US FINANCIAL MARKET
US Stock Rally Loses Steam Near All-Time Highs: Markets Wrap – Bloomberg, 12/27/2023
- Stocks struggled to find solid ground after a rally that put the market near a record on bets the Federal Reserve will cut rates next year.
- Without any major economic data or significant corporate events, the S&P 500 wavered.
- The Nasdaq 100 rose 0.2%. The Dow Jones Industrial Average rose 0.1%.
- With just a few days left before the end of 2023 — when volume tends to shrink — some traders cite an old Wall Street adage saying, “Never short a dull market.”
- Yet concerns about a reality check have surfaced amid overbought levels and warnings about overly dovish Fed wagers.
- Traders have stepped up bets on rate cuts as early as March 2024, according to Fed swaps pricing.
- That view has gained momentum since policymakers updated their forecasts this month to show they expect to reduce rates at a stronger pace than indicated in their previous projections in September.
- The S&P 500 traded less than 0.5% away from its all-time high of 4,796.56.
- Treasuries held small gains ahead of a $58 billion sale of five-year notes — a day after shorter maturities drew strong demand from buyers seeking to lock in higher yields before the Fed starts easing policy.
- Traders also kept an eye on the latest geopolitical developments.
- Oil retreated from its highest close in almost a month, with a new attack on shipping in the Red Sea underscoring why some vessels are avoiding the key route.
- West Texas Intermediate crude fell 0.8% to $74.94 a barrel.
- Shipping giant Hapag-Lloyd said it would keep its vessels away from the Red Sea even after launching a US-led task force to protect the key trade route from militant attacks.
- In other corporate news, Cytokinetics said its experimental drug helped patients with a genetic heart ailment in a closely watched trial that has spurred speculation about a potential takeover.
- Pipeline operator Williams agreed to buy natural gas storage assets from an affiliate of Hartree Partners LP for $1.95 billion in a bet on demand growth for fuel in the US and overseas markets.
- The Stoxx Europe 600 has changed a little.
- The Bloomberg Dollar Spot Index fell 0.2%.
- The yield on 10-year Treasuries declined six basis points to 3.84%.
Tesla Plans Revamp of Smash Hit Model Y From China Plant – Bloomberg, 12/27/2023
- Tesla is preparing to roll out a revamped version of its smash hit Model Y from its Shanghai plant, according to people familiar with it.
- The US electric carmaker is currently conducting preparation work in China for its refreshed Model Y sport utility vehicle, and mass production may start as soon as mid-2024.
- The 2024 version of the Model Y will have much more obvious exterior and interior changes than the most recent update in October, which added a new wheel design and ambient lighting, the people said, declining to elaborate.
- The first batch of the newest Model Ys will be made from the second phase of Tesla’s Shanghai facility, which will suspend production for around a week during the New Year holiday for a partial upgrade, one of the people said.
- More adjustments will have to be made prior to mass production, they added.
New York Times Sues Microsoft and OpenAI, Alleging Copyright Infringement – Wall Street Journal, 12/27/2023
- The New York Times sued Microsoft and OpenAI for alleged copyright infringement, touching off a legal fight over generative AI technologies with far-reaching implications for the future of the news publishing business.
- In a Wednesday complaint, the Times said the technology companies exploited its content without permission to create their AI products, including OpenAI’s humanlike chatbot ChatGPT and Microsoft’s Copilot.
- The tools were trained on millions of pieces of Times content, the suit said and drew on that material to serve up answers to users’ prompts.
- In its complaint, the Times said it believes it is among the largest proprietary information sources for OpenAI and Microsoft’s AI products.
- The suit said that their AI tools divert traffic that would otherwise go to the Times’ web properties, depriving the company of advertising, licensing, and subscription revenue, the suit said.
- The Times is seeking damages, in addition to asking the court to stop the tech companies from using its content and to destroy data sets that include the Times’ work.
Williams to Buy Gulf Coast Natural Gas Storage Portfolio for $1.95 Billion – Wall Street Journal, 12/27/2023
- Energy infrastructure company Williams has inked a deal to buy a Gulf Coast natural gas storage asset portfolio from an affiliate of commodities-trading company Hartree Partners for $1.95 billion.
- Williams on Wednesday said the acquisition includes six underground natural gas storage facilities in Louisiana and Mississippi with a total capacity of 115 billion cubic feet, along with 230 miles of gas transmission pipeline and connections to Transco, the nation’s largest natural gas transmission pipeline.
- The Tulsa, Okla., company, which operates 33,000 miles of pipeline, said it expects to complete the acquisition in January.
Cytokinetics Stock Jumps on Heart Drug Trials Results – Wall Street Journal, 12/27/2023
- The biotech sector’s heady end-of-year continued Wednesday, with shares of Cytokinetics surging after the company said its experimental heart drug worked safely in a study.
- Analysts and investors anticipated the results of aficamten because of the pill’s potential to compete for prescriptions with Bristol-Myers Squibb’s new Camzyos, which was the crown jewel of a $13.1 billion acquisition.
- Both drugs treat hypertrophic cardiomyopathy, the most common genetic heart disease, which can lead to blood clots, strokes, and, in rare cases, death.
- About 1 in 500 people have HCM, but Cytokinetics Chief Executive Robert Blum said his company’s market research found doctors prescribe Camzyos to only 3% to 5% of eligible patients.
- “For that reason, we foresee that there’s quite ample opportunity for aficamten,” he said in an interview.
Iovance Stock Plunges as FDA Puts Hold on Lung Cancer Study After Patient Death – Barron’s, 12/27/2023
- Iovance Biotherapeutics stock was tumbling Wednesday after the Food and Drug Administration placed a clinical hold on a cancer treatment study following the death of a study patient.
- Iovance said in a press release Wednesday that the FDA placed a clinical hold on its trial for a lung cancer therapy after the company reported a death potentially related to the treatment.
- Iovance will pause enrollment for new patients and monitor patients who previously had received the treatment.
US ECONOMY & POLITICS
Michigan Supreme Court Rejects Effort to Keep Trump Off Primary Ballot – Wall Street Journal, 12/27/2023
- Donald Trump can appear on Michigan’s 2024 presidential primary ballot, the state’s top court ruled Wednesday.
- The Michigan Supreme Court declined to take up the question of Trump’s eligibility under the state’s election laws.
- In a one-paragraph ruling, the majority wrote the court was “not persuaded that the questions presented should be reviewed by this Court.”
EUROPE & WORLD
BOJ Summary Suggests Ueda Can Wait for Wages Before Hiking – Bloomberg, 12/27/2023
- Bank of Japan board members discussed the potential timing of the nation’s first interest rate hike since 2007 during their meeting last week, with several members indicating they see no rush to make the move.
- “It would not be too late even if the bank makes a decision after it sees developments in labor-management wage negotiations next spring,” one of nine board members said at the December 18-19 gathering.
- There is only a small risk of underlying inflation overshooting its 2% target by a significant degree, the same member said.
- Another voiced the opinion that there is now “sufficient leeway” to determine whether a virtuous wage-inflation cycle has been achieved after the bank enhanced the flexibility of its yield curve control mechanism in October.
- “While it is undesirable to make hasty decisions, it is ‘better to be rough and ready than slow and elaborate,’ as the saying goes,” one member noted in a comment that will help keep speculation of an early move next month smoldering.
Israel Widens Discussions on Egyptian Peace Proposal – Wall Street Journal, 12/27/2023
- Israel’s war cabinet took an Egyptian proposal to end the war with Hamas to a wider group of ministers as domestic pressure grows to secure the release of hostages and regional powers look for a solution to end the fighting in Gaza.
- The planned presentation to the 14-member security cabinet on Tuesday night came alongside a broader briefing to the group on hostage-release efforts and other issues related to the war’s progress, according to a person familiar with the meeting’s agenda.
- Israeli officials said it is unlikely that Israel can agree to any deal that would allow a role for Hamas in Gaza after the war is over, as the Egyptian plan proposes. The security cabinet wasn’t expected to vote on the proposal.
- But Israel is willing to discuss the first stage of the plan, which would see the release of hostages held by Hamas in exchange for Israel’s release of Palestinian prisoners, said Danny Danon, a senior lawmaker in Prime Minister Benjamin Netanyahu’s Likud party.
- On the Palestinian side, a delegation from the executive committee of the Palestine Liberation Organization is expected to go to Cairo soon to discuss the proposal, including the makeup of a potential unified government that would run the Gaza Strip and the West Bank, committee member Ahmed Majdalani said Tuesday.
U.S., Mexico to Hold Talks on Slowing Border Crossings – Wall Street Journal, 12/27/2023
- Top Biden administration officials are flying to Mexico on Wednesday for urgent talks to slow the record pace of illegal crossings at the US southern border, just as congressional negotiators are racing to reach a deal to tighten America’s immigration laws.
- Secretary of State Antony Blinken will meet on the one-day trip with Mexican President Andrés Manuel López Obrador.
- They will be joined by Homeland Security Secretary Alejandro Mayorkas and by Liz Sherwood-Randall, the White House’s homeland security adviser.
- In Washington, the border crisis has become a major obstacle to continued US military support for Ukraine, a priority of President Biden.
- Republicans are demanding changes to the Biden administration’s border policy as a condition for backing a $110.5 billion national-security package that would fund aid for Ukraine, Israel, and Taiwan, as well as replenish US weapons stocks.
- Some of the proposed measures to tighten border security and send back more deportees would require Mexico’s support.
Hapag-Lloyd to Continue Avoiding Red Sea Despite U.S.-Led Naval Deployment – Wall Street Journal, 12/27/2023
- German shipping company Hapag-Lloyd said it will continue to avoid the Red Sea because it considers the area is still too dangerous despite the US and allies deploying naval ships to deter further strikes by Houthi militants.
- “We continuously assess the situation and plan a next review on Friday,” a spokesperson of the German shipping giant said Wednesday.
- It will continue rerouting its ships via the Cape of Good Hope in South Africa.
- On Tuesday, peer Mediterranean Shipping said it would continue to reroute vessels booked for Suez transit via the Cape of Good Hope and confirmed that one of its container ships was attacked while in the Red Sea.
India Seeks More Middle East Crude as Attacks Delay Cargoes – Bloomberg, 12/27/2023
- Refiners in India, the world’s third-largest crude oil importer, seek to boost supplies from the Middle East and other nearby nations as recent attacks on ships in the Red Sea raise the risk of longer shipping time and higher costs, according to people familiar with the matter.
- Shippers turned cautious about entering the Red Sea in recent weeks due to multiple attacks by Yemen’s Iran-backed Houthi rebels.
- That prompted massive diversions, with many ships taking a longer route around the Cape of Good Hope, adding as much as three weeks to the voyage.
- Shipping companies are asking Indian firms to bear the risk premiums for deliveries via the usual route, said the people who asked not to be identified because of the sensitivity of the issue.
- The refiners are not willing to bear the additional liability and are scouting for alternative suppliers, they said.
- They said that talks are also underway with countries such as Saudi Arabia and the United Arab Emirates to strengthen maritime security cooperation in the Red Sea region.
Factmonster – TODAY in HISTORY
- Darwin began his voyage aboard the HMS Beagle. – 1831
- Radio City Music Hall in New York City opened. – 1932
- The World Bank was created with an agreement signed by 28 nations. – 1945
- The Netherlands transferred sovereignty to Indonesia after more than 300 years of Dutch rule. – 1949
- The Soviet Union took control of Afghanistan, installing Afghan politician Babrak Karmal as president. – 1979
- Rwanda’s first genocide trial opened for the 1994 slaughter of 800,000 Tutsis. – 1996
- The U.S. announced plans to hold Taliban and al-Qaeda prisoners at Guantanamo Bay, Cuba. – 2001
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