Daily Market Report 01-19-2024

Daily Market Report

As of 11:00 A.M. EST


Stocks Eke Out Gains With S&P 500 Near Record High: Markets Wrap – Bloomberg, 1/19/2024

  • Stocks are ending the week on a relatively positive note, with traders weighing the latest economic readings and Fedspeak for clues on the outlook for interest-rate cuts.
  • The S&P 500 hovered near its all-time high as data showed elevated consumer confidence and lower inflation expectations. While that would arguably be considered by many as a “Fed-friendly” development, it didn’t really move the needle for Wall Street on Friday.
  • Treasury yields remained slightly higher, though volatility was reasonably subdued.
  • Federal Reserve Bank of Chicago President Austan Goolsbee said a continued decline in inflation would merit discussion of cutting rates, though he stressed the central bank will make decisions meeting-by-meeting.
  • He spoke just hours before the Fed’s traditional pre-meeting communications blackout period.
  • The S&P 500 erased this week’s losses while the tech-heavy Nasdaq 100 outperformed after hitting a record Thursday.
  • The S&P 500 rose 0.3%. The Nasdaq 100 rose 0.6%. The Dow Jones Industrial Average rose 0.2%.
  • The yield on 10-year Treasuries advanced three basis points to 4.17%
  • Traders have tempered their wagers on rate cuts as US economic data continued to show resilience and Fed officials emphasized, they want to ensure inflation is tamed before embarking on any cuts.
  • Two-year yields about matched those on 30-year bonds as of Friday morning in New York.
  • As for Fed cuts, markets are now pricing in about 1.4 percentage points of reductions this year, compared with expectations of as much as 1.7 percentage points of easing as recently as last week.
  • Meanwhile, March rate cuts that were largely baked into the market are now seen as more of a toss-up.
  • Apple vowed to open its coveted tap-to-pay technology on iPhones to rivals in a bid to sidestep potentially massive European Union antitrust fines.
  • Amazon.com’s proposed $1.4 billion acquisition of Roomba maker iRobot Corp. is expected to be blocked by the European Union’s antitrust regulator over concerns that the deal will harm other robot vacuum makers.
  • Ford Motor cut production of its F-150 Lightning electric truck amid fading demand for electric vehicles.
  • Spirit Airlines said its deal with JetBlue Airways “remains in full force and effect” as the carrier explores ways to shore up its liquidity, offering investors a measure of relief after a court decision blocked the multibillion-dollar buyout.
  • SLB raised its payout to shareholders 10%, marking the highest dividend since 2020, as growth in drilling outside of North America buoyed results for the world’s biggest oil-field contractor.
  • Ally Financial announced fourth-quarter results that topped analysts’ estimates and said it will sell a point-of-sale financing business that includes $2.2 billion of loan receivables to Synchrony Financial.
  • The Stoxx Europe 600 fell 0.4%.
  • West Texas Intermediate crude rose 0.5% to $74.46 a barrel.

Ally Tops Earnings Estimates, Will Sell Unit to Synchrony – Bloomberg, 1/19/2024

  • Ally Financial announced fourth-quarter results that topped analysts’ estimates and said it will sell a point-of-sale financing business that includes $2.2 billion of loan receivables to Synchrony Financial.
  • The Detroit-based auto lender reported more than $2 billion in revenue, beating analysts’ estimates of $1.99 billion.
  • Consumer auto-loan originations totaled $9.6 billion, less than the $9.69 billion average estimate of analysts in a Bloomberg survey.
  • The company’s net interest margin hit 3.17% in the fourth quarter, below estimates of 3.2%.
  • Adjusted earnings came in at 45 cents a share, according to a statement Friday, topping estimates of 44 cents.
  • For all of 2024, NIM is expected to be between 3.25% and 3.3%, Ally said in an earnings presentation, and other revenue is forecast to rise as much as 10%.
  • The deal for the point-of-sale unit includes relationships with almost 2,500 merchant locations and supports more than 450,000 active borrowers in home-improvement services and health care, according to a separate statement.
  • Ally said the sale, expected to be completed in the first quarter, will boost its Common Equity Tier 1 ratio by about 15 basis points and add “modestly” to tangible book value and per-share earnings in 2024.

Travelers’ stock leaps toward a record as lower catastrophe losses boost profit – Market Watch, 1/19/2024

  • Shares of Travelers Companies surged into record territory Friday, after the property casualty insurer said lower catastrophe losses and higher underwriting gains helped produce record profits.
  • Meanwhile, total revenue grew 13.4% to $10.93 billion, below the FactSet consensus of $11.17 billion, as net premiums written increased 13.2% to $9.99 billion to miss expectations of $10.40 billion.
  • Catastrophes costs, net of insurance, improved to $125 million from $459 million in the same period a year ago, while underwriting gains improved to $1.38 billion from $449 million.
  • That helped improve the combined ratio, a measure of profitability for insurers that expresses expenses and incurred losses relative to premiums earned — the lower the ratio the better — to 85.8% from 94.5%, well below the FactSet consensus of 94.1%.
  • Excluding nonrecurring items, core earnings per share more than doubled to $7.01 from $3.40, well above the FactSet consensus of $5.10.

SLB Tops Earnings Estimates and Boosts Dividend. International Growth Is Strong. – Barron’s, 1/19/2024

  • Shares of SLB were trading higher after the oil services provider formerly known as Schlumberger topped earnings estimates and raised its quarterly dividend.
  • Revenue of $8.99 billion was above the $8.96 billion analysts had expected. International revenue jumped 18% in the quarter.
  • SLB posted fourth quarter adjusted earnings of 86 cents a share, beating Wall Street’s call for 84 cents, according to FactSet.
  • SLB’s board approved a 10% increase in the company’s quarterly cash dividend to 27.5 cents from 25 cents.

Wayfair Boss, Weeks After Viral Memo, Cuts 13% of Staff – Wall Street Journal, 1/19/2024

  • Wayfair is laying off 13% of its employees, weeks after the company’s chief executive sent a memo asking them to work harder.
  • On Friday the online retailer said it would lay off around 1,650 employees.
  • Wayfair, which primarily sells furniture and other home goods, has done several rounds of large layoffs in recent years as pandemic furniture buying has cooled.
  • Workers affected by the current round of layoffs will receive email notification Friday, the company said.
  • The move will cost $70 million to $80 million, mostly in severance, and is expected to generate annual savings of about $280 million.

JPMorgan Lifts CEO Jamie Dimon’s Pay to $36 Million for 2023 – Bloomberg, 1/19/2024

  • JPMorgan Chase raised Chief Executive Officer Jamie Dimon’s pay to $36 million for 2023, a year in which the bank notched the highest profit in the history of American banking.
  • The board granted Dimon a $1.5 million salary and $34.5 million of performance-based incentive compensation, according to a regulatory filing Thursday.
  • His total pay is up 4.3% from 2022, when he made $34.5 million.
  • The firm awarded $30 million to President Daniel Pinto, $27 million to longtime asset and wealth management chief Mary Erdoes and $18.5 million apiece to consumer-banking co-heads Jennifer Piepszak and Marianne Lake, according to the company.

Ford to Cut Production of Electric F-150 Pickups Amid Weaker Demand – Wall Street Journal, 1/19/2024

  • Ford will slash production of its electric pickup, the F-150 Lightning, after seeing weaker-than-anticipated demand.
  • The automaker said Friday that it was looking to balance production, sales growth and profitability for its electric pickup trucks.
  • Ford said it expects slower EV sales growth than anticipated in 2024.
  • Ford said about 1,400 employees would be affected as Rouge Electric Vehicle Center moves to one shift effective April 1.
  • The company said about 700 workers will be transferred to its Michigan Assembly Plant, while others would be placed at the Rouge Complex or other facilities.
  • Workers will also be able to take advantage of the special retirement incentive program under the recent union contract.
  • Ford also announced it would add a third crew at its Michigan Assembly Plant to increase production of Bronco sports-utility vehicles and Ranger pickups.
  • The company said the added production, meant to match higher demand for the vehicles, would create 900 jobs.

Spirit Airlines Looking to Refinance $1.1 Billion in Debt – Wall Street Journal, 1/19/2024

  • Spirit Airlines is considering refinancing $1.1 billion in debt due in 2025, the company said in a regulatory filing Friday.
  • The Wall Street Journal reported Thursday that the budget airline was looking for a path forward on its near-term debt after a federal judge blocked JetBlue Airways proposed $3.8 billion acquisition of the company.
  • Spirit, which has been struggling to turn a profit since before the Covid-19 pandemic, said it was “assessing options” on refinancing the maturities.
  • The company said it saw strong bookings during peak holiday travel and now expects fourth-quarter revenue to come in at the high end of previous guidance.

Mesa Air Group Strikes Deal With United Airlines to Improve Liquidity – Wall Street Journal, 1/19/2024

  • Mesa Air Group has struck several agreements with United Airlines meant to bolster Mesa’s operating income and liquidity.
  • Mesa, a regional air carrier that partners with United as well as other commercial airlines, said it has amended its CPA agreement with United to increase its block-hour rate, a move expected to generate about $63.5 million in extra revenue over the next year.
  • Separately, Mesa has struck a deal to extinguish $12.6 million of an outstanding United bridge loan and revolving credit facility debt in exchange for Mesa’s stake in Heart Aerospace, a privately held company.
  • Mesa said it originally bought the stake for $5 million.
  • Mesa also released its stake in Archer Aviation as collateral.


US Existing-Home Sales Decline to Cap Worst Year Since 1995 – Bloomberg, 1/19/2024

  • Sales of previously owned US homes fell in December, capping the worst year for the housing market in nearly three decades.
  • Contract closings decreased 1% from a month earlier to a 3.78 million annualized rate, according to National Association of Realtors data released Friday.
  • Last month, the number of previously owned homes for sale dropped to 1 million, the lowest since March.
  • At the current sales pace, selling all the properties on the market would take 3.2 months.
  • That lack of inventory is helping to keep prices elevated.
  • The median selling price climbed to $382,600 in December from a year ago, reflecting increases in all four regions.
  • Prices hit a record of $389,800 in 2023.
  • Some 56% of the homes sold were on the market for less than a month.
  • Properties remained on the market for 29 days, compared with 25 days in November.
  • Sales fell in the Midwest and South.
  • Sales of single-family homes as well as condominiums and co-ops both declined last month.
  • First-time buyers made up a historically low 29% of purchases in December.
  • Sales were down 9.2% from a year earlier on an unadjusted basis.

US Consumer Sentiment Jumps, Price Outlook Hits Three-Year Low – Bloomberg, 1/19/2024

  • US consumer sentiment soared in early January to the highest since 2021, far exceeding expectations, as short-term inflation expectations slipped to a three-year low.
  • The University of Michigan’s consumer sentiment index rose 9.1 points to 78.8, the biggest monthly advance since 2005.
  • The preliminary January reading surpassed all estimates in a Bloomberg survey of economists.
  • Consumers expect prices will climb at an annual rate of 2.9% over the next year, down from the 3.1% expected a month earlier.
  • They see costs rising 2.8% over the next five to 10 years, a four-month low, data Friday showed.
  • “Consumers exhibited stronger views on multiple facets of the economy, suggesting greater confidence of a soft landing,” Joanne Hsu, director of the survey, said in a statement.
  • “Improvements in inflation expectations have been supported by perceptions of easing price pressures in buying conditions for both durable goods and vehicles,” she said, adding that consumers increasingly expect the Federal Reserve to lower rates this year.
  • The current conditions gauge rose 10 points to 83.3, and a measure of expectations climbed to 75.9.

Biden Cancels $5 Billion in Student Debt in Latest Relief Step – Bloomberg, 1/19/2024

  • President Joe Biden is forgiving nearly $5 billion in additional student debt as the administration seeks to deliver on one of his signature initiatives with high stakes for his 2024 reelection campaign.
  • Almost 74,000 student loan borrowers will see debt canceled because of administrative changes by the US Education Department in the latest round of relief.
  • Those affected include borrowers enrolled in the government’s income-driven repayment and public-service loan forgiveness programs.
  • Each program requires at least a decade of payment or service to be eligible for relief.
  • “My administration is able to deliver relief to these borrowers – and millions more – because of fixes we made to broken student loan programs that were preventing borrowers from getting relief they were entitled to under the law,” Biden said in a statement Friday.
  • Of those receiving assistance, 43,900 borrowers are public servants and 29,700 are enrolled in income-driven repayment plans.

Congress Averts Government Shutdown as Conservatives Steam Over Border, Spending – Wall Street Journal, 1/19/2024

  • Biden hosted lawmakers at the White House on Wednesday, with attendees saying talks were productive and floating the idea of a possible vote on a combined border-Ukraine bill in the Senate next week. But House Republicans have remained skeptical of any deal that falls short of the border bill they passed last year with no Democratic support.
  • Former President Donald Trump, the front-runner in the 2024 GOP race, stirred up those sentiments on social media, saying that Republicans should not do a border deal “at all” unless they could get “everything needed to shut down” migration at the border.
  • “He’s going to be the presidential nominee,” said Rep. Marjorie Taylor Greene (R., Ga.), who voted against Thursday’s government-funding bill.
  • “It’s time for all Republicans—Senate and in the House—to get behind his policies. Those are policies that we should be reflecting in our bills and in our votes on the House floor.”
  • Meanwhile, Johnson has continued to grapple with the restive conservative wing of his conference that wanted to impose spending cuts or extract a win on border policy as a condition for funding the government.
  • In the vote Thursday, 107 Republicans backed the stopgap bill, with 106 voting against it and seven not voting.


Apple Offers to Open Mobile Payments to Third Parties Amid EU Antitrust Case – Wall Street Journal, 1/19/2024

  • Apple has agreed to let third-party mobile wallet and payment services in Europe use the technology behind its Apple Pay app in a move to allay competition concerns from European regulators.
  • The U.S. tech giant said Friday that it would allow other companies’ apps to make contactless payments on iPhones and other devices that use its iOS operating system for free, without the need to use Apple Pay or Apple Wallet.
  • Apple said it was making the concession after discussions with the commission, and that Apple Pay, which is used by more than 3,000 issuing banks across Europe, would continue to be a broadly available option.
  • Under the proposed change, consumers in Europe who use their mobile device to make a payment will be able to decide between using Apple Pay or an app enabled by iOS, Apple said.
  • Users will be able to change their default payment method at any time.
  • By offering commitments in response to the commission’s concerns, Apple is seeking to settle the case and avoid a possible fine.

Israel Intensifies Raids Against Palestinians in West Bank – Wall Street Journal, 1/19/2024

  • The Israeli-occupied West Bank has become an increasingly deadly front in a Middle East conflict that has spread beyond the war in Gaza, with near-daily Israeli raids into Palestinian villages and cities which Israel says are aimed at uprooting growing militant activity and preventing new attacks.
  • Early on Friday, Israeli security forces ended a two-day raid in Tulkarem, a West Bank city straddling the wall separating Palestinian communities and Israel that hasn’t been known as a hotbed of militancy in recent years, leaving at least eight Palestinians dead.
  • The raids, which lasted 45 hours, occurred in the city and its two refugee camps, Tulkarem and Nour Shams, where residents said Israeli forces destroyed homes and damaged infrastructure, including roads.
  • The Israeli military said it destroyed 400 explosives and five bomb factories, questioned hundreds of suspects and detained 37 individuals.
  • Since Israel launched its response to the deadly Hamas-led Oct. 7 attack, 357 Palestinians, of whom 90 were children, have been killed across the West Bank, including East Jerusalem, according to the United Nations.
  • Five Israelis, including four members of the security forces, have been killed in the West Bank over the same period, the U.N. said.

Houthis Fire Missiles at Another US-Owned Ship in the Red Sea – Bloomberg, 1/19/2024

  • Houthi militants in Yemen fired missiles at an American-owned commercial vessel on Thursday, the same day President Joe Biden acknowledged US airstrikes have not halted the Red Sea attacks.
  • The Houthis launched two anti-ship ballistic missiles at the Chem Ranger, a Greek-operated tanker, US Central Command said in a statement posted on social media platform X.
  • It was the third such attack in three days.
  • “The crew observed the missiles impact the water near the ship. There were no reported injuries or damage to the ship,” Central Command said in the statement.
  • A day earlier, the American military targeted 14 Houthi missiles just before midnight Yemeni time.
  • They were ready to be launched and presented “an imminent threat to merchant vessels and US Navy ships in the region,” Central Command said.

Factmonster – TODAY in HISTORY

  • The electric neon sign was patented in the United States by George Claude of Paris, France. – 1915
  • President Eisenhower okayed the first filming of a news conference for television. – 1955
  • Indira Gandhi was elected prime minister of India. – 1966
  • The United States and Iran signed an agreement paving the way for the release of 52 Americans held hostage for more than 14 months. – 1981
  • Yasser Arafat returned to Hebron for the first time in 30 years, as Israel hands over control of the West Bank city to Palestinians. – 1997
  • President Clinton admitted he made false statements under oath about Monica Lewinsky. – 2001

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