Closing Recap

Thursday, December 28, 2023

U.S. stocks were slightly higher all day, trading just shy of a record high for the S&P 500 before a very late day pullback erased most of those gains as we head into the New Year (came within 3 points of an ATH for SPX with one trading day left in 2023). At this point, it looks like the S&P 500 index will enter 2024 with a 9-week winning streak, right into all-time highs as major averages stay strong on interest rate cut expectations. The 10-year Treasury yield ticked higher after falling to 5-month lows around 3.8% while the dollar index (DXY) hits fresh 5-month lows below 101 before rebounding on the day. Not a lot of individual stock movers, but several interesting data points worth noting.

Contrarian indicator today as the bull-bear spread in the American Association of Individual Investors (AAII) weekly survey was 21.2 vs 32 last week as Bulls fall to 46.3% from 52.9% while Neutrals rise to 28.6% from 26.2% and Bears rise to 25.1% from 20.9%. The run has been incredible as @OptionsHawk noted: “The Bloomberg Global Aggregate Total Return Index has risen nearly 10% over November and December, its best two-month run in data going back to 1990. Nasdaq at a record and up 55% this year, the most since 1999.”  But the gains have been led by a select few as @_SeanDavid noted: “only 29% of S&P 500 stocks outperformed the index in 2023. The 2nd lowest in 3-4 decades. Meaning it was a difficult year to outperform. Stock pickers market.”

A little caution perhaps as we enter earnings in 3-weeks as @EconguyRosie noted “as the stock market rips in this Santa rally, nobody seems to have noticed that since the end of September, Q4 EPS estimates have been trimmed more than -5% and 2024 by -1%. Then again, who needs fundamentals when you have seasonals, momentum and a dovish Fed as tailwinds? Lots of strong market readings as @dailychartbook noted: The NAAIM Exposure Index increased to 102.7 from 97.3. This is the highest reading since November 2021. And markets coming off easy times as @Zerohedge noted that “this has been the biggest two-month easing in financial conditions in history, surpassing the announcements of QE1, 2, 3, and so on. The market has priced in 136bps, or 5.5x rate cuts since the start of November.”

With one trading day left in 2023, S&P top performers this year include: NVDA +238% YTD, followed by META +197%, BLDR +162%, RCL +162%, UBER +162%, CCL +130%, PHM +128%, AMD +125%, PANW +113%, TSLA +112% and AVGO +101% YTD. The biggest S&P index decliners on year are FMC -49% YTD, ENPH -48%, DG -45%, PFE -44%, MRNA -43%, EL -41%, PAYC -33%, AES -32%, VFC -31% and ETSY -31% YTD.

• November Advance Retail Inventories fell (-0.1%) to $794.9B vs -0.1% prior (revised from flat, while on a Y/Y basis, retail inventories grew 5.1% in November. Wholesale Inventories for November (-0.2%) M/M to $895.7B, in-line with consensus and vs. (-0.3%) in October (revised from -0.2%). On a Y/Y basis, wholesale inventories fell (-3.1%).
• International Trade Goods Balance (-$90.3B) vs. (-$88.40B) consensus and (-$89.56B) in October as exports fell to $165.1B vs. $171.3B in October and imports fell to $255.4 vs. $260.9B prior.
• Pending Home sales index for November unchanged, below consensus +1.0% and down (-5.2%) from Nov 2022.

• Gold prices fell -$9.60 to settle at $2,083.50 an ounce as Treasury yields and the dollar extend declines on expectations the Federal Reserve will soon be cutting interest rates. Gold climbed to over three-week high on US rate cut bets, but off this month record highs (intraday). December gold expired Wednesday at $2081.90 an ounce, a record.
• Treasury yields edged higher this afternoon following a weaker 7-yr auction as $40B in notes yielded 3.859% vs. 3.837% when issued prior, with bid to cover at 2.50 vs. 2.44 prior as primary dealers take 16.92% of U.S. 7-year notes sale, direct 19.37% and indirect 63.71%. The 10-year yield rose 6 bps to 3.849% on Thursday and after hitting 52-week highs of 4.987% on 10/19 and 52-week lows of 3.285% on 4/5 – the 10-yr yield is currently up only 2.3-bps YTD! The US dollar index (DXY) was strong all day, rising 0.2% to 101.25 after bouncing off 5-month lows below 100.75, while the euro topped the 1.11 level vs. the greenback.

• BA shares dipped after the FAA said it was "closely monitoring" Boeing 737 MAX airplanes, which are being inspected for potential loose bolts in the rudder control system.
• CING shares surge after saying received guidance from the FDA regarding its clinical program for CTX-1301 as it expects to submit NDA for CTX-1301 in 1h’25. Cingulate said “in order to achieve filing of our NDA for ctx-1301 for potential FDA approval, believe we will need about $17-21M of capital” – about $9-$13M less than previously anticipated.
• CTSO shares slid after the company said a trial of its DrugSorb-ATR device missed the primary effectiveness endpoint for the overall patient population.
• CYTK price tgt raised by several analysts after SEQUOIA-HCM demonstrates aficamten’s best-in-class potential in HCM: full dataset and anticipated NDA in 2024. PT raised to – $85 at Goldman Sachs, $86 at Truist, $92 at Raymond James, $94 at HCW, $107 at Oppenheimer, $108 at Needham, $110 at JMP.
• GFI shares fall cutting its forecast for 2024 output to 220k-250k gold equivalent ounces vs. prior 400k-430k at the Salares Norte project in northern Chile after saying it expects first gold production to be delayed by four months.
• GM is suing San Francisco claiming it has been unfairly taxed $108M over seven years despite having no employees or physical presence in the city.
• HES shares slipped this afternoon after Venezuela said it is deploying soldiers in its border dispute with neighboring Guyana, according to Bloomberg.
• HLIT shares active as activist investor Ancora Holdings is preparing to challenge the board of directors of Harmonic and has identified candidates for a slate it plans to nominate to the company’s board http://tinyurl.com/4wfw2nc4 .
• MARA shares snapped winning streak as came into the trading day with an 11-day winning streak, up +159% MTD.
• NEO shares fell after NTRA announced that the federal District Court for the Middle District of North Carolina has issued a preliminary injunction, effective immediately, enjoining the RaDaR assay from NeoGenomics.
• PENN shared edge higher; WSJ reported Hedge fund HG Vora is a top shareholder in Penn Entertainment, with an 18.5% stake, and is hoping to win seats on the casino operator’s board http://tinyurl.com/2cwhefky
• SATS will replace DISH in the S&P SmallCap 600 effective prior to the opening of trading on Tuesday, January 2.
• SQM and state-run Codelco have reached a memorandum of understanding to form a government-controlled partnership for the future production of the key battery metal.
• UUU shares fall after saying Tom Brock would cease to be the company’s CFO effective Dec. 31, with Nathan Bennett, current Corporate Controller, being appointed as the interim CFO effective Jan. 1, 2024.
• In Crypto: Cathie Wood’s ARK Next Generation Internet ETF executed a massive shake-up in its Bitcoin-related holdings, selling all its remaining 2.25 million shares of the Grayscale Bitcoin Trust (GBTC) on Wednesday, according to data compiled by Bloomberg. The same day, it bought 4.32 million shares of ProShares Bitcoin Strategy ETF, according to Ark Investment Management LLC’s daily data, making it the second-biggest holder of the fund.
• US listed China stocks have been rallying late 2023, but the country’s benchmark stock index looks set for a third straight year of losses (Shanghai Index -4.35% YTD). Shares of PDD, JD, BABA, NIO, BIDU, LI, NTES, XPEV among movers.