WELCOME TO LEIBOVIT VR NEWSLETTERS – ‘TURNAROUND TUESDAY’ – JANUARY 16, 2024

With traders digesting earnings news from several big-name companies as well as the latest U.S. inflation data, stocks fluctuated over the course of the trading session on Friday.

While the S&P 500 and the Nasdaq eventually ended the session slightly higher, the narrower Dow showed a modest move to the downside.

The S&P 500 inched up 3.59 points or 0.1 percent to 4,783.83 and the Nasdaq crept up 2.57 points or less than a tenth of a percent to 14,972.76, the Dow dipped 118.04 points or 0.3 percent to 37,592.98.

For the week, the tech-heavy Nasdaq spiked by 3.1 percent, the S&P 500 jumped by 1.8 percent and the Dow rose by 0.3 percent.

A steep drop UnitedHealth (UNH) weighed on the Dow, with the health insurance giant tumbling by 3.4 percent despite reporting fourth quarter results that beat analyst estimates on both the top and bottom lines.

Financial giants Bank of America (BAC), Wells Fargo (WFC) and JPMorgan Chase (JPM) also moved to the downside after reporting their quarterly results, while Citigroup (C) moved higher over the course of the session.

Traders were also reacting to a Labor Department report showing producer prices in the U.S. unexpectedly edged slightly lower in the month of December.

The Labor Department said its producer price index for final demand slipped by 0.1 percent in December, matching a revised dip in November.

Economists had expected producer prices to inch up by 0.1 percent compared to the unchanged reading originally reported for the previous month.

Meanwhile, the report said the annual rate of producer price growth accelerated to 1.0 percent in December from a downwardly revised 0.8 percent in November.

The annual rate of producer price growth was expected to speed up to 1.3 percent from the 0.9 percent originally reported for the previous month.

After Thursday’s report showing consumer prices in the U.S. rose by slightly more than expected in the month of December, the wholesale price data added to recent uncertainty about the outlook for interest rates.

“PPI reports always feel secondary when they’re released after the more-important CPI data, but considering the December PPI does not incorporate new supply chain issues from conflicts in the Red Sea, this morning’s report feels particularly backward-looking,” said FHN Financial Macro Strategist Will Compernolle.

“As a result, the encouraging aspects of December data on producer prices should be largely dismissed for now,” he added. “We’ll have to wait until January to see how recent supply chain problems pass through to US producer prices.”

Sector News

Airline stocks showed a substantial move to the downside on the day, resulting in a 4.4 percent nosedive by the NYSE Arca Airline Index.

Delta Air Lines (DAL) led the sector lower, plummeting by 9.0 percent despite reporting fourth quarter earnings that exceeded analyst estimates.

Considerable weakness was also visible among housing and banking stocks, with the Philadelphia Housing Sector Index and the KBW Bank Index falling by 1.2 percent and 1.1 percent, respectively.

On the other hand, gold stocks moved sharply higher, driving the NYSE Arca Gold Bugs Index up by 2.8 percent. The strength in the gold sector came amid a surge by the price of the precious metal.

Energy stocks also turned in a strong performance, as the price of crude oil saw further upside after Britain and the U.S. carried out military strikes against targets in Houthi-controlled areas of Yemen

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved lower on Friday, although Japan’s Nikkei 225 Index extended its recent rally and jumped by 1.5 percent. Hong Kong’s Hang Seng Index fell by 0.4 percent, while China’s Shanghai Composite Index dipped by 0.2 percent.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.’s FTSE 100 Index climbed by 0.6 percent, the German DAX Index and the French CAC 40 Index jumped by 1.0 percent and 1.1 percent, respectively.

In the bond market, treasuries fluctuated over the course of the session before closing moderately higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 3.950 percent.

Looking Ahead

Following the long holiday weekend, next week’s trading may be impacted by reaction to the latest economic news, including reports on retail sales, industrial production, import and export prices, housing starts and consumer sentiment.

Earnings news may also continue to attract attention, with Goldman Sachs (GS), Morgan Stanley (MS), Charles Schwab (SCHW), KeCorp (KEY), M&T Bank (MTB) and Travelers (TRV) among the companies due to report their quarterly results.