MARKET RECAP

• US stocks +1.08%, international stocks +1.35%, bonds + 0.05%.
• The S&P 500 and the Nasdaq have been up 12 of the last 13 weeks.
• According to the Stock Trader’s Almanac, three key indicators give a glimpse of what the rest of the year might look like, they are the Santa Claus Rally, the First Five Days (of the year), and the January Barometer (performance for January). When all three are positive, the SPX has been up 90.3% of the time. But this year, only two of the three have been positive because the market was slightly down for the first five days. When one of the three has been negative, the SPX is up only 59.5% of the time, 25 of 42 years, with an average gain of 2.9%.
• The Fed meets this Wednesday and is expected to keep interest rates the same.
• The Personal Consumption Expenditures (PCE) index was up 0.2% for December and 2.6% year over year. The Core PCE (x-energy and x-food) was up 2.9% compared to last year.
• Preliminary GDP for Q4 came in at 3.3%, beating estimates of 2%, indicative that the economy continues strong.
• After releasing its earnings, TSLA dropped 12% and is now down 26% year-to-date.
• MSFT joins Apple with a market cap greater than $3 trillion.
• The SPX has been on fire, see the positive sloping black line on the chart below. However, the MACD technical indicator is showing a negative divergence. A possible sign of some short-term trouble ahead.
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SCOREBOARD

MARKET RECAP

• US stocks are up by 1.04%, the Nasdaq by 2.3%, international stocks are down by 1.33%, and bonds fall by 0.91%. The yield on the 2-year treasury increased by 25 basis points to 4.39%, and the 10-year yield increased by 19 basis points to 4.15%.
• Expectations for Feb rate cuts, in terms of starting in March and in total number for 2024, are declining.
• Bitcoin, which had a recent peak on January 11th at $49,102, is now down almost 16% to $41,347. A classic example of sell on the news, as a bunch of bitcoin spot ETFs became available last week.
• Jobless claims are closing in on historic lows again, coming in at 187,000 this past week.
• University of Michigan consumer sentiment improved by the most since 2005, up by 9.1 points to 78.8.
• The Philadelphia Fed Manufacturing Index fell to -10.6, showing declining activity in that region.
• According to Barron’s, the Wall Street consensus is for S&P 500 earnings growth of 11% this year. But management is talking more conservatively.
• There is an estimated $8.8 trillion in money market funds. Part of the bull argument is that some of those funds will flow into equities if interest rates fall.
• Jacob Sonenshine writes in Barron’s that the earnings yield on the SPX is 5.3%, only 1.3% greater than the 4% 10-year treasury yield. Investors are optimistic and short interest is low, some of the reasons the market might be set for a correction.

SCOREBOARD

MARKET RECAP

• SP500 +1.84%.
• Inflation data came in higher than consensus,+3.4% year over year.
• Barron’s Roundtable members are looking for market returns ranging from -15 % to +12% for 2024, mainly due to high valuations. That would be less than the general market expectations in the 8-10% range.

SCOREBOARD

MARKET RECAP

US stocks were off by 2.10%, ending a nine-week winning streak. International stocks dropped by 1.57%, and bonds dropped by 1.25% as interest rates increased.

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