If the end of 2023 was a feast for the stock market, the beginning of 2024 feels like a hangover after the feast.
“Barron’s” said the “Big Seven” technology companies will lead the rise in US stocks for most of 2023. But the Nasdaq Composite Index, which is dominated by technology stocks, fell 3.25% last week . After analysts repeatedly downgraded Apple stock (AAPL-US), Apple fell 5.9% last week, the worst performance among the “Big Seven”.
The S&P 500 fell 1.5% last week and the Dow Jones Industrial Average fell 0.6%, both ending nine consecutive weeks of gains.
After the non-farm employment data was released last Friday (5th), the 10-year US Treasury bond yield was above 4%. At first glance, the employment data for December was very strong, with 216,000 new jobs being created during the month, above market expectations of 173,000, and the unemployment rate was also stable at 3.7%.
“Barron’s Weekly” said that under the surface, employment growth fell by 71,000 in October and November last year. This mixed message left the market reeling and unable to decide what this meant. It will keep interest rates unchanged to curb economic overheating, or it plans to cut interest rates before the economy achieves a soft landing and small “cracks” in the labor market do not get bigger.
Investors may be reluctant to make any big moves in the first few weeks of the year because of this uncertainty. Guy Ortmann, senior technical analyst at RF Lafferty & Co., wrote in a research report: “There is no indication in the technical charts or the data that the market correction is over, and caution remains the most important, as perhaps the the market will do it. will continue to fall.”
But a weak start to the year does not mean that there will be weakness throughout the year. The S&P 500 has fallen in the first four trading days of a new year only twice since 1928, and that didn’t happen last week; and in the last two years, the index has ultimately risen for the year.
Earnings season begins on Friday, when major banks, airlines and healthcare companies are expected to report earnings that could determine whether the stock market continues to fall. CEOs’ views on the outlook for 2024 may be more important than last year’s fourth quarter financial data, especially as the market expects corporate profits to grow 11.6% in 2024.
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