Rally on Short Week, Rate Cuts on Hold? – Jan 19 Market Recap
Indices
- Dow 37,863, +271 or +0.72%.
- Nasdaq 15,310, +338 or +2.26%.
- MSCI EAFE 2179.25, -47.63 or -2.14%.
- S&P 4,839, +56 or +1.17%.
- USD10Y 4.146%, +19.6bp or +4.96%.
- WTI Crude $73.41 bbl, +$0.65 or +0.89%.
Rally on Short Week, Rate Cuts on Hold?
Markets and especially the technology sector rallied during the holiday shortened week. Early in the week, Fed Governor Christopher Waller warned that rates may not come down as quickly as investors might expect. Later in the week a hot Retail Sales report, an Initial Jobless Claims report below 200,000, and increasing Consumer Sentiment all seemed to support his view. As a result, the yield on the 10-year U.S. Treasury bond rose nearly +5% this week.
Next Week
Q4 GDP and December Personal Consumption Expenditure will highlight the economic data releases. Two members of the “magnificent seven,” Netflix (NFLX) and Tesla (TSLA) will report earnings this week along with two airlines, American and United Airlines and two consumer staples companies Proctor and Gamble and Colgate-Palmolive
Economic Calendar
- Monday – December U.S. Economic Leading Indicators. Earnings: United Airlines (UAL).
- Tuesday – N/A. Earnings: Netflix (NFLX), Proctor and Gamble (PG).
- Wednesday – January Flash S&P Manufacturing and Services PMI. Earnings: Tesla (TSLA).
- Thursday – Initial Jobless Claims, Q4 Preliminary GDP. December Durable Goods Orders. Earnings: Intel (INTC), American Airlines (AAL).
- Friday – December Personal Consumption Expenditure (PCE). Earnings: American Express (AXP), Colgate-Palmolive (CL).
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Jan 19 Daily Trading Recap…
Monday – Markets closed in observance of Martin Luther King Jr’s birthday.
Tuesday – Dow -231 to 37,361, Nasdaq -28 to 14,944, S&P -17 to 4,739, USD10Y +4.0bp to 4.106%.
- Ten of eleven S&P sectors traded down today, led lower by Energy, Materials, and Utilities.
- The January Empire State Manufacturing Survey was a disaster at -43.7 vs –4.0 expected and vs last month’s -14.7 print.
- Federal Reserve Governor Christopher Waller warned that rates may not come down as quickly as expected which sent the 10-year yield soaring and had a chilling effect on the markets today.
- Earnings: Goldman Sachs (GS) beat their revenue estimates while it was unclear if the earnings they reported were comparable to street estimates; GS was unchanged in the extended session.
Wednesday – Dow -94 to 37,266, Nasdaq -88 to 14,855, S&P -26 to 4,783, USD10Y +1.1bp to 4.030%.
- All eleven S&P sectors traded down today, led lower by Real Estate, Utilities, and Consumer Discretionary.
- JetBlue (JBLU) and Spirit Airlines (SAVE) traded down 8% and 22% respectively after a U.S. District Court judge blocked their merger.
- December U.S. Retail Sales surged to +0.6% vs +0.4% expected and vs +0.3% last month, raising further doubts that the Fed will cut rates during their March meeting.
- Earnings: Charles Schwab (SCHW) beat earnings but missed their revenue estimates and traded down -1.34%.
Thursday – Dow +202 to 37,468, Nasdaq +200 to 15,055, S&P +41 to 4,780, USD10Y +11.4bp to 4.144%.
- Seven of eleven S&P sectors traded higher today, led by Technology, Communication Services, and Industrials.
- Jobless claims were 187,000, vs 207,000 forecast and vs. last week’s slightly revised higher print of 203,000 (originally 202,000).
- January Philadelphia Federal Manufacturing Survey was -10.6 vs -8.0 expected and vs -12.8 last month.
- Earnings: JB Hunt (JBHT) beat revenues but missed their earnings estimates as increased insurance costs hurt their earnings results.
Friday – Dow +395 to 37,863, Nasdaq +255 to 15,310, S&P +58 to 4,839, USD10Y +0.2bp to 4.146%.
- Nine of eleven S&P sectors traded higher, led by Technology, Consumer Discretionary, and Financials.
- January University of Michigan Consumer Sentiment improved markedly to 78.8 vs 69.7 expected and last month’s 69.7 print. This is the highest reading of the survey since July of 2021.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, GM, RIVN, TOST, and TSLA.