Quiver Quantitative - The U.S. stock market started 2024 on a tepid note as a mix of factors, including rising Treasury yields and a downgrade for Apple (NASDAQ:AAPL), weighed on investor sentiment. Despite ending 2023 with gains, Wall Street's major indexes faced early pressure in the new year. The yield on 10-year U.S. Treasury notes surged past 4.0000%, a two-week high, dampening enthusiasm for equities and prompting a reevaluation of expectations regarding Federal Reserve rate cuts.
Apple's (AAPL) stock experienced a 3.3% drop after Barclays (LON:BARC) (BCS) shifted its rating to "underweight" due to projected weaker iPhone demand. This decline contributed significantly to the broader market downturn, with other megacap stocks like Nvidia (NVDA) and Microsoft (NASDAQ:MSFT) also recording substantial losses of 3.5% and 1.7%, respectively. Phil Blancato, CEO of Ladenburg Thalmann Asset Management, pointed out that this could be a period of realignment and profit-taking after the strong rally from the previous year's lows.
Market Overview: -U.S. equities dipped on the first trading day of 2024, pressured by rising Treasury yields and profit-taking. -Broad indexes retreated: Dow Jones (0.19%), S&P 500 (0.73%), Nasdaq (1.49%). -Megacap tech stocks led declines: Nvidia (3.5%), Microsoft (1.7%), Apple (3.3% after Barclays downgrade). -Healthcare outperformed, while tech suffered the most.
Key Points: -Bitcoin surged above $45,000 for the first time since April 2022, boosting crypto-linked stocks: Marathon Digital (NASDAQ:MARA) (8.9%), MicroStrategy (13%). -Investors cautious despite strong 2023 fueled by AI optimism and easing interest rates. -Economic data releases, Fed minutes, and presidential elections seen as potential market catalysts in the coming months.
Looking Ahead: -Weekly jobless claims, payrolls data, and service sector data on the docket for the week. -Fed December meeting minutes due Wednesday, scrutinized for clues on potential rate cuts. -Traders expect near 70% chance of a 25-basis-point rate cut in March, according to CME Group's (NASDAQ:CME) FedWatch tool.
Health stocks (XLV) bucked the trend by rising 1%, while information technology stocks (XLK) led the declines with a 2.5% drop. The volatility index also spiked, indicating heightened investor apprehension.
Looking ahead, market focus will be on upcoming economic data, including jobless claims and non-farm payrolls, as well as the Fed's meeting minutes, which could provide insights into future rate decisions. Traders currently anticipate a high likelihood of a rate cut in March. Cryptocurrency-related companies like Marathon Digital Holdings (MARA) and MicroStrategy (MSTR) saw gains amid a surge in Bitcoin's price, while Boeing (NYSE:BA) faced a decline after being removed from Goldman Sachs (NYSE:GS) "conviction list."
This article was originally published on Quiver Quantitative