Market Overview
The trading session was relatively uneventful, with major indices hovering around their previous closing levels. The Russell 2000 index outperformed others, closing 0.9% higher, indicating some speculative buying in a thinly-traded market following the holiday break. The choppy performance of mega-cap stocks contributed to mixed results across the three major indices. The Vanguard Mega Cap Growth ETF (MGK) fluctuated between a high of +0.1% and a low of -0.7% during the session.
S&P 500 Sector Performance
The S&P 500 sectors experienced muted price action, with none moving more than 0.6% in either direction. The financial sector and health care sector both gained 0.2%, making them the top performers. Conversely, the consumer discretionary sector recorded the largest decline, falling 0.6%.
Market Rates and Economic Data
Market rates were already elevated, and selling increased following a better-than-expected initial jobless claims report. Weekly initial jobless claims for the week ending December 21 came in at 219,000, below the consensus of 232,000. Continuing jobless claims for the week ending December 14 reached 1.910 million, the highest since November 13, 2021. Despite this, Treasuries ended with gains after a $44 billion 7-year note auction saw strong demand. The 10-year yield briefly reached 4.64% after the jobs data but settled at 4.58%, one basis point lower than Tuesday.
Year-to-Date Index Performance
- Nasdaq Composite: +33.4% YTD
- S&P 500: +26.6% YTD
- Dow Jones Industrial Average: +15.0% YTD
- S&P Midcap 400: +13.9% YTD
- Russell 2000: +12.5% YTD
Economic Data Review
The key takeaway from the latest economic data is that layoff activity remains low. However, securing a new job is becoming more challenging for those who have lost their employment.
Today's News
Elon Musk has expressed a preference for Eli Lilly's (LLY, Financial) weight loss drug Mounjaro over Novo Nordisk's (NVO, Financial) Ozempic, citing fewer side effects and greater efficacy. This endorsement comes as Musk, dressed as Santa Claus, humorously referenced Ozempic in a social media post. The drugs, both part of the GLP-1 class, are used for diabetes treatment and weight loss. Musk's comments could influence public perception and market dynamics of these pharmaceutical products.
Amazon Web Services (AMZN, Financial) plans to reduce spending on products from ZT Systems, which is being acquired by Advanced Micro Devices (AMD, Financial) for $4.9 billion. Despite this, AWS will continue its business relationship with ZT Systems as it focuses on developing in-house data center components. The acquisition is expected to enhance AMD's capabilities in AI and data center systems, potentially boosting its market position.
New York Governor Kathy Hochul has enacted the Climate Change Superfund Act, requiring major polluters to pay $75 billion for climate change-related damages over 25 years. This legislation aims to fund infrastructure improvements to mitigate climate impacts, marking a significant move in environmental policy. Energy companies are expected to challenge this law legally, reflecting the growing tension between environmental regulation and industry interests.
Boeing (BA, Financial) has been praised by Elon Musk for its new leadership under CEO Kelly Ortberg, following a safety crisis. Musk's comments highlight Ortberg's technical expertise in aerospace, which is seen as a positive shift for Boeing's future direction. The company continues to address safety concerns and operational challenges in the aviation industry.
Palantir (PLTR, Financial) and Salesforce (CRM, Financial) are positioned to lead in AI application monetization, according to Wedbush. As AI spending increases, Palantir's expanding use cases and partnerships are expected to drive growth. The company's potential to evolve into a major player like Oracle (ORCL) is noted, with significant demand for its enterprise-scale AI solutions.
Martin Midstream Partners LP (MMLP, Financial) has terminated its merger agreement with Martin Resource Management following opposition from major unitholders. The deal, which valued the units at $4.02 each, faced criticism for undervaluing the company. The termination reflects shareholder influence and market dynamics in corporate transactions.
MicroStrategy (MSTR, Financial) plans to issue more shares to purchase additional Bitcoin (BTC-USD), despite a recent price drop. The company's aggressive Bitcoin acquisition strategy underscores its commitment to cryptocurrency investment. Bitcoin's momentum has slowed after a significant year-to-date increase, highlighting the volatile nature of digital assets.
Ingles Markets (IMKTA, Financial) has received a compliance notice from Nasdaq for not filing its annual report on time. The company plans to rectify this within the 60-day period allowed by Nasdaq rules, ensuring continued listing of its shares. This situation emphasizes the importance of regulatory compliance in maintaining market confidence.
Starbucks (SBUX, Financial) has ended a five-day strike by baristas, organized by the Workers United union, over contract negotiation delays. The union's demands for significant wage increases were deemed unsustainable by Starbucks. The labor dispute highlights ongoing challenges in labor relations and contract negotiations within the company.
SEALSQ (LAES, Financial) has regained compliance with Nasdaq's minimum bid price requirement after maintaining a share price above $1.00 for ten consecutive days. This compliance ensures the continued listing of SEALSQ shares, reflecting the company's efforts to meet market standards and investor expectations.
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