tumbled -43.7 in January (vs. consensus -5.0) below the -14.5 in December as new orders index -49.4 in January vs -11.3 in December (previous -11.3) and prices paid index +23.2 in January vs +16.7 in December (previous +16.7).

Commodities, Currencies & Treasuries

  • Gold prices dropped -$21.40 or over 1% to settle at $2,030.20 an ounce, hurt by a strengthening dollar and rising Treasury yields, as markets wait to hear remarks from several Federal Reserve officials this week to further gauge the central bank’s monetary policy path. The dollar index (DXY) rose around 1% to a more than one-month high around 103.40, extending overnight gains after Fed Governor Waller late morning commentary (there are at least other six officials due to speak this week.) The euro dropped more than 0.5%.
  • Treasury yields spiked on the back of comments by the Fed’s Waller who pushed back somewhat against aggressive rate cut speculation. But he did not give any specifics on the timing or degree of actions. The 10-yr hit afternoon highs rising over 12-bps to 4.073% (2-yr +11 bps at 4.247%) but still hasn’t eclipsed the highs 2-weeks ago above 4.1% after the “hotter” CPI report. The curve is at -17 bps, having steepened out from -20 bps on Friday and at -40 bps at the start of the year.
  • U.S. crude oil futures settle at $72.40 per barrel, falling -$0.28 or 0.39% while Brent crude futures settle at $78.29/bbl, up 14 cents, 0.18%. Natural gas for February delivery settles down 12% at $2.900/MMBtu, giving back much of last week gains as weather forecasts point to a warm-up in the weather after this week’s deep freeze across large parts of the U.S.





WTI Crude















10-Year Note




Sector News Breakdown


  • Morgan Stanley with several changes in retail: TSCO downgraded from Equal Weight to Underweight driven by lower potential for EPS/multiple revisions relative to most of its coverage as expects lagged reversion for TSCO to weigh on ’24 comps and margins, with the combined impact yielding muted EPS growth potential in ’24. DG upgraded from Equal Weight to Overweight and raise tgt to $160 from $130 as thinks near-term fundamentals are bottoming and ’24 should see sequential improvement on SSS with recent market share losses leveling off. TGT upgraded from Equal Weight to Overweight and raised tgt to $165 from $140 saying risk/reward skews wide and favorably.
  • Wells Fargo notes PVH is top pick in retail and highlights BURL, NKE, TPR, and ASO, upgraded VSCO to overweight; and downgraded GIII to underweight and both LEVI and RENT to equal weight saying given where they are in the cycle, the setup for retail in 2024 is changing. The firm said they are shifting into a "stock pickers tape," driven by recovery dynamics and idiosyncratic setups.

Consumer Staples & Restaurants:

  • In Restaurants: Burger King, which is owned by QSR, agreed to buy Burger King franchisee TAST in a deal valued at $1 billion. Under terms of the deal, Carrols shareholders will receive $9.55 in cash for each Carrols share they own, which represents a 13.4% premium over Friday’s closing price of $8.42 .
  • BROS was upgraded from Hold to Buy at Stifel and raised tgt to $35 as believes the company is poised to make meaningful progress on several fronts under Ms. Christine Barone’s leadership.
  • Morgan Stanley upgraded SBUX to Overweight after being more cautious in ’23 and downgraded both EAT and SG to Underweight; said given recent performance, don’t see as compelling of risk-reward skew in space but remain OW CAVA and DRI, and underweight on CAKE. The firm said slightly below-history growth, less pricing, pockets of risk, but relative cost/operating stability, stable consumer, better balance sheets leave US cautiously optimistic. MSCO is OW rated on DPZ, SBUX, MCD, YUM, CAVA, DRI, USFD, see less favorable risk/reward skew in most SMIDs.
  • In Beverages: SAM upgraded from Underperform to Market Perform at Bernstein and raised tgt to $335 from $280 saying Twisted Tea now accounts for ~50% of group volumes in Nielsen (vs. ~30% in Jan-22). It continues to grow strongly (+21% YoY) and Bernstein’s analysis indicates it has more room for expansion.
  • In Grocers: The WSJ reported a lawsuit filed by Washington Attorney General Bob Ferguson makes the state the first to challenge the ACI/KR deal, which would combine the two largest U.S. supermarket operators. The Federal Trade Commission (FTC) has been reviewing the deal, announced in late 2022, for the past year.

Homebuilders, Building Products, Home Furnishing:

  • In Home Improvement Retail: Piper Sandler upgraded HD to Overweight and raised tgt to $400 from $311 (LOW to $245 from $218), taking a more bullish stance on home improvement – and more specifically, large remodel projects – as home equity extraction activity (cash-out refi’s + HELOC originations) is trending toward improvement in 2024.
  • Bernstein said for 2024, LOW and HD with a favorable outlook as rebound in existing home sales and discretionary spending is expected to drive sales in their do-it-yourself categories (raised price target on LOW to $251 from $235; HD to $350 from $328). FND was downgraded to Market Perform at Bernstein in 2024 home improvement outlook saying 2023 was defined by declining comps in Home Improvement, due in part to the precipitous decline in Existing Home Sales and a pullback on discretionary spending among consumers—especially big-ticket discretionary.
  • In Furniture Retail: Wayfair (W) upgraded from Equal Weight to Overweight at Morgan Stanley and raised tgt to $80 from $60 saying the company fits their theme of favoring early-cycle, quality retailers with a track record of share gains and cost discipline.


  • Midstream: Wells Fargo said ENB & PAA could beat earnings while TRP could miss in earnings preview saying the sector is shaping up to be a solid EPS season – they expect a strong outlook from WMB and weaker from LNT/TRGP.
  • E&P Sector: TALO announced the acquisition of QuarterNorth Energy in a cash and stock deal valued at $1.29B. QuarterNorth is a private, deepwater-focused Gulf of Mexico operator with estimated 2024 production of ~30 mboepd.
  • In Refiners: Multiple reports this morning indicates that the PSX refinery in Bayway, NJ, had an overnight explosion and fire that injured at least three people with operations most likely impacted.

Banks, Brokers, Asset Managers:

  • Few more big banks out with earnings:
  • GS reported Q4 revenue of $11.32B, up 6.9% and beating forecasts of $10.8B and earnings jumped 65% to $5.48 per shar easily topping the $3.62 est. after cutting estimates from $6.67 per share in September. Asset & wealth management and platform solutions revenue rose during the quarter, while global banking & markets revenue fell about 3%. Goldman Sachs also reported $1 billion in share buybacks during the quarter.
  • MS shares slid as Q4 EPS of $0.85 misses the $1.07 estimate, revenue of $12.9B beats by $80M boosted by strength in its investment banking business which increased 5%, as fixed income underwriting revenue jumped 25% while advisory and equity underwriting revenue were flat.
  • In Regionals: PNC Q4 adj EPS $3.16 vs. est. $2.94; Q4 revs $5.35B vs. est. $5.29B; Q4 CET1 capital ratio 9.9%; Q4 tangible book value per share $85.08; incurred $525 mln of post-tax expenses related to FDIC special assessment and workforce reduction charges; qtrly average loans of $324.6B increased $5.1B, or 2% vs q/q.

Bitcoin, FinTech, Payments:

  • In FinTech: PYPL downgraded to Neutral from Buy at Mizuho saying their data suggests that market share loss to Apple Pay looks increasingly challenging. Mizuho also worries about an emerging age demographic problem, as younger cohorts in the US gravitate towards newer payment methods like Apple Pay, auto-fill, and BNPL.
  • In Credit Cards: AXP card member loans 30 days past due loans as a % of total 1.4% at Dec 2023 end versus 1.4% at Nov 2023, and loans net write-off rate-principal only 2.5% at Dec 2023 end versus 1.7% at Nov 2023 end. DFS said credit card delinquency rate 1.59% at Dec 2023 end vs 1.54% at Nov 2023 end and said credit card charge-off rate rises to 1.98% at Dec 2023 end vs 1.79% at Nov 2023 end. Citigroup (C) said credit card delinquency rate 1.45% at Dec 2023 end vs 1.47% at Nov 2023 end and charge-offs 2.34 % in Dec vs 2.21% in Nov.

Insurance & Services:

  • In Asset managers: TD Cowen upgraded BLK to Outperform from Market Perform, raise its ’24-25E adjusted EPS estimates, and shift its target methodology to SOTP post GIP deal – raise its 12-month price target to $938 from $819 prior, and see a pathway toward $1,000.
  • In Credit Rating Services: Experian reported a 9% rise in Q3 revenue, powered by strong demand for its new products and business wins, especially in Latin America, and said organic revenue from Latin America grew 13% in the December quarter. Experian guided FY24 organic revenue to grow between 5% and 6% at constant exchange rates vs earlier forecast of 4%-6% growth (shares of FICO jump in reaction early).
  • In Insurance: FAF shares slipped after saying a previously reported cybersecurity incident will have a material impact on its fourth-quarter results of operations.
  • In Lending: Citigroup upgraded SLM, downgraded RKT and announced a negative catalyst watch on NAVI as the firm said they expect 2024 outlooks for consumer finance companies to be in line with or better than consensus expectations. SLM upgraded to Buy from Neutral as it pivots to balance sheet growth next year, and it is downgrading RKT mainly on valuation. Citi is opening a negative catalyst watch on NAVI into earnings as it expects FFELP NIM guidance to be substantially lower than recent levels.


  • Truist upgraded COLD, FRT, EQIX, WSR and MAA to Buy from Hold, and downgraded AVB, AKR, ELS, SUI, and SLG to Hold saying they are relatively bullish on REIT sector, following a challenging 2023 that was mired by volatile inflationary environment (RMZ +14% vs S&P500 +26%). The firm said REITs should benefit from a favorable backdrop of improved cost of capital environment, liquidity, and attractive valuation levels.
  • Bank America downgraded OHI to Neutral from Buy and lowered tgt to $31 from $33 to reflect its view that the stock has more limited upside given continued tenant issues, choppy external growth & risk to dividend. Bank America upgraded VTR to Buy from Neutral and increased PO to $53 from $48 to reflect its view that VTR’s strong core growth (notably senior housing NOI) will flow to the bottom line in 2024 and 2025.

Biotech & Pharma:

  • ALLK shares tumbled after announced that its Phase 2 studies of Lirentelimab in Atopic Dermatitis and Chronic Spontaneous Urticaria both did not meet their primary endpoint – company not pursuing further clinical development of lirentelimab, refocusing its development efforts to AK006; announcing a restructuring to focus on development of AK006 and said will reduce its workforce by approximately 50%.
  • GSK upgraded to Buy from Sell, SNY and NVS to Buy from neutral, and NVO to Neutral from Sell at UBS while the firm downgraded AZN to Sell from Buy in European Pharma.
  • REGN and SNY said the FDA updated the label for Dupixent(R) (dupilumab) in atopic dermatitis, adding efficacy and safety data for patients aged 12 years and older with atopic dermatitis with uncontrolled moderate-to-severe hand and/or foot involvement.
  • VRTX said the FDA approved its Casgevy drug for the treatment of transfusion-dependent beta thalassemia in patients 12 years and older, two months ahead of the FDA’s decision deadline, known as a PDUFA date.

Aerospace, Industrials, Materials & Transports

  • In airlines, SAVE, JBLU shares volatile midday after Spirit Airlines tumbles after judge blocks sale to JetBlue. JBLUE and SAVE said in a statement: "We disagree with the U.S. District Court’s ruling. We continue to believe that our combination is the best opportunity to increase much-needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers.”
  • BA shares slip after being downgraded to equal weight from overweight at Wells Fargo, seeing a higher risk of production and/or delivery impacts with the US FAA taking a closer look into Boeing’s operations. Also, Bloomberg noted China’s aviation regulator has temporarily halted the restart of 737 Max jet deliveries to the nation. SPR also extends losses in sympathy with decline in BA after Wells downgrade and 737 Max 9 groundings extended.
  • In Defense: LHX, LMT and Sierra Space have won separate contracts valued at $919M, $890M and $740M respectively from the Pentagon to deliver and operate 18 satellites related to the agency’s missile-tracking efforts, the Space Development Agency said.
  • In paint stocks, Kelly-Moore Paints said it plans to cease operations and shut down, collapsed in part by years of asbestos lawsuits that have left the paint maker and retailer still saddled with some $170 million in liabilities. Shares of SHW and PPG were active on the news.
  • Chemicals call at Bank America: the firm upgraded DOW to Buy from Hold (tgt to $60 from $57) increasingly confident on a ~50% EBITDA growth by 2025; ECL upgraded to Neutral and downgraded FMC to Underperform from Neutral (tgt to $57 from $60) saying the outlook for crop chems remains cloudy; CE to Underperform (tgt to $135 from $124) following a 56% return in 2023, and DD to Underperform from Buy as see modest improvement in electronics/housing end markets and PFAS exposure.
  • LYB announced it entered into an agreement to acquire a 35% interest in Saudi Arabia–based National Petrochemical Industrial Company (NATPET) from Alujain Corporation (Alujain) for approximately $500M.
  • In Metals & Mining: GOLD total preliminary output was 1.05 million ounces of gold and 113 million pounds of copper in the three months ended Dec. 31, up from 1.04 million ounces of gold and 112 million pounds of copper in the previous quarter.

Internet, Media & Telecom

  • In Internet: BIDU shares slipped after the company clarified media reports (in South China Morning Post on Friday) on its ERNIE Bot saying it has not engaged in any business collaboration or provided any tailored service to authors of the academic paper of a Chinese university or any institutions with which they are affiliated.
  •  In Telecom: CMCSA said Saturday night’s Chiefs-Dolphin’s game on Peacock was the most streamed event ever at 23M viewers and set an internet usage record as well, accounting for 30% of all web traffic. NY Post reported this weekend that DIS’ ESPN and the National Football League are in advanced talks that could result in the league taking an equity stake in ESPN, NY Post reported. TGNA and AT&T’s (T) DirecTV and Tegna reached a new multi-year distribution agreement that covers Tegna’s 64 owned stations in 51 Nielsen designated markets.

Hardware & Software movers:

  • AAPL shares slip on reports the company is offering rare discounts on its iPhones in China, cutting retail prices by as much as 500 yuan ($70); sales of Apple’s latest iPhone 15 handsets have been far worse than previous models in China according to the reports. . Separately, AAPL is removing a blood-oxygen sensor from certain models of its smartwatches to get around a patent dispute related to the technology, according to a MASI filing on Monday.
  • SNPS agreed to buy ANSS for $35 billion in cash and stock “bringing together Synopsys’ industry-leading EDA solutions with Ansys’ world-class simulation and analysis capabilities” Ansys shareholders will receive $197 in cash and 0.3450 share of Synopsys for each share .
  • FTNT was downgraded from Overweight to Equal Weight at Wells Fargo but raised tgt to $65 based view that billings growth is slowing to single digits in FY24 and May take longer to get back to double-digits, the pivot to SASE is off to a slow start, and SASE is a key driver of billings growth, and adjusted FCF is slowing, and the lack of operating leverage over the next two years will make it difficult to accelerate growth.
  • HPE was downgraded to MP from OP at Bernstein and cut tgt to $17 from $20 on the premise that the co’s acquisition of Juniper limits opportunities for shareholder returns and value-enhancing strategies.
  • TEAM announced additional price increases relating to renewal of its flagship on-premises Data Center products.


  • Barclays with sector call as they upgraded CAMT ($82 from $65), COHR ($60 from $38), NXPI ($260 from $200), WDC ($65 from $45) all to Overweight from Equal Weight.
  • KeyBanc raised price tgts on AMD to $195 from $170, ARM to $75 from $65, MU to $115 from $100, NVDA to $740 from $650 and QCOM to $165 from $145 after quarterly findings in semis. The firm said broad-based end-demand trends remain weak, as auto and industrial end markets undergo inventory destocking; PCs are bouncing along the bottom, while Android smartphone demand is sustaining with iPhone seeing weakness in China.
  • ACLS raises Q4 EPS view to $2.05 from $2.00 (est. $2.00) and reaffirmed its expectations for the full year; expects revenue for the Q4 to be greater than $300M, above the approximately $295M prior guidance.
  • AMD hit fresh 52-week highs above 4159 per share, rising more than 9% earlier before paring gains.
  • IDCC guides Q4 adjusted EPS $1.34 on revs $105M, above consensus $0.71/$104.2M.
  • NVDA chips have been purchased in China by organizations linked to its military and state-backed artificial intelligence research firms over the past year, despite a U.S. export ban, according to a Reuters report citing publicly available tender documents. .
  • WDC was upgraded from Hold to Buy at Deutsche Bank and raised tgt to $65 from $45 noting since WDC reported FQ1 results in late October, NAND pricing has improved faster than the firm expected, leading them to believe that business fundamentals for FQ2 will likely come in at the high end of guidance.


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.