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 (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 (NASDAQ: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 (GS) "conviction list."
This article was originally published on Quiver Quantitative