MARKET WRAPS
Watch For:
ISM Report on Business Manufacturing PMI for December; FOMC
meeting minutes and economic forecast; Fed speak from Thomas
Barkin
Today's Top Headlines/Must Reads:
- Tech's AI Hangover Might Just Be Getting Started
- How Serious Is the Fed About Cutting Rates? Watch Today's Fed
Minutes for Clues.
- Finding a New Job Is Getting Harder
Opening Call:
Equity-index futures were lower on Wednesday as investors
remained wary ahead of the release of the Federal Reserve's meeting
minutes. Treasury yields continuing to move higher added to the
cautious mood.
Deutsche Bank said the rebound in yields reflects growing
skepticism about the chance of near-term interest rate cuts by the
Fed.
"Clearly, investors are still pricing in a Q1 rate cut as more
likely than not, but there's been a bit more doubt over the last 48
hours as to whether the aggressive rate cuts priced for 2024 will
actually end up happening," Deutsche added.
Premarket Movers
Apple extended losses in premarket trading, falling 0.4% after
it closed down 3.6% Tuesday following a downgrade by Barclays.
Funds of ARK Invest purchased 190,370 shares of Roku on Tuesday,
according to a trade notification. The stock was down 0.8% in
premarket trading.
Keefe Bruyette downgraded Rocket Cos. to Underperform from
Market Perform and left the price target at $10.75. Wells Fargo,
meanwhile, downgraded Rocket to Equal Weight from Overweight but
raised its price target to $14 from $13.
SoFi Technologies was downgraded to Underperform from Market
Perform at Keefe Bruyette, the Fly reported, and the price target
on shares of the financial-technology was reduced to $6.50 from
$7.50. The stock was down 3.7% premarket.
Tuesday's Post-Close Movers
AST SpaceMobile said it was looking to close a strategic
investment later this month, subject to the completion of final
documentation and approvals. Shares rose 5.8%.
Bloomin' Brands appointed two new members to its board as part
of an agreement with activist investor Starboard Value. Shares rose
4.4%.
PGT Innovations received an unsolicited proposal from Miter
Brands to acquire all of the company's outstanding shares. Shares
rose 4.9%.
Forex:
The dollar hit a two-week high against a basket of currencies,
reflecting a typical pattern of gains in January following losses
in December, ING said.
"The dollar strength in the early part of the year is often
associated with the December tax flows by U.S. corporates being
reverted," it said.
The dollar also gained as markets questioned recent bets on
sharp U.S. interest-rate cuts in 2024.
Wednesday's job openings for November and December ISM
manufacturing data are expected to be good and should prop up the
dollar, ING said.
EUR/USD's pullback from its late-December high of 1.1139 may
extend further, based on technical charts, UOB's Global Economics
& Markets Research said.
Despite EUR/USD reaching 1.1139, there's no clear increase in
upward momentum and the pullback from 1.1139 was accompanied by
bearish divergence on daily moving average convergence divergence
indicator, it said.
Downward momentum is also starting to build, which suggests
1.1139 may be a peak for the next 1-2 months. The rising trendline
that connects lows of November and December and the 55-day
exponential moving average, both around 1.0860, should offer strong
support, UOB added.
Energy:
Oil prices dropped, pressured by a broader fall in risk assets
and despite a rise in Middle East tensions.
"While the geopolitical situation is a concern for the oil
market, a fairly comfortable oil balance over the first half of
2024 does help to ease some of these worries," ING said.
Metals:
Base metals and gold edged lower as a stronger dollar added
pressure to risk assets.
ING said gold investors will be eyeing this week's jobs data,
with Fed policy likely to be led by key economic data releases.
"We believe that the Fed policy will remain key to the outlook
for gold prices in the months ahead."
A modest cyclical revival in China's growth in the first half of
2024 should help support most commodity prices, Capital Economics
said, adding that its in-house proxy of China's economic growth
points to a pick-up in activity and reckons recent PMI surverys
"are not reflecting economic reality.
Activity and import data all point to resilient commodity
demand," it added.
HSBC expects commodity prices to rise an average 2% in 2024 ,
before falling 4% in 2025. That follows a sharper-than-expected
fall in 2023.
Despite the pullback, commodity prices remain at elevated levels
and "squeezed supply, better Chinese demand and the energy
transition are all set to support commodity prices in 2024," HSBC
said.
TODAY'S TOP HEADLINES
For Cyber Companies, Economic Turbulence in 2023 Sets Up
Uncertain 2024
Instability among cybersecurity providers in the past year has
rattled security chiefs, leaving some hesitant to rely too much on
one supplier.
Cybersecurity is normally seen as protected from economic ups
and downs because fears of large-scale hacks spur spending on cyber
defenses. But corporate security executives across industries
tightened their belts and applied extra scrutiny to vendor costs in
2023, adding pressure on suppliers.
Tesla Faces a Higher Bar for Hype in 2024
Tesla shares had a stellar 2023, in large part because they had
such a dismal end to 2022. By the same logic, this year could be
tough for the world's most traded stock.
The company delivered roughly 485,000 electric vehicles last
quarter-a bit better than expected, but worse than its Chinese
rival BYD, which sold about 526,000. It is the first time the EV
pioneer has been outsold on a quarterly basis. With the Chinese
company offering cheaper vehicles in a larger home market, it won't
be the last.
U.S. Auto Sales Bounced Back in 2023
U.S. auto sales rebounded in 2023, boosted by pent-up demand and
better availability on dealership lots.
But this year could prove more challenging for automakers as
stock levels continue to rise and higher interest rates stretch
more U.S. car buyers financially.
Hamas Leader Killed in Beirut Was Linchpin of Relations With
Iran, Hezbollah
The killing on Tuesday night of a senior Hamas leader marked the
biggest hit to the group's top leadership in years, taking out a
key player who was responsible for aligning the Palestinian
militant group with Iran and Iran's proxy Hezbollah.
Saleh al-Arouri was killed in Beirut in a suspected Israeli
strike, although Israel hasn't officially claimed responsibility.
The death of Arouri, a Hamas political leader known for his
diplomatic abilities and who helped establish the organization's
military wing in the 1980s, represents a symbolic and operational
blow to the Islamist, Palestinian nationalist group.
Donald Trump Asks Maine Court to Reverse State's Ballot Ban
Donald Trump's campaign on Tuesday asked a Maine court to
reverse last week's decision by the state's top election official
to remove the Republican front-runner from the presidential
ballot.
Trump's legal team filed a suit in Kennebec County Superior
Court defending his eligibility for office and challenging the
authority of Maine's secretary of state to disqualify him from its
primary contest.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing scheduled
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Eldorado Gold: Paul Ferneyhough Named Executive Vice Pres and
Chief Fincl Officer; Ferneyhough Appointment Effective Jan 2,
Succeeding Philip Yee, Who Will Be Retiring
Expected Major Events for Wednesday
08:55/GER: Dec Labour market statistics (incl unemployment)
12:00/US: 12/22 MBA Weekly Mortgage Applications Survey
12:00/US: MBA Weekly Mortgage Applications Survey
13:55/US: 12/30 Johnson Redbook Retail Sales Index
15:00/US: Dec ISM Report On Business Manufacturing PMI
15:00/US: Nov Job Openings & Labor Turnover Survey
21:00/US: Dec Domestic Auto Industry Sales
21:30/US: 12/29 API Weekly Statistical Bulletin
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
Axcella Health Inc (AXLA) is expected to report for 3Q.
Broadway Financial Corp (BYFC) is expected to report for 3Q.
Cal-Maine Foods Inc (CALM) is expected to report $0.83 for
2Q.
Celularity Inc (CELU) is expected to report for 3Q.
Chase Corp (CCF) is expected to report for 1Q.
Citius Pharmaceuticals Inc (CTXR) is expected to report $-0.02
for 4Q.
Near Intelligence Inc (NIRLQ) is expected to report for 3Q.
Ocean Biomedical Inc (OCEA) is expected to report for 3Q.
Resources Connection (RGP) is expected to report $0.11 for
2Q.
Rite Aid Corp (RADCQ) is expected to report for 3Q.
SeaChange International Inc (SEAC) is expected to report for
3Q.
Simulations Plus Inc (SLP) is expected to report $0.06 for
1Q.
Sonic Foundry Inc (SOFO) is expected to report $-0.39 for
4Q.
Spark Networks SE - ADR (LOVLQ) is expected to report for
3Q.
Timberline Resources Corp (TBR.V,TLR) is expected to report for
4Q.
UniFirst Corp (UNF) is expected to report $2.04 for 1Q.
Yellow Corp (YELLQ) is expected to report for 3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Aaron's Raised to Overweight From Equal-Weight by Stephens &
Co.
Alliant Energy Cut to Equal-Weight From Overweight by
Barclays
American Homes 4 Rent Raised to Buy From Hold by Jefferies
America's Car-Mart Cut to Equal-Weight From Overweight by
Stephens & Co.
Apple Cut to Underweight From Equal-Weight by Barclays
Apple Inc. Cut to Underperform From Equal-Weight by Barclays
Capital
Arcutis Biotherapeutics Raised to Buy From Neutral by Mizuho
AvalonBay Cut to Peer Perform From Outperform by Wolfe
Research
Avery Dennison Cut to Underperform From Buy by B of A
Securities
AvidXchange Cut to Neutral From Overweight by Piper Sandler
Ball Corp Cut to Underperform From Neutral by B of A
Securities
BlackLine Cut to Underweight From Neutral by Piper Sandler
Booking Holdings Raised to Equal-Weight From Underweight by
Wells Fargo
Boston Properties Raised to Buy From Hold by Jefferies
Brady Corp Raised to Buy From Underperform by B of A
Securities
Brunswick Corp Cut to Neutral From Buy by B. Riley
Securities
CBIZ Cut to Neutral From Buy by Sidoti & Co.
Centene Raised to Overweight From Equal-Weight by Wells
Fargo
Choice Hotels Intl Cut to Underperform From Hold by
Jefferies
Cinemark Cut to Neutral From Buy by B. Riley Securities
Citizens Financial Group Cut to Equal-Weight From Overweight by
Barclays
CubeSmart Raised to Buy From Hold by Jefferies
Douglas Emmett Raised to Hold From Underperform by Jefferies
Doximity Raised to Neutral From Underperform by B of A
Securities
Equinix Raised to Peer Perform From Underperform by Wolfe
Research
Essex Property Raised to Buy From Hold by Jefferies
Exact Sciences Raised to Buy From Hold by Benchmark
Exelon Cut to Neutral From Buy by UBS
Expedia Group Raised to Equal-Weight From Underweight by Wells
Fargo
Fortive Cut to Hold From Buy by Vertical Research
GoodRx Holdings Cut to Underperform From Buy by B of A
Securities
Harmony Biosciences Cut to Underperform From Neutral by B of A
Securities
Hasbro Cut to Neutral From Buy by DA Davidson
Hasbro Inc. Cut to Neutral From Buy by DA Davidson
Helmerich & Payne Cut to Neutral From Buy by Seaport
Global
Hilton Grand Vacations Raised to Buy From Hold by Jefferies
Hudson Pacific Properties Raised to Buy From Hold by
Jefferies
Huntington Bancshares Raised to Equal-Weight From Underweight by
Barclays
Icosavax Cut to Neutral From Buy by Guggenheim
Inspire Medical Systems Cut to Hold From Buy by Stifel
Invitation Homes Raised to Buy From Hold by Jefferies
Ionis Pharmaceuticals Raised to Buy From Neutral by B of A
Securities
Jackson Financial Cut to Hold From Buy by Jefferies
Mid-America Apartment Cut to Hold From Buy by Jefferies
Moderna Raised to Outperform From Perform by Oppenheimer
Navient Cut to Underweight From Equal-Weight by Stephens &
Co.
nCino Raised to Overweight From Neutral by Piper Sandler
Netstreit Raised to Outperform From Peer Perform by Wolfe
Research
Otis Worldwide Cut to Hold From Buy by Vertical Research
Pactiv Evergreen Raised to Buy From Neutral by B of A
Securities
Park Hotels & Resorts Raised to Buy From Hold by
Jefferies
ProFrac Holding Cut to Neutral From Buy by Seaport Global
Prog Holdings Raised to Overweight From Equal-Weight by Stephens
& Co.
ProKidney Cut to Neutral From Buy by B of A Securities
Regions Financial Cut to Underweight From Equal-Weight by
Barclays
Sherwin-Williams Cut to Neutral From Buy by Northcoast
Research
Simply Good Foods Cut to Hold From Buy by Deutsche Bank
Southwest Airlines Cut to In-Line From Outperform by Evercore
ISI Group
Sprout Social Raised to Overweight From Neutral by Cantor
Fitzgerald
Thoughtworks Raised to Outperform From Neutral by Baird
Travel + Leisure Raised to Buy From Hold by Jefferies
Unity Software Cut to Underweight From Neutral by Piper
Sandler
Universal Health Raised to Overweight From Equal-Weight by Wells
Fargo
Upbound Group Raised to Overweight From Equal-Weight by Stephens
& Co.
Voyager Therapeutics Raised to Overweight From Equal-Weight by
Wells Fargo
Weave Communications Raised to Overweight From Neutral by Piper
Sandler
Westlake Raised to Hold From Sell by TPH Energy Research
This article is a text version of a Wall Street Journal
newsletter published earlier today.
(END) Dow Jones Newswires
January 03, 2024 06:19 ET (11:19 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.