What you need to know…
The S&P 500 Index ($SPX) (SPY) on Monday closed up +1.41%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.58%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.11%.
Stocks on Monday settled moderately higher, with the S&P 500 climbing to a 1-week high. A +5% gain in Nvidia to a record high led to a rally in technology stocks Monday that lifted the overall market after it unveiled new graphic chips that will let users use AI on their personal computers better. Also, an increase in M&A activity supported stocks after Boston Scientific agreed to buy Axionics for $3.7 billion, and Johnson & Johnson agreed to buy Ambix Biopharma for $2 billion.
Stocks also found support Monday from lower bond yields on comments over the weekend from Dallas Fed President Logan, who said the Fed may slow the pace at which it shrinks its portfolio of assets to keep ample liquidity in financial markets.
On the negative side for stocks, Boeing tumbled more than -8% after a fuselage section on a new 737 Max 9 aircraft ejected during an Air Alaska flight over the weekend, forcing the company to pull the jet from service for inspections. Also, comments Monday from Atlanta Fed President Bostic were hawkish when he said the Fed "is in a restrictive stance, and I'm comfortable with that, and I just want to see the economy continue to evolve and see inflation get to our 2% level." He added that he expects the Fed's first rate cut in Q3 of this year.
U.S. Nov consumer credit rose +$23.751 billion, stronger than expectations of +$8.550 billion and the most in a year.
The markets are discounting the chances for a -25 bp rate cut at 5% at the next FOMC meeting on Jan 30-31 and 67% for that same -25 bp rate cut for the following meeting on March 19-20.
U.S. and European government bond yields on Monday moved lower. The 10-year T-note yield fell -3.8 bp t0 4.008%. The 10-year German bund yield fell -2.0 bp to 2.136%. The 10-year UK gilt yield fell -1.5 bp to 3.772%.
The Eurozone Jan Sentix investor confidence index rose +1.0 to an 8-month high of -15.8, right on expectations.
German Nov factory orders rose +0.3% m/m, weaker than expectations of +1.1% m/m.
ECB Governing Council member Vujcic said he expects inflation to slow gradually and that the ECB "is not talking about cutting interest rates now, and probably won't before the summer."
Overseas stock markets on Monday settled mixed. The Euro Stoxx 50 closed up +0.49%. China’s Shanghai Composite Index closed down -1.42%. Japan’s Nikkei Stock Index was closed for the Coming-of-Age holiday.
Today’s stock movers…
American Airlines Group (AAL) closed up more than +7% after Morgan Stanley upgraded the stock to overweight from equal weight.
Nvidia (NVDA) closed up more than +6% at a record high after it unveiled new graphic chips at the CES trade show with extra components that will let users make better use of AI on their personal machines without having to rely on remote services accessed over the internet.
Arista Networks (ANET) closed up more than +5% after Melius Research LLC upgraded the stock to buy from hold with a price target of $300.
Advanced Micro Devices (AMD) closed up more than +5% after Melius Research LLC upgraded the stock to buy from hold with a price target of $188.
Chip stocks rallied Monday to lead technology stocks higher. Marvell Technology (MRVL) closed up more than +6% to lead gainers in the Nasdaq 100. Also, Globalfoundries (GFS) closed up more than +4%, and KLA Corp (KLAC), ON Semiconductors (ON), Lam Research (LRCX), NXP Semiconductors (NXPI), and Intel (INTC) closed up more than +3%.
Dexcom (DXCM) closed up more than +4% after reporting preliminary Q4 revenue of at least $1.03 billion, higher than the consensus of $1.0 billion.
Ambrix Biopharma (AMAM) closed up more than +101% after Johnson & Johnson agreed to buy the company for $2 billion or about $28 per share.
Crocs (CROX) closed up more than +20% after raising its full-year revenue forecast to $3.95 billion from a previous forecast of $3.91-$3.94 billion, stronger than the consensus of $3.93 billion.
Moderna (MRNA) closed up more than +3% after reporting $6.7 billion in 2023 product sales, above the consensus of $6.3 billion.
Boeing (BA) closed down more than -8% to lead losers in the S&P 500 and Dow Jones Industrials after it pulled its 737 Max 9 jet from service for inspections after a fuselage section on a new Alaska Airlines jet blew out during flight. United Airlines reported Monday that it found loose bolts and other parts on the 737 Max 9 jet plug doors during inspections.
Energy stocks and energy service providers retreated Monday, with the price of WTI crude oil falling more than -4%. As a result, Baker Hughes (BKR) closed down more than -2% to lead losers in the Nasdaq 100. Also, Schlumberger NV (SLB), Haliburton (HAL), and Marathon Oil (MRO) closed down more than -2%. In addition, APA Corp (APA), ConocoPhillips (COP), Exxon Mobil (XOM), Phillips 66 (PSX), and Occidental Petroleum (OXY) closed down more than -1%.
ZoomInfo Technologies (ZI) closed down more than -3% after RBC Capital Markets downgraded the stock to underperform from sector perform with a price target of $14.
W.R. Berkley (WRB) closed down more than -2% after RBC Capital Markets downgraded the stock to sector perform from outperform.
Genesco (GCO) closed down more than -1% after reporting comparable sales fell -4% for the quarter-to-date period, and it cut its full-year adjusted EPS continuing operations estimate to 65 cents-85 cents from a previous estimate of $1.50-$2.00, well below the consensus of $1.73.
Across the markets…
March 10-year T-notes (ZNH24) on Monday closed up +10.5 ticks, and the 10-year T-note yield fell by -3.8 bp to 4.008%. Mar T-notes Monday posted moderate gains and found support on weekend comments from Dallas Fed President Logan, who said the Fed may need to slow the pace of shrinking its balance sheet to keep adequate liquidity in financial markets. T-notes also rose on Monday’s -4% plunge in crude prices, which lowers inflation expectations.
T-notes fell back from their best levels Monday on hawkish comments from Atlanta Fed President Bostic, who said the Fed is in a restrictive stance and he’s comfortable with that. Also, Monday’s news that showed U.S. Nov consumer credit rose more than expected by the most in a year weighed on T-notes. In addition, strength in stocks reduced the safe-haven demand for T-notes.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
