Stock Market Today: January 29th - February 2nd, 2024

Top of the morning StonkForumers! Happy Hump Day to all of you and welcome to the final trading day of January and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are under an hour into the US cash market open.

GLTA on this Wednesday, January the 31st, 2024!

 

Morning Lineup - 1/31/24 - That Was Fast
Wed, Jan 31, 2024

January often seems like the longest month of the year, but it’s hard to believe it’s already winding down. What’s been a strong month for equities so far looks to be going out on a sour note as earnings from mega-caps like Alphabet (GOOGL), Microsoft (MSFT), and Tesla (TSLA) haven’t impressed investors. Based on today’s pre-market levels, all three stocks have traded down in reaction to their earnings reports. That leaves Apple (AAPL), Amazon.com (AMZN), and Meta (META) on Thursday as the last chances to salvage something from the mega-cap space this earnings season (NVIDIA doesn’t report until late February).

On the economic calendar today, the ADP Employment report for January missed forecasts coming in at a level of 107K compared to forecasts for an increase of 150K. The Employment Cost Index was also just released and showed a smaller-than-expected increase of 0.9% compared to forecasts for growth of 1.0%. The only other report on the calendar for the day is the Chicago PMI at 9:45 which is expected to modestly increase from 46.9 to 48.0. But the most important event of the day is the FOMC’s rate decision at 2 PM, and given expectations for no change in rates, every word of Powell’s press conference thirty minutes later will be dissected down to each syllable.

As mentioned above, the first of the mega caps to report haven’t impressed investors so far this earnings season. Earnings reports are just one day in a quarter, though. While a positive stock price reaction to an earnings report can be nice, it’s only a small part of the picture.

Look at the chart of GOOGL below. With the stock trading down over 5% in the pre-market, it is now on pace to have its fifth negative earnings reaction day in the last six quarters. To put that in perspective, if you had purchased the stock at the close on the day of its earnings report and only held it through the close on its earnings reaction day, you’d be down just over 21% on these six trading days alone. Over the entire period and including these six days, though, GOOGL’s cumulative performance has been a gain of over 51%. Again, not only is a stock’s performance on its earnings reaction day a small part of a bigger picture, but it can also be wildly inaccurate.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Wednesday, January 31st, 2024.

 

Top of the morning StonkForumers! Happy Thursday to all of you and welcome to the first trading day of February and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over an hour into the US cash market open.

GLTA on this Thursday, February the 1st, 2024!

 

Morning Lineup - 2/1/24 - Getting Back on the Horse
Thu, Feb 1, 2024

Futures are higher this morning as investors look to regroup following yesterday’s FOMC meeting and Powell’s press conference which pooh-poohed the possibility of a March cut. The S&P 500 finished the day down over 1.5% in what was the worst day in four months. Powell gets much of the blame for the decline, but equities were already firmly in the red leading up to the announcement, and the market was also trading at overbought levels. Powell didn’t help, but what he said wasn’t exactly a major surprise. Just the fact that the chair was openly talking about rate cuts being a matter of when rather than if is a stark difference from the last two years.

The tone right now is positive, but if you think Tuesday was a seminal moment in the earnings season, today promises to be even bigger with Apple (AAPL), Amazon (AMZN), and Meta (META) being just three of the dozens of companies reporting after the close.

On the economic calendar, Jobless Claims, Unit Labor Costs, and Non-Farm Productivity were all just released, and later we’ll get Construction Spending as well as the S&P and ISM Manufacturing PMIs. Non-Farm Productivity came in stronger than expected (3.2% vs 2.5%) while Unit Labor Costs were weaker than forecasts (0.5% vs 1.2%). Jobless claims weren’t particularly good as both initial and continuing claims came in higher than expected and at their highest levels since November. Expectations for the PMIs aren’t particularly positive, and based on the regional Fed Manufacturing reports we got throughout the month, we’ll be lucky to even get an inline reading.

What had been a very strong first month of the year turned into a more modest one as Fed Chair Powell successfully let some of the air out of the market balloon in his press conference yesterday. When the dust settled, the S&P 500 finished January up 1.7% on a total return basis after being up well over 3% heading into yesterday’s session.

On a y/y basis, the S&P 500 is still up over 20% on a total return basis which is nine full percentage points above the long-term historical average of 11.8% ranking the last year in the 69th percentile relative to all one-year periods. While one-year returns have been very strong, two-year returns have been the complete opposite. At 5.3% annualized, the S&P 500’s two-year performance ranks in just the 28th percentile relative to all other two-year periods. Looking further out, both five and ten-year annualized returns have been above the historical norm while 20-year returns are still below their long-term average.



Long-term US Treasuries are a completely different story. Based on returns of the BofA/Merrill 10+ Year US Treasury Index, long-term treasuries were down 1.65%. You may recall that in December treasuries ended a 34-month streak of negative 12-month returns, but January’s weakness moved the one-year returns back below zero. As shown in the chart below, annualized returns over the last one, two, and five years are all negative. On a 10 and 20-year basis, returns are positive, but they are still well below their historical long-term average, and for all periods except the last year, current returns rank in the 3rd percentile or below relative to all other periods. Calling the last decade a dark age for bonds wouldn’t be an understatement.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Thursday, February 1st, 2024.

 

here is a quick preview of next week's notable earnings releases courtesy of reddit's wallstreetbets:

have yourself a terrific weekend ahead guys!