Market Review: January 12, 2024

Closing Recap

Friday, January 12, 2024





DJ Industrials




S&P 500








Russell 2000













After a higher CPI inflation report Thursday, a cooler PPI inflation data today, weak guidance for DAL in airlines sector, weaker MLR figures for Dow component UNH, and a generally weaker set of banking numbers today from some of the largest in the country, the S&P and Nasdaq still managed a small gain in another testament to the resiliency of the broader stock market to start the New Year. The S&P 500 Index (SPX) officially broke above 4,800 for the first time since January 2022 this morning (still was 20 points away from making a new intraday all-time high), but again closed below its record “closing” high of 4,796.55. Stock movement was steady and slow all afternoon, but major averages still ended the week with solid gains after jumping at the beginning of the week, led by the Nasdaq up over 3%. Mega cap tech such as NVDA, AMZN, META, MSFT saw big gains this week and continues to pace broader market gains. Energy led the way higher today amid a spike in oil prices after the US and UK launched airstrikes on Houthi rebel targets in Yemen is response to a string of attacks that have disrupted commercial shipping in the Red Sea. Communications (XLC), and REITs (XLRE) rounded out the top sector movers. Bitcoin slips further after 2-year highs (down below 44K after topping 49K Thursday) and crypto stocks tumble after massive run in December/early January. For the week, the S&P 500 climbed 1.8%, the Dow climbed 0.3% and the Nasdaq climbed 3.1%.


But note there is some caution shown in the near-term as Bloomberg noted a trader snapped up $17M worth of call options tied to the Cboe Volatility Index, positioning for a pickup in stock market swings within the next month – A trader bought about 250,000 call contracts on the VIX Index with a strike price of 17 that expire on Feb. 14 . Other market concerns as Jake Sherman tweets: "One week until the government partially shuts down – house will be gone by 10:45 this morning – Senate left yesterday – not a single bill conferenced…said as of yesterday, Speaker Johnson had members in his office urging him to walk away from a four-day old spending agreement." We also head into the 3-day holiday weekend with geopolitical concerns in the Middle East after the attack on Yemen overnight. Next week earnings get rolling with other banks including MS, GS, PNC, FITB, KEY, FHN, and many others before the tech party rolls out.

Economic Data

  • December Producer Price Index (PPI) headline fell -0.1% M/M, lower than the +0.1% estimate (prior was unchanged) and on a Y/Y basis rose +1.0%, below the +1.3% estimate. On a core basis, or PPI ex Food & Energy showed prices unchanged vs. est. +0.2% and Y/Y rose +1.8% vs. est. +1.9%. The PPI inflation data “cooler” than the CPI report released on Thursday.
  • Nationwide, 88.5% of U.S. homeowners with mortgages have an interest rate below 6%, down from a record high of 92.8% in mid-2022 according to a report by Redfin. That means more than 88.5% of homeowners with mortgages have a rate below the current weekly average of 6.66%, prompting many to stay put instead of selling and buying another home at a higher rate—a phenomenon called the “lock-in effect.”
  • The Federal Reserve ran an operating loss of $114.3 billion last year, its largest ever, a consequence of its campaign to aggressively support the economy in 2020 and 2021, then jacking up interest rates to combat high inflation.


  • Oil prices jumped overnight with WTI crude +4% around $75 per barrel and Brent rising above $80 per barrel after the US and UK launched airstrikes on Houthi rebel targets in Yemen, escalating a conflict in response to a string of attacks that have disrupted commercial shipping in the Red Sea. Prices pared gains but still ended the day and week higher with WTI crude rising $0.66 or 0.92% to settle at $72.68 per barrel.
  • Natural gas settled +7% at $3.313/MMBtu on the day and up 14.5% on the week, helped by a bigger-than-expected draw on inventories this, which fell by 140 Bcf to 3,336 Bcf in the week as sub-freezing conditions are expected over the long weekend in large parts of the U.S., lifting demand for heating.
  • Gold prices rose $32.40 or about 1.6% to settle at $2,051.60 on the day helped by two catalysts: 1) the US and UK launched more than 60 airstrikes on Houthi targets in Yemen early on Friday in a bid to stop the Iran-backed group’s shipping attacks in the Red Sea as investors rotated into haven assets. Prices extended gains after the December PPI data was cooler than expected, boosting hopes for aggressive cuts by the Fed.
  • The USDA lowers its forecast for U.S. cotton production to 12.4 million bales from 12.8 million bales, adding to last month’s cut. The agency says the lowered forecast is largely due to reductions in Texas. Ending stocks are estimated at 2.9 million bales, down 200,000 bales.
  • The USDA raises its 2024 estimate for livestock production, citing increased expectations of cattle slaughter as well as higher dressed weights. Beef production is now forecast at 26.11 million pounds, from December’s projection of 25.99 million pounds.

Currencies & Treasuries

  • The U.S. dollar climbed as traders weighed the softer PPI U.S. inflation report and tensions in the Middle East, where the United States and Britain launched air and sea strikes against Houthi targets in Yemen. The U.S. dollar index (DXY) rose +0.1% around 102.40 and remains up 1% this month so far. The euro was down. Bitcoin prices extended their decline from a two-year high above $49,000 on Thursday as traders analyzed results from the first day of trading of spot Bitcoin ETFs holding the cryptocurrency. Prices dipped below $45K late day. Treasury yields finished the day flat, with the 10-yr holding around 3.95%, well off yesterday’s highs around 4.08% after the CPI report. The two-year lost 25.3 bps this week to 4.136%, while the 10-year declined just 9.2 bps to 3.949%,





WTI Crude















10-Year Note




Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • In Luxury Retail: BURBY warned of a slowdown in demand for luxury goods for the 2nd time in 3-months as Burberry now expects FY2023/24 adj operating profit in a range between 410M-460M pounds, down from Nov guide when they said the profit number would be towards the lower end of analysts’ forecasts of 552M-668M pounds; said retail revenue in the 13 weeks to Dec. 30 was down 7% at 706M pounds (luxury retail names TPR, RL, PVH fell).
  • In Restaurants: PBPB was upgraded from Hold to Buy at Benchmark with $15 tgt after spending time with the Potbelly senior management team at this year’s ICR Conference and given the strong Q423 SSS results and franchisee pipeline growth preannounced. GTIM qtrly same store sales increased 4.1% for its good times brand and decreased 6.2% for its bad daddy’s brand. Casual diners EAT, DRI ended the day near lows into the weekend.

Homebuilders, Building Products, Home Furnishing:

  • RBC Capital with several changes as they upgraded TMHC to Outperform from Sector Perform, upgrade MHK to SP from Underperform and downgraded both SUM and VMC to Sector Perform from OP saying top ideas remain OC, BECN, BLDR, CNM, and AZEK. The firm said they have a neutral stance on Homebuilders and Building products to begin 2024, with a relative preference but still selective view on Products. Said there are reasons to be incrementally optimistic, but the magnitude of the recent rally already surpasses prior post-tightening cycle rallies.
  • In Appliances: Appliances maker Electrolux posted a prelim Q4 operating loss of around 700 million crowns ($68.4 mln) before non-recurring items, against a year-earlier 600 million crowns loss. The company said its N.A. business area made an underlying loss of 1.4B crowns against a year-ago 1.2B loss (results weighed on shares of WHR).

Autos, Leisure, Gaming & Lodging:

  • In Autos: TSLA extends weekly losses (dropping below its key 50-day and 200-day MA supports in the process) after dropping the price of its China Model 3 to 245,900 yuan, and the price of the Model Y dropped to 258,900 yuan overnight. The move comes a day after saying it will suspend most car production at its factory near Berlin from Jan. 29 to Feb. 11 due to lack of components due to shifts in transport routes because of attacks on vessels in the Red Sea.
  • In Leisure Products: KeyBanc with 2024 outlook as raise price tgts on GOLF to $75, CWH to $30, ONEW to $34, PATK to $110 YETI to $36 and lower PII to $105 saying they continue to see the biggest controversy within leisure vehicles, where views on respective cycle timing/relative positions remain beholden to macro questions/concerns to a large degree. Outside of leisure vehicles, they continue to prefer the relative resilience/stickiness of golf and remain cautious on YETI where it continues to have questions around the Company’s ability to maintain its historical +DD growth algo looking ahead.

Energy and Industrials:

  • In Energy: Baker Hughes noted in its weekly rig count report that U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row, as the oil and gas rig count fell by two to 619 in the week to Jan. 12, the lowest since November. Baker Hughes said U.S. oil rigs fell by two to 499 this week, while gas rigs fell -1 to 117. Oil related stocks saw biggest gains on Friday behind the pop in oil prices.
  • In Airlines: DAL results beat but cut forecast; Q4 adj EPS $1.28 vs. est. $1.17; Q4 revs $14.22B vs. est. $13.52B; forecasts 2024 adj EPS $6 to $7, compared with its previous target of more than $7 per share outlined at an investor day in December 2022 and vs. est. $6.50.
  • In Industrials: JCI downgraded to Underperform from Sector Perform at RBC Capital and cut tgt to $50 citing risks to its margin expansion targets, lukewarm earnings growth, potential spillover repercussions from the cyberattack, and persistently low earnings quality (prefers CARR in HVAC). RBC upgraded PNR to Outperform from Sector Perform saying the worst of the post-COVID-tough pools comps and destocking appear to have passed and sees potential positive catalysts from the upcoming March-6 NYC analyst meeting.
  • In Aerospace & Defense: BA shares pressured again early after the FAA announced what it calls "new and significant actions" to immediately increase its oversight of Boeing production and manufacturing. These actions come one day after the FAA formally notified Boeing that the FAA has launched an investigation into the company because of last Friday’s incident on a Boeing Model 737-9 MAX in which the aircraft lost a passenger door plug while in flight. MNTS shares tumbled after raising going concern headlines. Defense stocks LMT, RTX, GD, NOC all gained after the US/UK strike Houthis in Yemen.

Banks, Brokers, Asset Managers:

  • Four of the largest banks in the U.S. reported earnings today/mixed views:
  • 1) Citigroup (C) reported a Q4 net loss of $1.8B vs. net income of $2.51B y/y, said revenue fell 3% to $17.4B from $18B (below ests $18.75b) noting the recent devaluation of the Argentine peso had wiped out $880 million of the most-recent quarter’s revenue. By segment: Services business revs rose 6% to $4.5B, trading revenue fell 19% to $3.4B as trading on bonds and other fixed-income securities tumbled 25%, thanks to the Argentina, wealth-management business -3% y/y to $1.7B and IB revs rose 22% to $949M.
  • 2) BAC Q4 adj EPS $0.70 tops the $0.68 est. as revenue of $22B was down -10% y/y; Q4 net interest income down 5% to $13.9B as they spent more to keep customer deposits, and provision for credit losses at $1.1B; took a pre-tax charge of $2.1B in Q4 to pay a "special assessment" fee to replenish a FDIC fund; will also take a charge of about $1.6B in Q4 as it phases out a Bloomberg interest rate benchmark used in some commercial loan contracts. BAC had unrealized losses of almost $98B in Q4, down from paper losses of $131.6B in the last quarter.
  • 3) JPM shares hit all-time highs after Q4 results as adj EPS of $3.97 topped ests of $3.36 as Reports revenue of $38.57B, up 12% y/y; said expects FY net interest income (NII) of $90B, higher than analysts’ estimates of $86.2B; fees came in weaker on a 7% miss in Equities trading and 6% miss in IB revs while FICC came in 5% better.
  • 4) WFC Q4 adj EPS $1.26 tops the $1.17 estimate while Q4 revs rose 2% y/y to $20.5B and slightly above ests $20.3B; warned that 2024 net interest income (NII) could be 7% to 9% lower than a year earlier; raised Q4 provision for credit losses up to $1.28B vs. est. $1.32B; non-interest expense dropped 2.5% in the quarter.
  • In other Bank/Manager news: BLK agreed to buy private-equity firm Global Infrastructure Partners for roughly $12.5B in cash and stock, a significant push into private-market investments for the world’s largest asset manager – WSJ . BLK also raises the quarterly dividend 2% to $5.10 per share; Investment advisory performance fees $311M, +36% y/y, vs. est. $219.3M.

Healthcare Services & MedTech movers:

  • Managed care stocks were weaker after UNH posted Q4 EPS and rev beat and reaffirmed year guidance, but shares dropped (dragging comps HUM, CI, ELV lower) after its medical loss ratio (MLR) missed consensus by ~100 bp (85.0% vs. 83.9% consensus). JPM noted the EPS beat was driven by higher investment income, lower opex, and lower tax.

Materials, Metals & Mining

  • In Uranium: Shares of CCJ, URA, UEC, UUUU moved higher initially after Kazakhstan’s Kazatomprom said it may cut its 2024 production plan due to difficulties with the availability of sulfuric acid needed for uranium production. Reuters noted uranium prices hit $97/lbs on Jan. 11, highest since 2007 end.
  • In Metals: Gold and silver miners rallied (NEM, GOLD, PAAS) behind strength in precious metals in a flight to haven assets after the US/UK launched an attack on Yemen in response to stop the Iran-backed group’s shipping attacks in the Red Sea. CLF was upgraded to Overweight from Neutral at JP Morgan and raise tgt to $23 following a period of restriction saying Cliffs should generate "ample cash" in 2024 amid easing cost pressure and minimal capex requirements.
  • In Chemicals: IFF shares rise after named Erik Fyrwald as CEO, succeeding Frank Clyburn, effective Feb 6, reaffirmed its FY23 sales forecast and was upgraded to Buy at Jefferies and raised tgt to $112 as believes the new CEO should lead to structural improvement in the business, while a restocking cycle for the ingredients business should support the growth outlook.
  • In Fertilizers/potash: CF was upgraded to Equal Weight from Underweight at Barclays with $85 tgt saying they expects 7% free cash flow yield in 2024 and marginally raises its ammonia sales expectations in view of recently acquired Waggaman facility’s volume. Barclays downgraded ICL to Underweight driven by higher Red Sea and SE Asia exposure vs peers. NTR was downgraded to Market Perform from Outperform at Raymond James and cut tgt to $65 from $80 citing concerns over protracted pressure in potash.

Hardware & Software movers:

  • In Optical: CIEN was upgraded from In Line to Outperform at Evercore/ISI and raise tgt to $57 as thinks the recent earnings report has sufficiently reset expectations and enabled a path to beat and raise as it goes through FY24.
  • Barclay’s downgraded ESTC and SNOW to Equal Weight from Overweight and downgraded ZI, JAMF, and WKME to Underweight saying after a strong 2023 (IGV +58%), software needs to deliver in 2024 on the promise of AI and recovery. Barclay’s thinks the larger players are better positioned to do so.
  • Piper upgraded TWLO from Neutral to Overweight and raised tgt to $82 from $75 after 6 months of the stock digesting top-line estimates coming down. Piper’s updated view is primarily based on the view that there is material upside potential to FCF estimates, catalysts are emerging, revenue does appear to be stabilizing and sees a positive risk-reward at these levels. Piper raising price targets for other software names BAND, FIVN, RNG, and ZM.
  • Keybanc also weighs in on software, upgrading PRO from Sector Weight to Overweight w/ $43 PT as sees recent B2B momentum carrying forward as the company continues to benefit from go-to-market and packaging changes implemented over the last year.
  • Indian IT stocks extend gains for a 2nd day on earnings: WIT reported better results and guidance lifting shares today, followed better results from INFY this week.


  • A quiet day in general for the Semi sector (SOX), which generally lagged large cap tech and software names.
  • QCOM upgraded to Buy from Neutral at Citigroup with $160 tgt saying industry checks indicate inventory replenishment in the wireless end market continues and they expect upside to Qualcomm print and guide – raise ests, tgt and launch a positive catalyst watch.


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.