Market Review: January 02, 2024

Closing Recap

Tuesday, January 02, 2024





DJ Industrials




S&P 500








Russell 2000













US equities started the year with a bit of a hangover as both S&P and Nasdaq futures slipped overnight and into the open. Small caps outperformed early, and breadth was just slightly in favor of decliners by about 1.3:1. Early sector performance favored Healthcare, Energy, Utilities, Consumer Staples, and Real Estate, all in the green. Technology and Communications were early leaders to the downside and marked a bit of sector reversal to begin the new year. From a fear-and-greed perspective, we’re at 75 out of 100 and still at extreme greed, so certainly the morning pullback is not a de facto sentiment shift.


Further on sentiment and expectations, Goldman and BofA both had bullish market calls this morning. Goldman sees S&P 500 EPS growth of 5% in 2024, with the index climbing to $5,100 by year-end. BofA is even more aggressive, saying a $5,400 target level is probable, if not conservative in what it sees as year-two of a bull cycle. It sees downside risk to about $4,600 to start the year. Additionally, BofA’s sell-side indicator signals the most bullish sentiment in over 18 months after the largest month/month gain in over three years and second consecutive month of improvement. Canaccord took a more conservative view today, noting the recent rally was surprisingly strong and creates a tough set-up for continued gains. It sees any better economic data impact on rates as a risk, while it sees potential softer data impact as already priced into equities.


Heading into the final hour of trading, US equities were near lows with breadth expanding to about 1.7:1 in favor of decliners before a late pop into the bell. Small caps gave up small early gains to fade back to similar performance to the S&P but maintained outperformance over the Nasdaq. Sector-wise, consistent with the Nasdaq performance, Technology (XLK, -3.2%) was the big loser followed by Industrials (XLI, -1.29%) and Consumer Discretionary (XLY, -1.23%). Leading gainers included Health Care (XLV, +1.6%), Utilities (XLU, +1.3%) and Energy (XLE, +1%). Value was green and outperforming late with the Russell 1000 Value +0.17% versus its Growth counterpart at -1.92%. Given it is the first week of the new year, with little economic data or market-moving news thus far, it is hard to draw any meaningful conclusions from today’s activity. All eyes will remain on the macro side and expected Fed response in 2024.

Economic Data

  • Construction Spending for November rises +0.4% (11th straight month in a row it rises) vs. consensus +0.6% and vs. October +1.2% (prev +0.6%). Nov private construction spending +0.7%, public spending -0.7%.
  • S&P Global Dec. Manufacturing PMI at 47.9 vs 49.4 prior
  • China December Manufacturing PMI below expected; 49 vs 49.6 consensus; China December Services PMI slightly below expected; 50.4 vs 50.5 consensus; China Caixin Manufacturing PMI above expectations; 50.8 vs. 50.3 consensus.
  • China’s new home prices in December rose 0.1% after rising 0.05% in November making it the fourth straight monthly rise. The value of new home sales among the 100 biggest real estate companies fell 34.6% from a year earlier to 451.3 billion yuan ($64 billion), compared with a 29.6% decline in November.


  • February gold futures settled roughly flat, just +1.60/oz, or +0.08%, to $2,073.40. Concerns about escalation of conflict in the Red Sea joined Fed rate cut anticipation as a support for gold into 2024 following a 13% gain last year. It was the first annual gain since 2020 and many now are calling for record highs during 2024, with some speculation we see $2,000/oz as the new support with upside to $3,000 as new recession fears emerge. One overarching question is when the lag effect of rate hikes is fully felt, with some expecting a drag through Q3.
  • WTI February crude futures slid $1.27/bbl, or -1.77%, to settle at $70.38 after enjoying overnight gains. Brent crude also slipped $1.15, or -1.49%, to $75.89/bbl despite Iran having rejected recent calls to end support for Red Sea attacks by Houthi rebels and Monday’s report of an Iranian warship entering the Red Sea. Further, Maersk announced today that it will pause Red Sea transit for its ships until further notice. As with recession concerns supporting gold, recession/demand concerns continue to offset many geopolitical factors in the oil patch.
  • Treasury yields finished higher as investors look forward to a year of expected interest rate cuts by the U.S. Fed. The 10-year is at 3.94, after recording a small rise in 2023. The two-year is at 4.337%, following its largest one-year decline since 2020. The December employment report, due Friday, will be the last one before the Fed’s January 31 meeting, when rates are expected to remain unchanged before a first cut widely predicted for March.





WTI Crude















10-Year Note




Sector News Breakdown


  • In US December EV delivery forecasts: 1) TSLA said 4Q deliveries were reported at 484,507 vs. Bloomberg est. 483,173 and said Q4 production 494,989 vehicles, vs. est. 482,336. Said produced approximately 495K vehicles and delivered over 484K vehicles as vehicle deliveries grew 38% y/y in 2023 to 1.81 million while production grew 35% y/y to 1.85 million." Tesla reported Q4 Model 3/Y deliveries of 461,538. 2) RIVN slips as Q4 delivers 13,972 vehicles, below the est. 14,114. For 2023, the company said it delivered 50,122 vehicles, up 146.5% from a year ago but below the FactSet consensus of 51,000 deliveries.
  • Chinese electric-vehicle makers drop after China’s BYD posted a record sales quarter thanks to aggressive discounting amid an industry price war, stoking worries over rising competition. Several Chinese EV companies out with monthly delivery figures: 1) BYD Co. (BYDDF) sold 526,409 fully electric vehicles in Q4 as reported EV and hybrid sales of 340,178 in December — including 190,754 all-electric cars. 2) LI delivered 50,353 vehicles in December 2023, up 137.1% y/y, and achieved its monthly delivery target of 50,000 vehicles (Q4 deliveries up to 131,805, up 184.6% y/y); 3) NIO delivered 18,012 vehicles in December 2023, increasing by 13.9% y/y, and delivered 50,045 vehicles in the fourth quarter of 2023, representing an increase of 25.0% y/y. 4) XPEV delivered 20,115 Smart EVs, a new record for monthly deliveries, representing a 78% increase y/y; Q4 total vehicle deliveries hit 60,158, exceeding 60,000 quarterly deliveries for the first time and marking 171% increase y/y.

Retail, Consumer Staples & Restaurants:

  • In Retail: HAS downgraded from Buy to Neutral at Davidson and cut tgt to $53 from $60 noting share are up ~20% in two months, and the firm is taking this opportunity to cut its below-consensus estimates and downgrade. TPR shares were strong after JP Morgan raised its tgt to $46 saying it sees TPR’s bottom-line growth accelerating with opportunity across the top line, gross margin, SG&A, and capital allocation driving a return to double-digit compounding TSR, by its model.
  • In Consumer Products/Staples: Strong day for the group with biggest winners in beverages (KO, PEP) and food names (CAG, CPB, GIS, HSY, K, KHC, SJM all up 2% or more on the day). Deutsche Bank downgraded EL and SMPL from Buy to Hold in the consumer products group given recent price appreciation.

Leisure, Gaming & Lodging:

  • In Online travel: BKNG & EXPE were both upgraded to Equal weight at Wells Fargo while ABNB remains underweight as they preview 2024 for the OTA & alternative accommodation sectors. The firm said based on their top-down analysis, they see BKNG/EXPE 2024 GBs ests as achievable and their ’23 competitive intensity thesis did not play out.
  • In Casinos/Gaming (WYNN, MLCO, LVS, MGM): The Macau gaming industry ended 2023 with recorded gross gaming revenue up 334% y/y to $183.1B patacas ($22.7B). The year ended strong with gross gaming revenue 433% higher in December to $18.57B patacas ($2.30B). The GGR mark was also 16% than the level seen in November.
  • In Boating/Leisure: BC was downgraded from Buy to Neutral at B Riley with $106 tgt saying while they acknowledge share performance was disappointing between August and October as new boat demand trends became increasingly uncertain, stills point to the meaningful outperformance of shares relative to the recreational marine sector.
  • Ride Hailing/Food Delivery: Financial Times reported DASH is looking to diversify beyond its core biz citing the CEO who says, "The two largest areas of investment are expansion and penetration outside of the US, as well as the same outside of restaurants". UBER named top sector pick, sees room for EBITDA ‘rationalization’ in 2024.
  • In Vacation/Timeshare Rentals: HGV and TNL both upgraded to Buy at Jefferies, noting that rate cuts in ’24 will benefit its timeshare coverage, highlighting that every 1% decrease in rates should drive 2-3% increases in EBITDA. For HGV, believes the co is poised for unmatched growth as it sees the BVH integration driving 25% expansion in EBITDA and 29% EPS CAGR from ’19-’25 and TNL upgrade is predicated on the organic execution of the business and cash generation, which should drive valuation upside to the current lower end of the historical range.

Energy, Industrials and Materials

  • In Utilities: PNM shares fall after AGR terminated its 2020 deal to buy the company for $4.2B as Avangrid, which is majority-owned by Spain’s Iberdrola SA, said it was unable to obtain all final regulatory approvals by Dec. 31 and so it terminated the deal. BX said its infrastructure unit has agreed to invest $2.41 billion in Northern Indiana Public Service Company LLC, a unit of NI, paying $2.16B for 19.9% indirect non-controlling equity interest.
  • In Industrials: PH was upgraded to the conviction Buy list at Goldman Sachs as believes Parker Hannifin is uniquely positioned to benefit from the proliferation of ‘Mega Projects’ it is seeing in the US today as it has one of the largest networks of Industrial distributors domestically with one of the broadest Industrial product offerings.
  • In Aerospace & Defense: TXT was upgraded from Buy to Conviction Buy w/ $98 PT at Goldman Sachs as sees TXT as favorably exposed to sustained growth in business jet deliveries as corporations and high net worth individuals continue to lean into private air travel options following the disruptions of the pandemic. Goldman Sachs removed BA from its conviction Buy list.
  • In Energy: CVX said it would take after-tax charges of between $3.5 billion and $4 billion in its fourth quarter 2023 results on U.S. oil and gas production, primarily in California, and for securing abandoned wells and pipelines in the U.S. Gulf of Mexico that had been previously sold.
  • In Packaging: Bank America upgraded BRC, PTVE to Buy (from Underperform and Neutral respectively) mainly on opportunities for growth and still-attractive valuations looking ahead to 2024. Meantime, while BALL and AVY remain among the favorite companies they have covered, they downgrade both companies’ stocks to Underperform (from Neutral and Buy, respectively), as we expect them to lag after their recent rallies.

Banks, Brokers, Asset Managers:

  • In Banks: Barclays with 2024 preview as expects U.S. large-cap banks stock performance to improve in 2024 versus 2023 as the Federal Reserve signaled potential interest rate cuts in 2024, raising price tgts on several banks (JPM, C, WFC, etc.) and sees loan demand accelerating later in the year, while expenses remain well controlled. Notes the S&P 500 Banks Index rallied 11% in December 2023 on expectations of looming rate cuts. Wells Fargo raised its price target on Citigroup (C) to $70 from $60 saying they expect stock to double to $100+ over 3 years. In Regional Banks, Barclays downgraded shares of CFG to Equal weight and RF to Underweight as expects net interest income growth to lag peers in the near term for both, but upgraded HBAN to Equal weight as to expects the bank to benefit from stable to expanding NIM throughout 2024.
  • In Specialty Finance: Stephens upgraded shares of AXP to EW and raised lease-to-own players AAN, PRG & UPBD; while downgrade CRMT & NAVI. The firm says while Stephens generally doesn’t like upgrading all stocks within a subsector, it thinks each of the LTO players will do well for specific reasons. Thinks AAN consensus EPS is overly conservative for 2024, considers PRG the safest, most conservatively underwritten of the group and said UPBD is on-track to be the first of the Lease-To-Own companies to inflect to positive top-line growth by Q423. Downgraded NAVI to Underweight driven entirely by expectations that consensus estimates are over 20% higher than where they should be and cuts CRMT to EW as thinks several moving pieces ultimately results in n-t sales likely being flattish.
  • In Crypto: Bitcoin trading above $45,000 as investors anticipate a potential spot bitcoin ETF approval in the U.S. That was the first-time bitcoin rose past the $45,000 level since April 2022. The price movement comes after the U.S. SEC may reportedly notify the 14 asset managers if the SEC would approve their spot bitcoin ETF applications as early as Tuesday or Wednesday ahead of the Jan. 10 deadline. . Shares of COIN, MARA, RIOT, HUT, MSTR, CLSK were very active on the day.
  • In REITs: Jefferies out with our 2024 outlook for office REITs saying with consensus expecting a soft landing in ’24, they expect cyclical pressures to ease and leasing to improve even if below pre-COVID levels. Additionally, office REITs are trading at 10.1x FFO which is a 25%/34% discount to the 5/10Y avg. They move to neutral on the sector on the belief that broader office CRE will remain negative as the market continues to right size and occupancy is expected to decline in roughly half of our coverage in ’24. In REIT changes today, the firm upgraded CUBE to Buy in Self-Storage, DEI to Hold and raise both HPP, BXP to Buy in Office.

Biotech & Pharma:

  • AVXL shares tumbled after saying its Anavex 2-73 study missed a primary endpoint as the Phase 2/3 trial evaluated the clinical efficacy, safety, and tolerability of 30 mg Anavex 2-73 in 92 pediatric patients with Rett syndrome. The other co-primary endpoint, the Clinical Global Impression-Improvement scale, was not met.
  • BMY said the European Medicines Agency validated its application seeking approval of repotrectinib in certain patients with ROS1-positive non-small cell lung cancer and NTRK-positive solid tumors. Repotrectinib was the key asset in Bristol’s $4.1 billion acquisition of Turning Point Therapeutics in 2022.
  • CORT shares dropped after losing a patent trial with TEVA late Friday over its Cushing’s syndrome drug Korlym as the court found that Corcept hadn’t met its burden of proving induced infringement.
  • HRMY was downgraded to Underperform from Neutral at Bank America but maintain its price objective of $30/share given a lack of high-impact catalysts and a challenging path to addressing a 2029 Wakix LOE.
  • LBPH shares more than doubled early after positive topline data from an early clinical trial testing its experimental drug for the treatment of seizures.
  • MNKD said it sold a 1% royalty in net sales of Tyvaso DPI (Treprostinil) inhalation powder in exchange for up to $200M, including the purchase price of $150M and an additional potential milestone payment of up to $50M.
  • MRNA was upgraded to Outperform from Perform at Oppenheimer with a $142 price target citing increasing visibility on COVID-19 vaccine sales, a financial framework for OPEX progression (tied to sales), and key catalysts in 2024/25 that give them reason to believe that MRNA could be a five-product commercial company by 2026.
  • VYGR shares jumped after saying it signed a collaboration/license agreement with NVS potentially worth more than $1 billion (Voyager said it will receive $100M in upfront consideration from Novartis, including a $20M purchase of newly issued equity, and that it is eligible to receive up to $1.2B).
  • Bernstein says expects the Biotech sector’s recovery to accelerate in 2024 and names VRTX, ALNY, and NTLA as top picks in 2024 based on upcoming trial results.

Healthcare Services & MedTech movers:

  • In Managed Care/Hospitals: Wells Fargo upgraded both CNC and UHS to Overweight saying uncertainty remains for MCOs into 2024 but generally reflected in valuations; said hospital fundamentals generally attractive and notes distributor fundamentals likely to remain solid but appear fairly valued.
  • In Healthcare Services: DOCS was upgraded to Neutral from Underperform at Bank America and raised tgt to $29 from $21 saying earnings expectations have been appropriately reset and that pharma manufacturer budgets could begin to improve over the next year as pressure from higher interest rates begins to ease. The firm downgraded GDRX to underperform from buy; cuts price objective to $4.5 from $8.00.
  • In MedTech: EXAS upgraded to Buy (with $91 tgt) at Benchmark and named the stock its best idea for 2024 saying it should benefit from steady growth in its base business, continued progress on the new product pipeline, and an improving interest rate climate that enables the stock to sustain a higher multiple. INSP was downgraded from Buy to Hold at Stifel which centers on concerns such as GLP-1 near-term Impact, checks suggest little incremental capacity comes online in 2024, and volumes as diligence was good, not great.

Semi’s, Internet, Media & Telecom

  • In Media: The WSJ reported that Hulu, Netflix, and other streamers are turning to bundles, discounts and ad-supported plans as customer defections rise (shares of streaming service companies to watch include NFLX, DIS, PARA, CMCSA).
  • In Online: YY shares declined after saying BIDU cancelled its $3.6B bid for the company. Baidu said in a regulatory filing that the closing conditions for the all-stock agreement had yet to be fully satisfied. “The company seeks to discuss with JOYY the next steps following the termination of the share purchase agreement.”
  • In chips: ASML shares dropped after canceled shipments of some of its machines to China at the request of U.S. President Joe Biden’s administration, weeks before export bans on the high-end chipmaking equipment came into effect – Bloomberg.

Hardware & Software movers:

  • AAPL shares pressured: 1) was downgraded to underweight from equal-weight at Barclay’s saying that channel checks show weakness in iPhone volumes, as well as a lack of bounce-back in Macs, iPads. and wearables; 2) Apple’s share in the global premium smartphone market has declined to 71% in 2023 from 75% in 2022, according to Counterpoint Research’s Market Pulse Service, mainly because of Huawei’s resurrection in China driven by the Mate 60 series.
  • Software outlook from Piper: the firm upgraded NCNO, WEAV to Overweight, downgraded AVDX to Neutral and downgraded both Unity (U) and BL to Underweight saying as they enter 2024 with a higher degree of optimism for application software based on 1) stabilizing demand fundamentals after two years of moderation, 2) a declining interest rate backdrop sparking greater appetite for growth stocks, 3) new secular tailwinds for cloud and data driven by a generational shift to AI, 4) CIO survey optimism showing accelerating cloud and AI spending intentions, and 5) favorable risk-reward scenarios on 2025 metrics. Piper flags WDAY, MNDY, and KVYO as three GARP ideas to own with compelling risk-reward profiles having CY25E EV/S multiples below 8x.


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.