Stocks, yields slide as Fed signals no rate cut soon

There obviously was not a lot of confidence in what was coming from the Fed today as was evidenced by the Dow being near flat and the tech indexes being well into the red all day awaiting the announcement.  When it came around 2:30 and Powell made clear that no cuts would be coming anytime soon, certainly not in March, then the whole market tanked taking both the Dow and Nasdaq down over 300 each. 

Nasdaq ends lower ahead of big tech earnings, focus on Fed

It was a picture of caution today as the tech indexes suffered most of the day deeply in the red when both Google and Microsoft fell after their Q4 reports.  There is concern that these “Magnificent Seven” stocks have been doing too well and may be on the verge of underperforming. There was also the jobs report showing an unexpected increase in new openings with not enough workers to hire, adding further concerns that the job market remains too hot for rate cuts to be coming anytime soon, let alone as early as March. (See the chart for the disconnect between jobs and hiring.)  

S&P 500 hits fresh closing high ahead of Fed meeting, big tech earnings

All three indexes were basically flat until about 2 pm when they suddenly zoomed way up, the Dow up 224 points. It’s unclear what happened at 2 pm but it was a constant all day long that a whole slew of new data will be coming throughout the week including a ton of earnings reports, the Fed meeting, a slew of jobs reports, home prices, consumer confidence, purchasing managers, construction, and factory orders. 

Optimism Among Individual Investors Bounced Back Last Year

From the latest AAII, after a terrible 2022 and not so great first 10 months of 2023, optimism is back.  

10 Best Investments for 2024

The headline's a little misleading. It's not really the 10 best investments but the best investments across 10 different categories, which means it's really about some 50 best investments.  But that makes it even more valuable reading. Hope everyone's having a nice weekend.   

Weak Intel forecast drags S&P 500, ends streak of record highs

The third day with the same pattern saw all three indexes up in the morning, reaching a peak around 11 a.m, the Dow up some 160 points, then declining to a low around 2 pm before recovering some of the losses by close. The Dow at least closed in the black, but the tech indexes were dragged down by a slumping Intel forecast with the S&P breaking its five-day record streak. 

S&P 500 extends streak of record highs; Tesla tumbles

It was pretty much a repeat of yesterday with all the indexes starting high, the Dow up some 200 at 10 a.m., then taking a dive to almost break-even until 1 p.m. when it rebounded for the rest of the day to regain all the day’s losses and then some. Tech’s recovery was not nearly as good with the Nasdaq barely making it into the black but the S&P notching a respectable 25 point gain giving it its 5^th consecutive record high.  

S&P 500 ekes out another record high as Netflix and chipmakers leap

The day started out great with all the indexes up substantially, the Dow over 150 points. Then at 1 pm, the whole market started a decline that ended with all the indexes closing at a mere shadow of their intraday highs. The Dow closed down 99 but the Nasdaq and S&P managed to stay ever so modestly in the black. But even with its very modest gain, the S&P notched its fourth consecutive record close and the Nasdaq now stands just 4% below its record from November 2021.  

S&P 500 notches third straight record high close

All three indexes took an early morning dive reaching a low around noon, the Dow down about 200, then recovered with the tech indexes achieving moderate gains by close but the Dow remaining in the red closing down 96.  Trading was lighter as investors await crucial PCE, PMI and Q4 GDP data later this week. There’s also some pessimism creeping into sentiment today with the S&P trading at 20x earnings vs an average of 16 and thus today’s expert predicting, “Earnings for all equity classes peaked and will move lower as the economy weakens and revenue growth stalls.”  

S&P 500 ends with record high for 2nd session in row

Today the indexes were first way up (the Dow at +253 at 10:30), then down (Dow losing 200 by 1:30), then back up again for all 3 to close up very nicely, the S&P notching its 2^nd consecutive record and the Dow closing above 38,000 for the first time. All of this is indicative of very positive overall sentiment with the chart below showing a stellar forecast for the S&P in 2024. But there remains some fence-sitting as investors await a week that will include readings on PCI, PMI and Q4 GDP.  Volume was above average at 11.86 billion. 

AAII: January Charts of Interest: Quality Boosts Returns

It's time for another look behind the scenes at the AAII, tonight it's a look at the January Charts showing per Ben Inker of the firm GMO that quality boosts the returns of most types of stocks.  

Magnificent 7 Stocks: What They Are and How They Dominate the Market

I'm sure you're all at least vaguely familiar with the so-called "Magnificent 7" designation for stocks, which has replaced the FAANG moniker.  This week's edition of U.S. News Invested goes into more detail about which companies make up this elite index and how they made the list.  

S&P 500 notches first record high close in 2 years; chipmakers soar

It was a big shot straight up on all the indexes as the market enjoyed a huge rally triggered by its second consecutive day of AI exuberance and the big boost it gave to chipmakers after Wednesday’s announcement by the world’s biggest chipmaker that it “saw booming demand for high-end chips used in AI.” These two rallies have also finally pushed the S&P beyond the coveted 4,796 high mark achieved on January 3, 2022 and even beat it by 45 points to signal the end of the index’s long bear market and a much anticipated new bull market. 

S&P 500 ends near record high as AI optimism lifts chipmakers

Gains were down until about 1 pm when suddenly all three indexes soared, the S&P once again just a breath away from its January 2022 record close which, once reached, is expected to trigger another bull market. Today’s impetus was stellar performance from the chip companies which bolstered the chip index 3.4% and the overall tech index 2%.  All this week, healthy econ data kept the market down due to rate fears.  Today’s good news had the opposite effect. 

Wall St ends lower, Treasury yields gain as strong data cools rate-cut hopes

All three indexes took a substantial dive as it was yet another day when good news was taken as bad news. Strong December retail sales showed that the consumer remains plenty healthy while weathering both hot inflation and restrictive monetary policy. However, this also painted a picture unfavorable to the timing of the first Fed rate cut, the odds for a March cut now falling to 53.8%, substantially down from yesterday’s 63.1%.  

Wall Street ends down as Apple weighs

It was a shot straight down on all the indexes from the outset, the Dow reaching a loss of almost 400 points, before rebounding after 2:30 pm to close with modest losses on the tech side, a more serious 231 points on the Dow. Though the headline said that Apple was the main drag (China iPhone sales have been disappointing), the real drag were the mega-banks Morgan Stanley and Goldman Sachs bringing down the Dow and the banking index 1.2%. 

AAII: January Model Shadow Stock Portfolio Update

For MLK Day the markets are closed and there isn't much market news out there so I thought I would share the latest AAII update regarding their Shadow Stock Portfolio, which was published on Saturday. You're all well aware that the AAII has maintained this paper portfolio for years and I even recall that, when we had our study group years ago, a few of you had compared the portfolio to others of its kind and found it somewhat lacking. Anyway, for your edification (or amusement), here is the latest.  

New Market Regime

For your Sunday reading pleasure I submit the latest of episode of the PBS program WealthTrack in its discussion of what is now known at the New Market Regime, what it means and how it influences allocation strategies.  Stay warm everyone!  (I experienced 9 outages at my place on Saturday so it's been an interesting weekend, to say the least.  It turned out to be a defective transformer and DTE fixed it late Saturday afternoon, pleased to announce there have been no further incidents, knock wood as the temps dip below zero.)  

8 Best Defense Stocks to Buy Now

For those of you looking for some insurance after the bit of sliding the stock market has taken in January after the huge December rally, here are the latest recommendation for defense stocks courtesy of this week's edition of U.S. News Invested.  

Stocks end little changed as earnings offset inflation data

The Nasdaq and S&P hugged the break-even line pretty closely all day but the Dow went into a deep dive again, down 240 by 11 a.m., bogged down mostly by a hit from United Healthcare which accounted for about half of the slide, but recovered to a 118 loss by close. All of this was rather counterintuitive as the PPI came in with good news, in one short day once again boosting confidence that the Fed could now amply justify rate cuts and suddenly pushing the odds of a March cut to an impressive 79.5%, up from 67.6% two days ago.  Bank stocks also slid bringing the banking index down 1.26%.  Volume remains below average at 10.57 billion. 

Wall Street little changed after inflation, labor market data

All three indexes took a big dive until around noon, the Dow down almost 300 points, with the CPI data showing prices rising more than expected and unemployment data showing a hotter than expected job market. Then a well-received $21B sale of 30-year Treasury bonds helped boost stocks as the indexes all recovered to break-even by close. The good news: “Nobody believes that this [CPI] is going to be a persistent go-forward problem,” while the bad news was Fed officials saying, “consumer price data for December did little to assure them inflation is now on a steady track.”  Volume remains below average at 11.41 billion. 

Stocks climb as megacaps lead; inflation data, earnings on deck

It’s been one day way up, one day way down as investors try to figure out which way inflation and thus rate cuts are going to go.  Today it was once again way up on all three indexes as investors continue to try gauge the direction of inflation and rate cuts. But recent Fed comments have compelled investors to dial back expectations and today was no exception with the New York Fed Prez reiterating again that it’s too soon for rate cuts and still a fair way to go to the 2% inflation goal. 

Stocks ease, yields inch up ahead of US inflation data, earnings

All three indexes opened way down but at least the S&P and Nasdaq managed to recover to close the session at near break-even. The Dow was not so lucky having lost over 300 right out the gate and recovering only half before close. Just as yesterday Treasury yields fell and stocks rose ahead of inflation optimism over the CPI and PPI coming soon, today those same bets were hedged and yields rose and stocks fell as the Treasury sold $52B in 3-year notes. 

Nasdaq ends higher as yields fall, Boeing curbs gains on Dow

It was a shot straight up on all the indexes except the Dow starting over 200 points in the red but steadily moving up 450 points to close up over 200.  It was a day of falling Treasury yields which in turn gave a big boost to the megastocks as investors use falling yields to gauge inflation and thus falling rates. As today’s expert put it, “We’re probably in a more rational place in terms of yields and so far the view is that yields are falling for the right reason.” 

7 Best Vanguard Funds to Buy and Hold

For those of you who are still into good 'ol reliable conservative "buy and hold," here are the best of the best for 2024.  

LEGENDARY VALUE INVESTOR EXCLUSIVE

For those of you favoring value stocks, this most recent episode of WealthTrack gives us the latest and greatest courtesy of an exclusive interview with Bruce Berkowitz, founder of Fairholme Capital Management and widely considered for many years one of Wall Street's foremost value investors.  It is a great rags to riches to rags story.  He talks candidly about the joys of victory and agonies of defeat.  Enjoy.  

Wall Street posts small Friday win, but first weekly decline in ten

There was bad news and good news. The bad was a jobs report showing more hiring than expected, which ordinarily would be good news but, in this case, just douses the hopes of rate cuts coming sooner than later.  The good news was from the ISM report showing falling services sector activity pointing to a weakening economy. Again, this would ordinarily be bad news but in this case bolstered hopes for rate cuts coming sooner than later.  

S&P, Nasdaq extend year-start skid to three; Dow higher on financials

This morning it looked like we might be seeing a day in the green to break the 2-day losing streak as the Dow was up almost 300 at 11:30 and the S&P up over 20. But then started a steady decline that ended with the Dow barely breaking even and the other two with a third day of losses, the first such streak on the S&P in 9 years.  And even though the jobs report was very positive showing a labor market able to continue sustaining the economy.  

Wall St notches second lower finish as 2024 starts with profit-taking

It was a shot straight down at the outset on all the indexes with at least the S&P and Dow recovering much of their losses by 2:30 p.m. only to take another shot straight down in the final hour to have the second consecutive close in the red.  There are two causes – 1) After the blistering year-end rally, it’s time for profit-taking; and 2) for the second day a sudden skepticism over the likelihood of rate cuts. 

S&P, Nasdaq begin 2024 with lower close as Apple, big tech weighs

The Dow seesawed back and forth four times today, losing almost 200 points twice before recovering to a 25 point gain. The Nasdaq and S&P didn’t fare nearly as well, both in the red all day.  The Nasdaq was hit hard by weakening iPhone sales. The S&P was within 1% of its record on Friday, today slipping to 1.6%. After an end-of-year gangbuster rally, today it was time to temper rate cut expectations. Thus, Treasury yields went up and equities down. Coming later this week is Fed minutes and a whole lot more labor data.  Volume was a little below average at 11.86 billion. 

AAII Model Shadow Stock Portfolio Annual Review

This is a heads-up for the next AAII webinar to be held a week from today, 3 pm EST next Monday. A link for registration can be found below.  Happy New Year!