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Keith Lerner, Co-Chief Investment Officer and Lead Market Strategist at Truist, joins Yahoo Finance to discuss inventory buying opportunities in this challenging start to 2024.
“I do think small caps, especially for longer-term investors, look attractive. They went up 25% from the October lows so now you’re pulling back and likely also going to consolidate,” Lerner explains. “But I will say this, the relative valuations are still at the lowest level, towards the lowest level we have seen in 20, 25 years. The underperformance, we’re still in extreme for the whole year, as well. They were also getting hit a lot by the Fed moving rates higher because they have a lot more floating rate debt. As interest rates or the Fed starts to pivot, that should be a positive.”
For more information and the latest market actions, click here to watch this full episode of Yahoo Finance Live.
The recent slide in U. S. stocks continued on Thursday as stocks struggled to recover from a gloomy start to the year and Federal Reserve policymakers put hopes of an early interest rate cut on hold.
The Dow Jones Industrial Average (^DJI) closed just above the flat line, while the benchmark S index
Investors looking for confirmation of bets on a March rate cut got uncertainty instead in the Fed minutes released Wednesday. While officials agreed rates had reached a peak and should be lower by the end of 2024, some signaled that they could stay at their historically high levels “for some time” depending on the path of inflation.
In one-off stock moves, Apple shares (AAPL) stumbled for a fourth straight day as Wall Street underscored concerns about weakening demand for the iPhone.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
Data released on Thursday morning showed that the hard labor market remains intact as wages continue to fall, a welcome sign in the fight against inflation.
ADP’s most recent jobs report showed corporations added 164,000 jobs in December, up from 103,000 in November and analysts’ expectations of 115,000 jobs.
Separately, the Labor Department reported that 202,000 jobless claims were filed last week, below economists’ estimates of 216,000.
Meanwhile, U. S. bond yields rose again, with the 10-year Treasury yield (^TNX) ending at 4% after pulling away from that figure on Wednesday.
Investors will now turn to the December jobs report. The monthly labor report from the Bureau of Labor Statistics, slated for release at 8:30 a.m. ET, is expected to show nonfarm payrolls rose by 175,000 in December while the unemployment rate ticked up to 3.8% from the previous month, according to consensus estimates compiled by Bloomberg.
The stock market’s slide to kick off 2024 continued on Thursday.
The Dow Jones Industrial Average (^DJI) closed just above the flatline, while the benchmark S&P 500 (^GSPC) fell about 0.3%. After a Wednesday sell-off, the Nasdaq Composite (^IXIC) pushed for gains at points in the session, but fell nearly 0.6% below the flatline by the close.
Meanwhile, Apple Technology Stocks (AAPL) stumbled for a fourth straight day as Wall Street highlighted considerations about weakening demand for the iPhone. The big tech giant is down just about 6% in the last five days.
QuantumScape Corporation (QS) dominated Yahoo Finance’s trending page on Thursday. Shares of Volkswagen’s battery subsidiary soared about 50% after its solid-state phone passed its first endurance test.
Mobileye Global’s (MBLY) inventory fell about 25% after the chipmaker said it expects first-quarter profit to decline about 50%. Inventory had increased by approximately 30% in the two months prior to publication.
Walgreens (WBA) stock fell about 6% after reporting quarterly results. The company announced its cutting its dividend by 48% to $0.25 a share from $0.48 a share.
Peloton (PTON) stock soared more than 15% on Thursday after an announcement that it will be launching a partnership with TikTok that will feature short-form fitness videos and other content.
Travel stocks traded higher on Thursday as oil costs fell, signaling a decline in fuel costs for cruise lines and airlines.
American Airlines (AAL), Delta (DAL) and United (UAL) rose more than 1%. Cruise operators Royal Caribbean (RCL) and Carnival (CCL) rose more than 2%.
Oil futures fell more than 2% ahead of the vote amid higher-than-expected U. S. gas and distillate fuel production.
Meanwhile, energy-related stocks came under pressure on Thursday. The S ETF
The December jobs report will be released on Friday morning and is expected to show signs of a slowdown in the hard work market through the end of 2023.
The monthly labor report from the Bureau of Labor Statistics, slated for release at 8:30 a.m. ET, is expected to show nonfarm payrolls rose by 175,000 in December while the unemployment rate ticked up to 3.8% from the previous month, according to consensus estimates compiled by Bloomberg. In November, the US economy added 199,000 jobs while unemployment unexpectedly fell to 3.7%.
Here are the key numbers Wall Street will be looking at, according to data from Bloomberg:
Nonfarm Payroll: 175,000 vs. 199,000
Unemployment rate: 3. 8% compared to 3. 7% previously
Average monthly hourly earnings: 0. 3% vs. 0. 4% previously
Year-over-year hourly earnings: 3. 9% vs. 4. 0% previous
Average weekly hours worked: 34. 4 vs. 34. 4
Once again, the report will be a brake on the year-end stock market rally. Investors have largely attributed the move that propelled inventories to record highs to a shift in sentiment, and many now believe the Federal Reserve can pull off what’s known as a soft landing, where inflation falls to 2% without a full slowdown in economic growth.
“We expect December’s task report to show slower task expansion and further moderation in nominal wage expansion, two things the Fed needs to see as it tries to engineer a comfortable landing,” wrote Nancy Vanden Houten, lead U. S. economist at Oxford Economics. Note on Thursday.
Oil reversed course on Thursday after weekly U. S. gas and distillate inventories indicated weaker demand.
West Texas Intermediate (CL=F) sank more than 2% before paring most of those losses following the release of US crude inventory data. Brent (BZ=F) also sank into negative territory, losing its earlier gains.
Gasoline inventories rose to 10. 9 million barrels, their biggest weekly increase in more than three decades, according to data from the Energy Information Administration.
Crude inventories fell to 5. 5 million barrels during the week ended Dec. 29, but the larger-than-expected decline may simply reflect U. S. materials offsetting disruptions in shipping due to tensions in the Red Sea.
Oil futures were up more than 1% earlier in the session, extending their gains from Wednesday amid concerns of supply interruptions in Libya.
The precipitous decline in lending stopped in early 2024.
Rebecca Chen of Yahoo Finance reports:
Average 30-year loan rates rose to 6. 62% from 6. 61% a week ago, according to Freddie Mac’s tracking on Thursday. Aside from this week’s small increase, rates have been falling for weeks since last October, falling just about 117 base issues from their 12-month high of 7. 79% last October.
These recent declines have increased buyers’ ability to buy a home, but a further improvement in purchasing power may be hampered by a continued shortage of resources, especially if lower rates bring back marginalized demand.
“Although loan interest rates are expected to decline overall in 2024, small swings in weekly loan interest rates are expected,” Jessica Lautz, deputy lead economist at the National Association of Realtors, wrote to Yahoo Finance.
“The biggest demand is likely coming from those who have been close to the homebuying market. In the spring, there will most likely be a festival between the steady percentage of homebuyers who pay exclusively in cash and first-time buyers looking to stand out,” Lautz added.
Stocks are off to a rocky start in 2024.
The famous Santa Claus collection did take place. The Nasdaq Composite (^IXIC) had its fourth-worst first day of the year. And the Russell 2000 (^RUT), one of the favorites of the recent market rally, just had the third-worst start of the year in two days.
“It’s fair to say that money markets will arrive in 2024 with a mild hangover,” Jonas Goltermann, deputy chief economist at Capital Economics, wrote in a study note on Wednesday.
But some on Wall Street believe the current market drivers center on the macroeconomy. When this sentiment becomes more focused on earnings, the recovery can continue.
Recent data from FactSet shows that analysts expect companies to S
This earnings environment is one of the main reasons why Bank of America is growing by approximately 10% in S.
“The earnings season, which will be held next week, will be pivotal for the market,” Kwon said.
With companies officially exiting the earnings recession in the third quarter, Kwon believes that momentum continuing is crucial to the bullish thesis.
“Companies have been cutting prices because of the earnings recession,” Kwon said. “They’ve controlled their margin management. Margins have increased for the second consecutive quarter. So I think the momentum is bullish and if corporations talk more definitively about these benefits it will be a good idea.
U. S. stocks stalled on Thursday, suffering a dismal start to the year after Federal Reserve policymakers put hopes of an early interest rate cut on hold.
The Dow Jones Industrial Average (^DJI) rose about 0. 2%, while the benchmark S index
Multiple data points released Thursday morning showed the labor market remains intact while wages continue to cool, a welcome sign in the fight against inflation.
ADP’s most recent jobs report showed corporations added 164,000 jobs in December, up from 103,000 in November and analysts’ expectations of 115,000 jobs.
Also within the release, ADP revealed annual wage growth fell to 5.4% from 5.6% the month prior.
“We’re returning to a tough labor market that’s very much in line with pre-pandemic hiring,” said Nela Richardson, lead economist at ADP. “Even if wages were not the cause of the recent rise in inflation, now that the wage expansion has slowed, any threat of a wage-price spiral is still gone. “
Elsewhere, the Labor Department’s knowledge shows that 202,000 unemployment benefit programs were filed last week, below economists’ estimates of 216,000. Jobless claims are an area that several economists told Yahoo Finance they were tracking for signs of slowing down, as a surge in registrations would mean more people would be laid off from their jobs.
The big jobs insights update of the week is still waiting for investors, as the December jobs report will be released on Friday at 8:30 a. m. m. , Eastern time.
Apple (AAPL) has suffered its second downgrade in four days of 2024, this time from Piper Sandler.
The reason for analyst Harsh Kumar’s downgrade similar to that of his Barclays peers this week: iPhone demand, especially in a Chinese market that is expected to be weak.
Apple’s inventory has already taken a hit this year, falling more than 1% on Thursday in premarket trading:
Piper Sandler’s downgrade from obese to unbiased is perhaps less impactful than Barclays’ downgrade to underweight on Tuesday. Apple shares reacted with their biggest percentage drop since September.
According to Bloomberg, the number of analysts giving stocks a bullish score is at its lowest level in three years.
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