Wall Street's major averages soared on Wednesday, buoyed by the Federal Reserve's latest policy decisions and Chair Jerome Powell's remarks. The blue-chip Dow Jones Industrial Average (DJI) surged past the 37K mark for the first time, setting a new intraday record high. The tech-heavy Nasdaq Composite (COMP.IND) also saw significant gains, while all 11 S&P sectors ended in the green. The Federal Reserve held its key policy rate steady and signaled potential rate cuts in 2024, which was interpreted by investors as a pivot towards a more accommodative monetary policy.
The Federal Reserve's Federal Open Market Committee (FOMC) maintained its key policy rate at 5.25%-5.50% for the third consecutive meeting, aligning with market expectations. However, the central bank opened the door to future easing by indicating more rate cuts next year than previously anticipated. The FOMC's statement maintained the possibility of further rate hikes but highlighted the need to consider the cumulative tightening of monetary policy and its lagging effects on the economy.
In response to the Fed's rate decision and Chair Powell's comments, both the U.S. 2-year Treasury yield (US2Y) and the 10-year Treasury yield (US10Y) experienced significant declines. The 2-year yield dropped to a more than 6-month low, while the 10-year yield fell below 4% for the first time since early August. The narrowing spread between the two yields and the cooling off of yields have supported bond prices, as they typically move inversely to yields.
Realty Income Corp. (O, Financial) has seen its stock extend losses this year, despite the net-lease REIT's acquisition of Spirit Realty Capital, which could lead to a higher market cap. Shares of Realty Income have experienced a notable decline year-to-date, underperforming the broader REIT sector (VNQ) and the overall stock market (SP500). However, shares have shown signs of recovery following the announcement of the acquisition, with analysts suggesting that the management's accretion estimates from the deal may be conservative.
The Association of American Railroads (AAR) reported an increase in U.S. rail traffic for the week ending December 9, 2023. The rise in intermodal volume and certain carload commodity groups, such as motor vehicles and parts, chemicals, and metallic ores and metals, contributed to the overall growth. However, other commodity groups like coal, nonmetallic minerals, and grain saw declines. North American rail volume also reflected mixed results, with Canadian railroads posting a slight increase in carloads but a decrease in intermodal units, and Mexican railroads reporting declines in both carloads and intermodal units.
B. Riley (RILY) experienced a significant drop during an investor call, with shares initially plunging by as much as 27%. The company discussed the performance of its Vitamin Shoppe business and the potential sale of Sylvan Learning. Despite the initial drop, B. Riley shares partially recovered, with the company expressing optimism about the sale process and the interest from numerous groups.
The success of Taylor Swift's The Eras Tour, which has grossed over $1 billion, has led to the release of a concert film available for streaming on various digital platforms. Apple (AAPL, Financial) and Amazon (AMZN, Financial) are among the services offering the film, which is expected to generate significant revenue and engagement from fans. The release coincides with Swift's birthday and is priced with a nod to her birth year and album title.
Bitcoin (BTC-USD) saw a rebound in its price following the confirmation of new crypto accounting rules by the U.S. Financial Accounting Standards Board. The new rules allow for immediate recording of gains and losses on bitcoin and ethereum holdings, reducing uncertainty over the valuation of crypto assets. This development has been welcomed by industry figures, including Michael Saylor, as it simplifies the adoption of bitcoin as a treasury asset for companies.
Alibaba (BABA, Financial) has faced a challenging year, losing its top spot in China's e-commerce market to rival PDD (PDD, Financial). Alibaba's market cap has significantly decreased from its peak in 2020, while PDD has seen its shares and market cap surge. The shift in market leadership comes as PDD's third-quarter results outperformed expectations and drew attention from investors and industry leaders.
UBS published its global equity focus list, highlighting the highest conviction stocks from the MSCI All Country World Index (ACWI, Financial). The list reflects a neutral view on global equities, with a focus on information technology and a significant representation from the U.S. and emerging markets. UBS experts anticipate that global equities will continue to be supported by lower market rates and resilient earnings, despite potential macroeconomic risks.
Energy Transfer LP (ET, Financial) shares are poised to break a 6-day losing streak, with the stock showing signs of recovery. The company has been rated positively for profitability and momentum by Seeking Alpha's Quant Rating, and Wall Street analysts have a strong buy consensus on the stock. Energy Transfer's performance has been mixed throughout the year, with a notable increase in share price but recent declines in December.
Federal Reserve officials have revised their interest rate projections, now expecting to start cutting rates three times next year. This shift towards potential easing is reflected in the Fed's dot plot, which shows a closer alignment with market expectations for rate cuts. The policy-setting FOMC has maintained the federal funds rate at its current level, the highest in 22 years, while signaling progress in the fight against inflation.
BofA Securities identified the bottom "triple momentum" stocks based on earnings, price, and sentiment from the news. The ranking highlights stocks with negative momentum across all three categories, with the most negative sentiment in sectors such as materials, real estate, and consumer staples. The list includes companies like V.F. Corporation (VFC), Darling Ingredients Inc. (DAR, Financial), and Moderna Inc. (MRNA, Financial), among others.
General Electric (GE, Financial) was named a top stock pick for the manufacturing industry in 2024 by analysts at Bank of America. Other top picks include Vertiv Holdings (VRT), Api Group (APG, Financial), and Emerson (EMR, Financial). GE is expected to show strong earnings growth, and the manufacturing industry is anticipated to benefit from reshoring trends, federal stimulus spending, and megaprojects.
Pfizer (PFE, Financial) shares hit a new 52-week low following the announcement of its 2024 outlook, which fell short of expectations. The outlook impacted peers in the COVID-19 vaccine market, including Moderna (MRNA, Financial), Novavax (NVAX, Financial), and BioNTech (BNTX, Financial). Pfizer's forecast includes revenue from its upcoming acquisition of Seagen (SGEN) and projections for its COVID franchise.
The Fontainebleau Las Vegas casino has opened its doors to the public, marking the end of a long-awaited project on the Las Vegas Strip. The luxury resort and casino features a wide range of amenities and is reported to be the tallest occupiable building in Nevada. The project, which faced delays and ownership changes, is now set to become a significant attraction in the area.
Tesla (TSLA) has recalled 2 million vehicles in the U.S. for a software update, a move that has been positively received by analysts. The recall addresses concerns raised by the National Highway Traffic Safety Administration and could pave the way for broader acceptance of Tesla's full self-driving (FSD) technology. FSD is considered a key valuation driver for Tesla's future.
Acadia Pharmaceuticals (ACAD, Financial) saw a significant increase in its share price after winning a summary judgment in a patent suit regarding its drug Nuplazid. The victory against generic maker MSN Laboratories has been well-received by the company, with the court ruling in favor of Acadia on both legal arguments presented.
U.S. consumer spending on video games declined in November, with a notable drop in hardware spending. Despite the overall decrease, certain content segments, such as mobile and non-console VR, saw growth. Activision Blizzard's (MSFT, Financial) Call of Duty: Modern Warfare III topped the sales charts, while Nintendo (OTCPK:NTDOY) experienced the most significant hardware decline year-on-year.
