The S&P 500 Index ($SPX) (SPY) is up +0.16%, while the Dow Jones Industrials Index ($DOWI) (DIA) has slightly increased by +0.01%. In contrast, the Nasdaq 100 Index ($IUXX) (QQQ) has fallen by -0.31%. Additionally, March E-mini S&P futures (ESH25) are up +0.21%, and March E-mini Nasdaq futures (NQH25) have risen +0.07%.
Today, stock performance is mixed amid low holiday trading volumes, as markets prepare for the closure on Wednesday in observance of New Year’s Day. Notably, energy stocks are on the rise with WTI crude oil reaching an 8-week high. This uptick in stocks is supported by a drop in the 10-year T-note yield, which has hit a 1-week low. However, chip stocks that initially gained are now weighing on the Nasdaq 100.
The negativity from today’s trading is influenced by a -1% decline in China’s Shanghai Composite Stock Index, which has reached a 1-week low due to disappointing manufacturing growth in China. The December manufacturing PMI for China decreased by -0.2 to 50.1, falling short of the anticipated 50.2.
Furthermore, the October S&P CoreLogic US composite-20 home price index has increased by +0.3% month-over-month and +4.2% year-over-year, surpassing forecasts of +0.2% month-over-month and +4.1% year-over-year.
With holidays leading to thinner trading conditions this week, exaggerated moves in stocks are possible. Investors are particularly looking forward to Friday’s US December ISM manufacturing index to assess the health of the manufacturing sector, with expectations of a slight decline to 48.2.
Currently, the market is giving an 11% chance for a -25 basis point rate cut during the FOMC meeting on January 28-29.
International stock markets showed mixed results on Tuesday, with the Euro Stoxx 50 rising by +0.55%. In contrast, China’s Shanghai Composite Index fell by -1.63%, and Japan’s Nikkei Stock 225 was closed for a bank holiday.
Interest Rates
March 10-year T-notes (ZNH25) are up +2 ticks, with the 10-year T-note yield down by -0.4 basis points to 4.529%. March T-notes have reached a 1-week high, while the yield has dropped to a low of 4.503%. The increase in T-note prices is attributed to month-end rebalancing as bond fund managers acquire long-term government debt to adjust their portfolios. Bloomberg estimates an extension of the bond indexes’ duration by about 0.07 of a year this month. However, T-notes decreased from their peak levels following the unexpectedly strong housing price index, which is seen as a hawkish sign for Federal Reserve policy.
European government bond yields are also trending lower. The 10-year German bund yield was not traded today due to the market closure for New Year’s holiday in Germany. Meanwhile, the 10-year UK gilt yield has dropped to a 1-week low of 4.545%, closing down -4.3 basis points to 4.568%.
Market swaps indicate a 100% probability for a -25 basis point rate cut from the ECB at its January 30 policy meeting, with a 12% chance for a -50 basis point cut at that same meeting.
US Stock Movers
Energy stocks are gaining momentum, driven by the rising WTI crude oil price. Companies such as APA Corp (APA), Marathon Petroleum (MPC), and Occidental Petroleum (OXY) have increased by more than +2%. Other energy companies including ConocoPhillips (COP), Chevron (CVX), Haliburton (HAL), Schlumberger (SLB), Exxon Mobil (XOM), Phillips 66 (PSX), and Valero Energy (VLO) are also up more than +1%.
Acadia Pharmaceuticals (ACAD) has surged over +12% following the announcement that it will replace Independent Bank Group in the S&P SmallCap 600 starting January 3, according to S&P Dow Jones Indices.
FTAI Aviation (FTAI) has increased by more than +16% after announcing a strategic capital initiative and initial guidance for 2025, which Citigroup deemed “very encouraging.”
VeriSign (VRSN) has seen a +1% increase following a report that Warren Buffet’s Berkshire Hathaway acquired $15.6 million worth of its shares over the last three sessions.
Yum! Brands (YUM) is up +0.43% as Argus Research upgraded its rating to buy from hold, with a target price of $155.
On the other hand, chip stocks are underperforming, with Nvidia (NVDA) leading declines in the Dow Jones Industrials, down more than -1%. Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), Marvell Technology (MRVL), and Micron Technology (MU) have all decreased by over -0.50%.
Vistra Corp (VST) has dropped more than -1% due to year-end profit taking and tax selling, even though its stock has risen over +260% this year.
GoDaddy (GDDY) is experiencing a decline of -0.70% after Bloomberg Intelligence reported that the company’s net additions are slowing, impacting average revenue per customer.
Dave Inc (DAVE) has plummeted more than -9% after the Federal Trade Commission referred its federal court case for allegedly deceiving customers and concealing fees to the Justice Department.
Earnings Reports (12/31/2024)
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On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information is presented for informational purposes. For more information, please refer to the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
