Stocks end Monday in the green
There’s too much optimism in the market, says Ariel Investments’ Charles Bobrinskoy
Ariel Investments’ Charles Bobrinskoy believes that investors are too optimistic for their own good right now.
“You pay a big price for a cheery consensus,” the investor said on CNBC’s The Exchange, citing a Warren Buffett quote. “We went from a lot of pessimism, a lot of certainty that we were going to have a recession to a lot of optimism … and there’s way too much consensus that there’s not going to be a recession, interest rates are going to drop and the stock market’s going to do well.”
While the investor generally agrees with the positive consensus, he added the caveat that too much optimism makes him nervous. “Things can still go wrong often for reasons that we don’t expect,” he said.
Bobrinskoy added that he’s currently most worried about the Chinese market, citing possible headwinds such as a residential real estate collapse and a possible Taiwan blockade.
— Lisa Kailai Han
Financial stocks in uptrend are boosting value names over growth, Strategas says
The recent strength in financial stocks is helping boost the relative performance of value stocks over growth names, according to Strategas Securities’ technical analyst Chris Verrone in a note to clients Monday.
More than four out of five financial stocks in the S&P 500 are in an uptrend, as measured by their 50-day moving averages topping their 200-day moving averages, the best of any S&P 500 sector, Strategas said. “The persistent leadership from the sector remains an asset in our work as Banks continue to act well into earnings, along with the Brokers, Investment Managers, Life Insurers, Consumer Finance names, and more recently, even the long-beleaguered Payment Processing stocks are firming.”
Over the past month, S&P 500 consumer finance stocks have jumped 11.2% and are higher by 30.1% over the past three months; S&P 500 banks are up 8.2% in one month and 24.4% in three; equity real estate investment trusts are ahead 4.3% in one month and 17.8% in three.
Financial stocks are showing “significant improvement … and currently sport the highest % of issues in an uptrend,” Verrone noted.
3-month performance of S&P 500 financial stocks.
— Scott Schnipper, Michael Bloom
U.S. crude oil falls more than 4% as Saudi price cut renews demand worries
U.S. crude oil fell more than 4% on Monday after Saudi Arabia slashed prices for its key crude product, renewing concerns that global demand is weakening.
The selloff came after Saudi Aramco slashed prices for Arab Light crude to Asian customers by $2 a barrel.
The Saudis are trying to defend their market share in the face of record U.S. production and cheap barrels from Iran and Russia, said Bob Yawger, energy futures strategist at Mizuho.
“Obviously they’re hitting the panic button a little,” Yawger told CNBC.
“You’re getting closer and closer to a 2020 situation here where they try to claw back market share by cutting everything to bare bones minimum and sparking a price war,” he said.
— Spencer Kimball
Energy stocks hinder S&P 500
Energy stocks restricted gains for the S&P 500 on Monday.
The broad market index advanced more than 1% in the session, with 10 of 11 of its sectors trading higher. Energy was the sole laggard, dropping more than 1.5%.
— Alex Harring
Morgan Stanley downgrades European energy sector
Morgan Stanley has downgraded the European energy sector to “in line” for 2024 as the oil and gas markets have turned soft.
Analyst Martijn Rats argued that the case for outperformance for the sector has weakened. Third quarter earnings were disappointing, the OPEC production cuts have failed to impress the market and expectations for a cold winter have proven elusive, Rats wrote.
TotalEnergies has a diversified portfolio with a rare combination of thriving old and new energies, according to Rats. BP has significant room for upside if its quarterly performance improves and concerns over its direction diminish.
Morgan Stanley has a price target of $79.70 for TotalEnergies, implying 17% upside. BP has a target of $46.80 suggesting 31% upside.
— Spencer Kimball
Berkshire Hathaway settles suit with Haslam family
Berkshire Hathaway settled a billion-dollar lawsuit with the Haslam family over how Berkshire accounted for the value of Pilot Travel Centers, which would affect the price paid in a forced buyout of the family’s remaining stake in that truck-stop giant, both sides said Sunday night.
The settlement, whose terms were not disclosed, avoided a two-day trial to resolve the dispute that had been scheduled to begin Monday in Delaware Chancery Court.
The trial would have been a rare one involving Berkshire Hathaway. Greg Abel, who has been designated by Berkshire as the successor to longtime CEO Warren Buffett, was expected to testify at the trial.
— Dan Mangan, Yun Li
Crypto stocks jump as bitcoin hits another 21-month high
Crypto related equities rose Monday afternoon as the price of bitcoin climbed to its highest level since April 2022.
Crypto exchange Coinbase rose 3%, while Block and Robinhood, which also offer bitcoin trading services, added 3% and 5%, respectively. Mining stocks enjoyed bigger gains. Marathon Digital and Riot Platforms advanced 8% each. CleanSpark and Iris Energy both added 6%.
On Monday bitcoin rallied more than 6% to above $47,000 as BlackRock, Grayscale and other potential bitcoin ETF issuers submitted final updates to the Securities and Exchange Commission, including key fee disclosures that bolstered investors confidence that an approval is more likely than not.
— Tanaya Macheel
Potential bitcoin ETF’s impact on Coinbase remains to be seen, says Barclays
The SEC’s imminent decision on whether to allow spot bitcoin ETFs to trade in the U.S. have big implications for bitcoin but it’s unclear what the impact will be on Coinbase.
Barclays raised its price target on the stock from $67 to $110 on Monday but maintained its underweight rating, as did Raymond James.
“We remain unconvinced that this surge in trading activity is sustainable,” Barclays analyst Benjamin Budish said in a note, “and continue to see risk that crypto asset trading could increasingly move off of crypto exchanges and into ETFs, which could put meaningful pressure on Coinbase’s transaction take rate.”
Meanwhile, Needham remained bullish on the stock, naming it a top pick for 2024 with the potential to “maintain an elevated retail trading take rate.” It reiterated its buy rating and raised its price target from $160 to $180.
— Tanaya Macheel
M&A deals keep coming in the pharmaceuticals sector
Berenberg analyst Kerry Holford estimates large pharma companies have $26 billion of unallocated cash ready to deploy for dealmaking or business development before making a move to boost their leverage. That should give the industry sufficient firepower to keep the recent M&A boom going, according to the analyst.
“Therapeutic category ‘hot spots’ included oncology (focused on antibody drug conjugates and radioligand therapies), neuroscience (focused on schizophrenia), autoimmune (focused on inflammatory bowel diseases), rare diseases and obesity,” Holford wrote.
—Christina Cheddar Berk
The S&P 500 is set to post a down first five trading days of January
The first five trading sessions of the year, considered a predictor for how markets will perform going forward, looks set to flash a bearish signal.
The S&P 500 on Monday was headed for a loss for the first five trading days of January after megacap tech stocks such as Apple pulled back last week, weighing on the major averages. The broader index was last down by about 1% for the month.
Chris Larkin, managing director at E-Trade from Morgan Stanley, said that would imply near-term weakness could continue for the broader index, in the month of February.
“Unless the S&P 500 closes today above 4,769.83, the index will have a negative return for the first five trading days of the year, something that has been followed by a negative February 73% of the time since 1957,” Larkin wrote Monday.
Meanwhile, Bank of America Securities’ Stephen Suttmeier on Thursday noted the S&P 500 advance for the year, and the February through December period, is better when the broader index rallies in the first five trading days of January, citing data going back to 1928.
“When the first five sessions of the year are up, the year is up 75% of the time with an 11.2% average return,” Suttmeier wrote. “When the first five sessions are down, the year is up 50.0% of the time with an average return of 1.1%.”
Elsewhere, the Stock Trader’s Almanac’s Jeff Hirsch on Thursday said the January selling, while more typical in an election year, is “notable and a warning sign.”
— Sarah Min
Gensler says crypto investments may be ‘exceptionally risky’
Securities and Exchange Commission Chair Gary Gensler reiterated some of his previous cautionary statements to investors about cryptocurrencies on Monday, ahead of a looming decision by the SEC on bitcoin ETFs.
In a series of posts on X, formerly Twitter, Gensler warned that companies offering crypto investments may not be following the law and that the investments could be “exceptionally risky.”
“Those offering crypto asset investments/services may not be complying w/ applicable law, including federal securities laws. Investors in crypto asset securities should understand they may be deprived of key info & other important protections in connection w/ their investment,” Gensler said in one of the posts.
The SEC Chair did not mention any particular firm or cryptocurrency in his series of posts. The SEC under Gensler has cracked down on crypto firms, including major exchanges like Binance, but did lose a court case last year about its attempt to block a bitcoin ETF.
— Jesse Pound
Boeing weighs on Dow
The Dow, 1-day
Those slides outweighed notable gains seen among other Dow members. Intel and Salesforce, the two best performers, each climbed more than 3% in the session. Apple and Walgreens followed, with both adding more than 1.5%.
— Alex Harring
Nvidia hits fresh high after announcing new AI chips
The new graphics processing units, known as the RTX 4060 Super, RTX 4070 Ti Super and RTX 4080 Super, will range in price between $599 and $999. While primarily designed for gaming, the graphics cards can also power AI applications and run on PCs and laptops.
These chips will also comply with the export controls on China.
Nvidia hits all-time high
— Samantha Subin, Kif Leswing
Stocks making the biggest moves midday: Nvidia, Alaska Airlines and more
Aerospace ETF slides, dragged by Spirit AeroSystems, Boeing
The ITA ETF, 1-day
Oil prices fall more than 3% after Saudi Aramco cuts prices
Oil prices fell more than 3% on Monday after Saudi Arabia slashed key crude prices amid worries that the market is oversupplied.
Saudi Aramco cut its official selling price by $2 a barrel, according to Reuters. The price cut comes as OPEC and its allies are slashing crude production this quarter in an effort to support the market in the face of record production in the U.S.
Crude prices settled higher for the first week of 2024 on rising tensions in the Middle East, but supply and demand concerns have persistently overshadowed geopolitical risks in the market.
— Spencer Kimball
Inflation expectations hit nearly 3-year low, New York Fed survey shows
Consumer inflation expectations continued to trend lower in December, with the one-year outlook hitting its lowest since January 2021, according to a New York Federal Reserve survey released Monday.
The central bank’s Survey of Consumer Expectations saw expectations decline at the one-year horizon to 3%, down from 3.4% a month ago. The three-year outlook dipped to 2.6% from 3%, while the five-year horizon slipped to 2.5%, down 0.2 percentage point from November.
Expectations for food and rent costs declined, while the outlook for gasoline was unchanged at 4.5%. Household spending expectations nudged down to 5%, off 0.2 percentage point from the previous month.
Twilio jumps as CEO steps down
“The time has come for me to pass the reins of this extraordinary company to a new CEO to lead Twilio through its next chapter,” Lawson said in a blog post announcing the change,” he wrote.
The enterprise communications software company’s faced pushback in recent weeks from two activist investors pressing for changes at Twilio. Longtime executive Khozema Shipchandler will strep in as CEO.
Twilio shares pop as CEO steps down
— Samantha Subin, Rohan Goswami
Nvidia hits record high
After a tough week, Nvidia rebounded Monday and reached an all-time high. The stock was last up 4%, trading around $510 per share.
NVDA rises to record
— Fred Imbert
Stocks open mixed on Monday
Boeing, Alaska Air among Monday’s biggest premarket movers
BlackRock reveals fee for proposed bitcoin ETF
Multiple ETF issuers filed updated registration statements for bitcoin ETFs on Monday morning that included key fee information, a sign that approval from the Securities and Exchange Commission could come within days.
Asset management giant BlackRock said in its filing that its ETF would have an annualized fee of 0.30%, with a temporary waiver so that the fee is just 0.20% for the first $5 billion of assets during the first year of the fund.
The Ark 21Shares Bitcoin ETF is proposing an even lower fee, at 0.25% annualized. That fund’s temporary fee waiver will knock that to zero for the first six months or the first $1 billion in assets. Notably, this is down from 0.80% in previous filings, a sign that competition in the ETF market is already driving down the fees.
The latest updated registrations are believe to be the last round of changes before the SEC makes a decision on whether to approve bitcoin ETFs. More than 10 firms are vying to launch a fund.
The SEC must first make a decision on rule change applications to allow a bitcoin ETF, which is expected this week. The regulator then can approve individual fund filings, after which fund launches could quickly follow.
— Jesse Pound
Lululemon falls even after raising guidance
Shares of Lululemon were down more than 2% in the premarket even after the athleisure company raised its fourth-quarter earnings guidance.
The apparel maker sees earnings per share between $4.96 and $5. That’s up from a previous range of $4.85 per share to $4.93 per share.
“Our sales trend remains balanced across channels, categories, and geographies, enabling us to raise our guidance for the fourth quarter and close out another strong year,” CFO Meghan Frank said in a statement.
— Fred Imbert
Boeing shares slide 8.4% in premarket trading; Airbus gains
An Alaska Airlines Boeing 737-9 aircraft during an event showcasing the latest updates in the ecoDemonstrator program at Boeing Field in Seattle, Washington, U.S., on Monday, Sept. 27, 2021.
David Ryder | Bloomberg | Getty Images
Shares were down around 8.43% at 6:45 a.m. ET.
Meanwhile, Airbus shares rose 2.45% Monday morning in France, bucking the downward trend in Europe.
The Federal Aviation Administration on Saturday said around 171 Boeing planes worldwide would be affected by its emergency airworthiness directive, which requires aircraft to be inspected before flying again.
Russ Mould, investment director at AJ Bell, noted that Friday’s blowout incident is the latest in a “string of problems for the company,” and suggested airlines using 737 Max planes will be “thinking long and hard about their future aircraft requirements.”
– Elliot Smith
Evergrande’s EV unit calls for trading halt pending a company announcement
The electric vehicle (EV) manufacturing arm of property developer China Evergrande has called for a trading halt pending a company announcement.
— Lim Hui Jie
Bank of Korea set to hold interest rates steady for eighth straight meeting
The Bank of Korea (BOK) complex in Seoul, South Korea, on Monday, April 10, 2023.
Bloomberg | Bloomberg | Getty Images
Bank of Korea will hold the first central bank meeting of the year among major Asia economies on Thursday.
South Korea’s central bank is expected to hold interest rates steady at 3.50% for its eighth straight meeting.
“We expect the decision to be unanimous and the Board to retain the wording ‘maintain a restrictive policy stance for a sufficiently long period of time’ in its forward guidance,” HSBC economist, Jin Choi wrote in a client note.
Choi said even if the BOK holds rates, there might be a change in tone which could hint at a possible easing in the near term that some market participants’ expect, but warned that “inflation is likely still too high for a near-term start of easing.”
The central bank’s inflation target is 2%.
— Shreyashi Sanyal
FAA grounds more than 170 Boeing 737 Max 9s
The Federal Aviation Administration on Saturday ordered a temporary grounding of dozens of Boeing 737 Max 9 aircraft for inspections, a day after a piece of the aircraft blew out in the middle of an Alaska Airlines flight.
Images and video of Alaska Airlines Flight 1282 that were shared on social media showed a gaping hole on the side of the plane and passengers using oxygen masks before it returned to Portland shortly after taking off for Ontario, California, on Friday afternoon.
The FAA’s emergency airworthiness directive will affect about 171 planes worldwide and applies to U.S. airlines and carriers operating in U.S. territory, the agency said. Alaska and United Airlines said late Saturday that they were grounding their entire fleets of Boeing 737 Max 9s.
— Leslie Josephs
Congressional leaders reach $1.59 trillion deal on top-line spending
Congressional leaders announced a $1.59 trillion deal on top-line spending Sunday as the government races to avoid a potential shutdown.
— Samantha Subin, Christina Wilkie
November consumer credit data out Monday
Total U.S. consumer credit in November is expected to have risen to $8.0 billion, according to economists polled by Dow Jones. That would be a rise from $5.2 billion in the prior reading.
The data is set to release 3 p.m. ET.
— Sarah Min
Stock futures open little changed
Stock futures opened little changed Sunday night.
Dow Jones Industrial Average futures fell by 38 points, or 0.1%. S&P 500 and Nasdaq 100 futures climbed 0.02% and 0.05%, respectively.
— Sarah Min