Mid-Morning Look

Friday, December 30, 2022

U.S. stocks on track to close out the week, month, and year lower (though having a strong overall Q4)) with a spike in yields, following stronger manufacturing data, reminding investors of the Fed aggressive rate hike cycle heading into 2023. Markets were blindsided by the surprise move by the Fed in 2022 of boosting interest rates in such a violent measure, causing destruction in growth stocks which did not take into account the unprecedented 425 bps rate hike this year. The Fed boosted interest rates to a range of 4.25%-4.5% at the December meeting and Fed officials put a 5.1% range according to the FOMC’s “dot plot” in December. Other factors this year causing volatility included the ongoing Russia and Ukraine conflict, massive inflation spikes with consumer prices hitting 40-year highs mid-year, spiking Treasury yields and borrowing costs and the rotation from growth to value stocks. Markets are giving back some of yesterday gains on the final trading day of the year.

Economic Data

·     December Chicago PMI: 44.9, above the 41.0 consensus and 37.2 in November but remains deep in contraction territory (4^th straight month below the 50-level) and worst December print since 2015. The production index rose to 39.2 in December, new orders index rose sharply to 44.1, the highest level since August, orders backlogs index increased to 53.7, employment index fell to 40.8, and prices paid index eased to 64.1, the lowest since September 2020.

Stock Movers Today

·     FUTU and TIGR tumble around -25% after China’s securities regulator CSRC) said that the online brokerages have conducted unlawful securities businesses, and will be banned from opening new accounts from mainland Chinese investors

·     HOTH -21%; announces $10 million private placement priced at-the-market under Nasdaq rules

·     KALA +25%; upside momentum continues after the FDA accepted its investigational new drug application earlier this week

·     MU -2% after being downgraded from Buy to Hold at Argus

·     NKLA -4%; after new securities purchase agreement

·     SJR +10%; after Canada’s competition tribunal approved deal w/ RCI

·     TSLA +1%, looks to build winning streak to 3-days after falling 7-days prior and down -68% YTD