Market Review: December 04, 2023

Closing Recap

Monday, December 04, 2023





DJ Industrials




S&P 500








Russell 2000













U.S. stocks declined on Monday led by weakness in technology and communications sectors (the 2023 leaders), while defensive consumer staples, healthcare, and REITs outperformed. Markets await key jobs data this week with the October JOLTs job openings tomorrow, private payrolls ADP on Wednesday and nonfarm payrolls on Friday. Today, the story was Bitcoin, rising to fresh 20-month highs above $42K before paring gains and gold which hit an all-time overnight before plunging and ending the day lower by more than 2% amid a bounce in the dollar and Treasury yields. Light day of economic data as Factory Orders for October slid (-3.6%) M/M to $576.8B, vs. the (-2.6%) decrease expected and the 2.3% rise in September (revised from +2.8%). News flow was quiet to kick off the week with a handful of retailers seeing strength (PVH, KSS, BBWI, M) as well as REITs. The notable standout was the weakness in mega caps such as AAPL, AMZN, GOOGL, META, MSFT, NVDA, NFLX, which have been the standout leaders. The other notable standout to the upside was the Russell 2000 index, leading large caps.


Commodities, Currencies & Treasuries

·     U.S. WTI crude oil futures settle at $73.04 per barrel, down -$1.03, or 1.39%, extending losses after big declines in October and November on slowing demand, higher supply. Brent Crude futures settled down 85 cents, or 1.08%, at $78.03 a barrel.

·     Gold prices ended the day lower by -$47.50, or 2.3% to settle at $2,042.20 an ounce, well off the all-time highs of $2,152.30 overnight on profit taking and a bounce in both the dollar and Treasury yields after sliding in November. Big jobs data coming this week with ADP on Wednesday and the Nonfarm payroll report for November on Friday.

·     The U.S. dollar ticked higher, regaining some ground after falling for three straight weeks on bets that the U.S. Federal Reserve will soon be cutting interest rates, while bitcoin breached $42,000 for the first time since early 2022. The dollar index (DXY) rose about +0.5% to 103.75 while Treasury yields were broadly higher as the 10-year yield moved back around the 4.3% level.






WTI Crude















10-Year Note





Sector News Breakdown



·     GM was upgraded to Buy from Neutral at Mizuho and raised tgt to $42 saying sentiment on GM is at a bottom given weak consumer, 25% UAW wage hikes, Cruise, and EV challenges, are reflected in 10-year valuation lows. Firm notes the UAW strike is in the rearview mirror, production has resumed, and now sees idiosyncratic catalysts.

·     CVNA was upgraded from Underweight to Neutral at JP Morgan and raised tgt to $40 from $25 as believes Carvana’s approach to retailing used vehicles had given it a multi-year head start in the online-only space of a fragmented used vehicle industry.

·     FSR downgraded from Outperform to In Line at Evercore/ISI and cut tgt to $2 from $6 on production (again) reduced to 10k (from 13-17k reduced guide only 3 weeks ago).

·     TSLA’s China-made electric vehicles (EVs) sales slid -17.8% in November y/y to 82,432 cars, China Passenger Car Association (CPCA) data showed; the biggest fall since December 2022 when Tesla’s sales of China-made EVs fell 21% on the year.


Retail, Consumer Staples & Restaurants:

·     BYON announced a restructuring plan targeting about $25 million of annualized reductions by early 2025 saying it would cut about 10% of the current employee base as part of the plan.

·     LULU was downgraded to EW from OW at Wells Fargo while the firm names NKE as a Top Pick, raises price target to $125 and maintains Overweight as expects a Q2 beat and a greater emphasis on improving profitability as drivers to the rally.

·     SBUX shares fell for an 11 straight day, tested its 50dma ($97.10) earlier in the session.


Leisure, Gaming & Lodging:

·     In Casinos: Casino workers for MGM Grand Detroit have voted to ratify a new contract, ending a 47-day strike. MGM Grand Detroit workers are union members of the Detroit Casino Council, which represents nearly 4,000 employees of the city’s three casinos.

·     In Ride hailing: UBER shares jumped to all-time highs after being added to the S&P 500 index effective Monday, December 18, to coincide with the quarterly rebalance.


Energy, Industrials and Materials

·     Transports: In airlines an M&A deal as ALK reached roughly $1.9 billion deal (includes debt) to buy HA with Hawaiian shareholders to receive $18 a share in cash under the deal after closing under $5 a share on Friday. 

·     Solar (FSLR, SPWR, ENPH, SEDG), nuclear names (CCJ, UUUU) moved high, possibly being helped by COP 28 headlines as several countries (16) have officially pledged to TRIPLE nuclear energy by 2050, including the U.S., Canada, Japan, France, and the UK.

·     In Aerospace & Defense: South Korea agreed to buy an undisclosed number of ERJ’s C-390 Millennium cargo aircraft, the aerospace company said; SPCE shares fell after Richard Branson told the Financial Times that he doesn’t plan further investments in the space tourism startup he founded; SAIC shares strong as Q3 top and bottom line results topped estimates and boosted its FY24 revenue view to $7.33B-$7.35B from $7.2B-$7.25B, above consensus $7.24B.

·     In Energy: natural gas producers RRC, SWN, EQT, AR underperformed broader energy complex as prices fell; Truist changes AR was downgraded from Buy to Hold at Truist and cut tgt to $28 from $37 as expects investor sentiment to remain depressed over the next few months and anticipate reductions in Street estimates/price targets to weigh on the name. NEP announces the offering of $750M in aggregate principal amount of senior unsecured notes.

·     In Multi-Industry: ALLE was downgraded to EW (tgt cut to $119) and MMM upgraded to EW from UW (raise tgt to $107) in multi-industry at Barclay’s saying 3M screens well on its updated stock selection framework and says Allegion has relatively few perceived secular growth tailwinds.

·     In Industrials: GNRC announced it made a minority investment in WBX and will take a seat on the EV-charging company’s board; KeyBanc downgraded URI and HRI to Sector Weight from Overweight saying valuation captures moderating starts within its Breaking Ground dataset, plateauing pricing in its proprietary spot rental rate scrapes, and downward trends in other forward-looking nonresidential indicators.



Banks, Brokers, Asset Managers:

·     In banks: Regional banks (KRE) outperformed large cap banks.

·     In Crypto currency: shares of Cryptocurrency-linked stocks COIN, MARA, MSTR, RIOT rallied as Bitcoin extends gains to surpass the $42,000 mark, its highest level since April 2022 in what has been a massive upward momentum trend in 2023 (up 150% YTD).



Biotech & Pharma:

·     ABSI announced a collaboration with AZN to deliver an AI-designed antibody against an oncology target; collaboration combines Absci’s Integrated Drug Creation platform with AstraZeneca’s expertise in oncology.

·     CI said it expects to reaffirm projected full year 2023 consolidated adjusted income from operations on a per share basis of at least $24.75 per share.

·     ETNB said it’s reached alignment with US/European regulators on a late-stage program for its pegozafermin drug candidate in nonalcoholic steatohepatitis; said will conduct two Phase 3 studies.

·     YPT shares soared over 300% after announced positive results from a Phase 2 trial of its EYP-1901 treatment for wet age-related macular degeneration (AMD) saying the study combining vorolanib, a selective tyrosine kinase inhibitor with bioerodible Durasert E, met its primary endpoint as well as key secondary endpoints with both doses used in the study.

·     GERN said results from a late-stage trial of imetelstat in patients with a form of blood disorder were published in The Lancet.

·     INCY was upgraded to Buy from Neutral at Guggenheim.

·     LLY said Jaypirca was approved by the FDA to treat adults with chronic lymphocytic leukemia or small lymphocytic lymphoma who have received at least two prior lines of therapy.

·     RHHBY announced a definitive merger agreement to acquire Carmot Therapeutics, Inc., a privately owned U.S. company for $3.1B ($2.7B upfront and $400M in milestones).



·     Weakness in the large cap mega tech (AAPL, AMZN, META, GOOGL, MSFT, NVDA), as investors rotate into underperforming SMID stocks. Semis were also lower with the Philly semi-index (SOX) down over 1.4% below 3,700 and software names broadly lower outside of a few movers.

·     In Telecom/Media: VZ said it plans to offer a bundle containing ad-free NFLX and Max for $10 a month combined to customers of its myPlan service. These wireless plans let customers choose which streaming services, bundles or other offers they want to get in addition to their cellular service. The bundle will become an option for consumers on Dec. 7. SPOT announced a reduction in the company’s employee base by approximately 17% and estimates that it will incur approximately EUR 130M- EUR 145M in charges, sending shares higher.

·     FIVN shares jumped late day and ZM shares slipped after Bloomberg reported Five9 Inc. has been exploring a potential sale, people with knowledge of the matter said, a little more than two years after they scrapped a multibillion-dollar takeover by Zoom Video

·     SMCI and VRT mentioned positively in Barron’s noting Nvidia (NVDA) is the clear—and most obvious—beneficiary from the AI buildout but says both companies are less well known to investors that should equally benefit in the year ahead.


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.