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Market Updates

Morning Brief

January 2nd, 2024

Square version of the Windsor Wealth Planners & Strategists logo.

Headline News:

The S&P 500 futures are down 40 points and are trading 0.8% below fair value, the NASDAQ 100 futures are down 202 points and are trading 1.2% below fair value, and the Dow Jones Industrial Average futures are down 240 points and are trading 0.6% below fair value.

Stock futures indicate a lower open on the first session of the new year following big gains for the market in 2023. A loss in a large tech company has contributed to the negative bias after the stock was downgraded. Rising rates are another factor driving the downbeat price action.

The 2-yr note yield is up seven basis points to 4.32% and the 10-yr note yield is up seven basis points to 3.95%.

Geopolitical worries are also in play after Iran sent a warship to the Red Sea after the U.S. destroyed three Houthi boats, according to Bloomberg. Also, Israel Prime Minister Benjamin Netanyahu has rejected international pressure to stop the war, saying the war will continue until “absolute victory,” which will take “many more months,” according to The New York Times.

WTI crude oil futures are up 2.2% to $73.17/bbl, likely tied to the geopolitical angst.

Manufacturing PMI readings from Germany, France, U.K., Spain, and Italy remained in contractionary territory, but they were a bit better than expected. China’s Caixin PMI expanded to 50.8 in December, exceeding the forecast of 50.4.

Today’s U.S. economic data includes the final December S&P Global U.S. Manufacturing PMI at 9:45 ET and the November Construction Spending report at 10:00 ET.

(Michael Gibbs, Managing Director, Lead Portfolio Manager)

 

Markets:

The S&P 500 closed lower at 4,769.83 to close out 2023. The index also closed below support at 4,778.01; a move down to support at 4,697.82 could happen this week. So far this morning, the S&P 500 futures are lower by .80%, which shows investors may be taking profits to start the year. We feel the selling could last a few days, but that would set up a buy-the-dip scenario that could resume the recent uptrend and see the S&P 500 set a new all-time high.

We are currently Intermediate-term bullish and short-term bullish.

John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategist

 

Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.

 

The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.

 

.The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term timeframes. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.

 

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

 

 The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.

 

 This is not a recommendation to buy or sell any company’s stock mentioned above.

 

 US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value.  US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government.  Bond prices and yields are subject to change based on market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall, and when interest rates fall, bond prices generally rise.

 

The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange, and it is not an index of U.S.-based companies. 

 

 

 

 

 

 

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