The start of 2024 has been a bit skittish for the major indices and the Treasury market. There has been some understandable selling activity, some understandable rebound activity, and some altogether indeterminate price action.
Some added attention has been paid to the “failure” of the Santa Claus Rally, which, frankly, we don’t see as a true failure given the massive percentage gains that preceded it, and to the first five trading days of 2024 culminating in a cumulative 0.1% decline for the S&P 500.
Those shortcomings, if you will, are apt to cause some undue concern for anyone who treats such seasonal patterns as gospel. The saving grace for them, we suppose, would be if the S&P 500 can regroup and close out January with a plus sign next to it.
There is plenty of January left for that to happen. Heck, the S&P 500 is only down 0.3% for the year coming into today — and it is coming into today without a lot of conviction.
Currently, the S&P 500 futures are down two points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 11 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down five points and are trading fractionally below fair value.
Some points of hesitation include the $37 billion 10-yr note auction today at 1:00 p.m. ET, the specter of the December Consumer Price Index, which will be released on Thursday, the official start of the Q4 earnings reporting season on Friday, and a 0.4% decline in Apple (AAPL) following yet another downgrade.
Redburn Atlantic cut its view on Apple to Neutral from Buy due in part to rising regulatory risk and what it thinks could be an underwhelming March quarter. That is the third downgrade of Apple since the start of the year.
Most of the mega-cap stocks were able to overcome early weakness yesterday, which enabled the broader market to bounce back from early losses. Today’s open is likely to be a flattish one, so traders will be looking for trading cues in the price action of both the mega-cap stocks and the small-cap stocks. Both were instrumental in powering the market’s year-end rally and both have been instrumental in the downshift to begin 2024.
Separately, mortgage demand powered up in the latest week. According to the Mortgage Bankers Association, mortgage applications increased 9.9% last week with refinance applications up 19% and purchase applications up 6%.
There is also a lot of energy in the trading of Bitcoin and Bitcoin-related stocks, as market participants await word on whether the SEC is going to approve a spot Bitcoin ETF. It appeared after yesterday’s close that the approval was granted, but just as soon as that headline hit, SEC Chair Gary Gensler said in an X update that the @SECGov account was compromised and that the SEC has not approved the listing and trading of spot Bitcoin ETFs.
That doesn’t necessarily mean the SEC isn’t approving them, only that there was no official announcement on the decision yesterday.
There was an official announcement today, however, that Hewlett-Packard Enterprise (HPE) will acquire Juniper Networks (JNPR) in an all-cash transaction for approximately $14 billion or $40.00 per share.
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Originally Posted January 10, 2024 – Market sees points of hesitation
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