MARKET WRAPS
Watch For:
ISM Report on Business Manufacturing PMI for December; FOMC meeting minutes and economic forecast; Fed speak from Thomas Barkin
Today's Top Headlines/Must Reads:
- Tech's AI Hangover Might Just Be Getting Started
- How Serious Is the Fed About Cutting Rates? Watch Today's Fed Minutes for Clues.
- Finding a New Job Is Getting Harder
Opening Call:
Equity-index futures were lower on Wednesday as investors remained wary ahead of the release of the Federal Reserve's meeting minutes. Treasury yields continuing to move higher added to the cautious mood.
Deutsche Bank said the rebound in yields reflects growing skepticism about the chance of near-term interest rate cuts by the Fed.
"Clearly, investors are still pricing in a Q1 rate cut as more likely than not, but there's been a bit more doubt over the last 48 hours as to whether the aggressive rate cuts priced for 2024 will actually end up happening," Deutsche added.
Premarket Movers
Apple extended losses in premarket trading, falling 0.4% after it closed down 3.6% Tuesday following a downgrade by Barclays.
Funds of ARK Invest purchased 190,370 shares of Roku on Tuesday, according to a trade notification. The stock was down 0.8% in premarket trading.
Keefe Bruyette downgraded Rocket Cos. to Underperform from Market Perform and left the price target at $10.75. Wells Fargo, meanwhile, downgraded Rocket to Equal Weight from Overweight but raised its price target to $14 from $13.
SoFi Technologies was downgraded to Underperform from Market Perform at Keefe Bruyette, the Fly reported, and the price target on shares of the financial-technology was reduced to $6.50 from $7.50. The stock was down 3.7% premarket.
Tuesday's Post-Close Movers
AST SpaceMobile said it was looking to close a strategic investment later this month, subject to the completion of final documentation and approvals. Shares rose 5.8%.
Bloomin' Brands appointed two new members to its board as part of an agreement with activist investor Starboard Value. Shares rose 4.4%.
PGT Innovations received an unsolicited proposal from Miter Brands to acquire all of the company's outstanding shares. Shares rose 4.9%.
Forex:
The dollar hit a two-week high against a basket of currencies, reflecting a typical pattern of gains in January following losses in December, ING said.
"The dollar strength in the early part of the year is often associated with the December tax flows by U.S. corporates being reverted," it said.
The dollar also gained as markets questioned recent bets on sharp U.S. interest-rate cuts in 2024.
Wednesday's job openings for November and December ISM manufacturing data are expected to be good and should prop up the dollar, ING said.
EUR/USD's pullback from its late-December high of 1.1139 may extend further, based on technical charts, UOB's Global Economics & Markets Research said.
Despite EUR/USD reaching 1.1139, there's no clear increase in upward momentum and the pullback from 1.1139 was accompanied by bearish divergence on daily moving average convergence divergence indicator, it said.
Downward momentum is also starting to build, which suggests 1.1139 may be a peak for the next 1-2 months. The rising trendline that connects lows of November and December and the 55-day exponential moving average, both around 1.0860, should offer strong support, UOB added.
Energy:
Oil prices dropped, pressured by a broader fall in risk assets and despite a rise in Middle East tensions.
"While the geopolitical situation is a concern for the oil market, a fairly comfortable oil balance over the first half of 2024 does help to ease some of these worries," ING said.
Metals:
Base metals and gold edged lower as a stronger dollar added pressure to risk assets.
ING said gold investors will be eyeing this week's jobs data, with Fed policy likely to be led by key economic data releases.
"We believe that the Fed policy will remain key to the outlook for gold prices in the months ahead."
A modest cyclical revival in China's growth in the first half of 2024 should help support most commodity prices, Capital Economics said, adding that its in-house proxy of China's economic growth points to a pick-up in activity and reckons recent PMI surverys "are not reflecting economic reality.
Activity and import data all point to resilient commodity demand," it added.
HSBC expects commodity prices to rise an average 2% in 2024 , before falling 4% in 2025. That follows a sharper-than-expected fall in 2023.
Despite the pullback, commodity prices remain at elevated levels and "squeezed supply, better Chinese demand and the energy transition are all set to support commodity prices in 2024," HSBC said.
TODAY'S TOP HEADLINES
For Cyber Companies, Economic Turbulence in 2023 Sets Up Uncertain 2024
Instability among cybersecurity providers in the past year has rattled security chiefs, leaving some hesitant to rely too much on one supplier.
Cybersecurity is normally seen as protected from economic ups and downs because fears of large-scale hacks spur spending on cyber defenses. But corporate security executives across industries tightened their belts and applied extra scrutiny to vendor costs in 2023, adding pressure on suppliers.
Tesla Faces a Higher Bar for Hype in 2024
Tesla shares had a stellar 2023, in large part because they had such a dismal end to 2022. By the same logic, this year could be tough for the world's most traded stock.
The company delivered roughly 485,000 electric vehicles last quarter-a bit better than expected, but worse than its Chinese rival BYD, which sold about 526,000. It is the first time the EV pioneer has been outsold on a quarterly basis. With the Chinese company offering cheaper vehicles in a larger home market, it won't be the last.
U.S. Auto Sales Bounced Back in 2023
U.S. auto sales rebounded in 2023, boosted by pent-up demand and better availability on dealership lots.
But this year could prove more challenging for automakers as stock levels continue to rise and higher interest rates stretch more U.S. car buyers financially.
Hamas Leader Killed in Beirut Was Linchpin of Relations With Iran, Hezbollah
The killing on Tuesday night of a senior Hamas leader marked the biggest hit to the group's top leadership in years, taking out a key player who was responsible for aligning the Palestinian militant group with Iran and Iran's proxy Hezbollah.
Saleh al-Arouri was killed in Beirut in a suspected Israeli strike, although Israel hasn't officially claimed responsibility. The death of Arouri, a Hamas political leader known for his diplomatic abilities and who helped establish the organization's military wing in the 1980s, represents a symbolic and operational blow to the Islamist, Palestinian nationalist group.
Donald Trump Asks Maine Court to Reverse State's Ballot Ban
Donald Trump's campaign on Tuesday asked a Maine court to reverse last week's decision by the state's top election official to remove the Republican front-runner from the presidential ballot.
Trump's legal team filed a suit in Kennebec County Superior Court defending his eligibility for office and challenging the authority of Maine's secretary of state to disqualify him from its primary contest.
Write to ina.kreutz@wsj.com
TODAY IN CANADA
Earnings:
Nothing scheduled
Economic Calendar (ET):
Nothing scheduled
Stocks to Watch:
Eldorado Gold: Paul Ferneyhough Named Executive Vice Pres and Chief Fincl Officer; Ferneyhough Appointment Effective Jan 2, Succeeding Philip Yee, Who Will Be Retiring
Expected Major Events for Wednesday
08:55/GER: Dec Labour market statistics (incl unemployment)
12:00/US: 12/22 MBA Weekly Mortgage Applications Survey
12:00/US: MBA Weekly Mortgage Applications Survey
13:55/US: 12/30 Johnson Redbook Retail Sales Index
15:00/US: Dec ISM Report On Business Manufacturing PMI
15:00/US: Nov Job Openings & Labor Turnover Survey
21:00/US: Dec Domestic Auto Industry Sales
21:30/US: 12/29 API Weekly Statistical Bulletin
All times in GMT. Powered by Kantar Media and Dow Jones.
Expected Earnings for Wednesday
Axcella Health Inc (AXLA) is expected to report for 3Q.
Broadway Financial Corp (BYFC) is expected to report for 3Q.
Cal-Maine Foods Inc (CALM) is expected to report $0.83 for 2Q.
Celularity Inc (CELU) is expected to report for 3Q.
Chase Corp (CCF) is expected to report for 1Q.
Citius Pharmaceuticals Inc (CTXR) is expected to report $-0.02 for 4Q.
Near Intelligence Inc (NIRLQ) is expected to report for 3Q.
Ocean Biomedical Inc (OCEA) is expected to report for 3Q.
Resources Connection (RGP) is expected to report $0.11 for 2Q.
Rite Aid Corp (RADCQ) is expected to report for 3Q.
SeaChange International Inc (SEAC) is expected to report for 3Q.
Simulations Plus Inc (SLP) is expected to report $0.06 for 1Q.
Sonic Foundry Inc (SOFO) is expected to report $-0.39 for 4Q.
Spark Networks SE - ADR (LOVLQ) is expected to report for 3Q.
Timberline Resources Corp (TBR.V,TLR) is expected to report for 4Q.
UniFirst Corp (UNF) is expected to report $2.04 for 1Q.
Yellow Corp (YELLQ) is expected to report for 3Q.
Powered by Kantar Media and Dow Jones.
ANALYST RATINGS ACTIONS
Aaron's Raised to Overweight From Equal-Weight by Stephens & Co.
Alliant Energy Cut to Equal-Weight From Overweight by Barclays
American Homes 4 Rent Raised to Buy From Hold by Jefferies
America's Car-Mart Cut to Equal-Weight From Overweight by Stephens & Co.
Apple Cut to Underweight From Equal-Weight by Barclays
Apple Inc. Cut to Underperform From Equal-Weight by Barclays Capital
Arcutis Biotherapeutics Raised to Buy From Neutral by Mizuho
AvalonBay Cut to Peer Perform From Outperform by Wolfe Research
Avery Dennison Cut to Underperform From Buy by B of A Securities
AvidXchange Cut to Neutral From Overweight by Piper Sandler
(MORE TO FOLLOW) Dow Jones Newswires
01-03-24 0619ET
