What to make of Cummins’ $2 billion penalty for Clean Air Act cheating
Here’s what an investor should watch after Cummins’ huge $2 billion Clean Air Act settlement.
Saturday Night Santa Claus says (on a Tuesday), For the week ahead expect…
Stocks continued on an upward path in a classic Santa Claus rally. Wall Street kicked off the final week of 2023 with gains in stocks, extending a rally that put the market on the brink of a record. Today, December 26, the Standard & Poor’s 500 traded about 0.5% away from its all-time high of 4,796.56. The so-called Santa Claus rally, which typically encompasses the last five trading sessions of the year and the first two of the new one, has a strong record of gains. Since 1969, the S&P 500 has averaged a gain of 1.3% over the seven-day period, according to the Stock Trader’s Almanac.
Don’t forget year-end tax loss harvesting–it could be extra valuable this year
You have until December 31–which effectively means Friday December 29 (although I wouldn’t push the deadline, personally) to sell your losers this year to off set any gains from winners you sold during the year. Given the way the year has unfolded, harvesting your tax losses to offset gains could be especially valuable this year.
Merry Christmas to all
I wish you all a Merry Christmas. Or a Happy Holiday of your choice. Hope Santa brings you everything you wished for. (And that you don’t get two more reindeer sweaters.) Looking forward to a more peaceful new year. One can always hope.
Is the good news priced in for Micron?
Right now memory chip maker Micro Technology (MU) is a microcosm of the stock market as a whole. There’s good news–pretty clearly–on the horizon. But the worry is that it’s already mostly priced into the stock. This week Micron, the largest U.S. maker of memory chips, gave a forecast for the fiscal second quarter that sure made it sound like the company, and the memory chip sector in general, was about to turn the corner after getting hammered on slumping demand for chips for personal computers and smartphones.
Bonds keep chugging higher, stock investors have doubts
Bond traders and investors kept the bond rally going today December 20. The yield on the 10-year Treasury dropped another 8 basis points to 3.85% today. The yield on the 2-year note fell 4 basis points to 4.40%. The drop in yields came as a result of gains in bond prices. On the other hand, the major stock indexes had a big down day. The Standard & Poor’s 500 fell 1.47% and the Dow Jones Industrial Average ended the day down 1.27%. The small-cap Russell 2000 dropped 1.86%. The NASDAQ Composite and the NASDAQ 100 soared 1.50% and 1.53%, respectively.. The differing results don’t reflect a divergence of views on interest rates–both bond and stock markets see the Federal Reserve cutting interest rates in 2024. The difference does, however, reflect differing views on valuation
U.S. oil production hits a record, destroying OPEC’s supply cut strategy
The world’s No. 2 oil producer, Saudi Arabia, wants to cut oil production to raise oil prices. And has even actually curtailed production to meet that goal. The world’s No 3 oil producer, Russia, wants (others mostly) to cut oil production to raise prices. And has even promised to cut its own production. (We’ll believe that when we see it.) But none of that matters because the world’s No. 1 oil producer, the United States, has put its foot to the accelerator and is producing at record volumes.
S&P 500 earnings on track to grow by just 0.6% in 2023
FactSet calculates that Wall Street analysts expect the S&P 500 to report earnings growth of 0.6% in calendar 2023. That’s way below the trailing 10-year average (annual) earnings growth rate of 8.4% for 2021 through 2022. So far on a quarterly basis, 2023 has shaped up this way: earnings declines of 1.7% and 4.1% for the S&P 500 in the first nd second quarters of 2023, respectively. And earnings growth of 4.9% for the third quarter. FactSet calculates that analysts expect the stocks in the index to report an earnings growth of 2.4% for Q4 2023.
Apple hit with patent judgment that puts quarterly sales growth in question
The hope among investors and on Wall Street was that Apple (AAPL) would show revenue growth when it reported its fiscal first quarter earnings in January. That growth would be the first in a year after four straight quarters of falling sales. That’s the longest streak of declining quarterly sales in two decades. But now a patent decision against Apple will take some of its best-selling Apple Watch series, the Series 9 and the Ultra2, off the market just as the holiday selling season is peaking.
Saturday Night Quarterback says, For the week ahead expect…
I expect the Federal Reserve to continue to try talking back some of the enthusiasm that greeted its December 13 meeting and the release of a new set of Dot Plot projections showing that the median forecast of staff and policy makers at the U.S. central bank called for three interest rate cuts in 2024.
Finally–Costco declares special $15 a share dividend; is membership increase next?
Costco Wholesale (COST) reported earnings for its fiscal first quarter of 2024 and declared a long anticipated special dividend of $15 a share. The stock closed up 4.61% on Friday, December 15.
Is the Fed “sorry” that it set off the latest rally?
Today sure sounded like policy-makers remorse from the Federal Reserve. New York Fed President, the vice-chair of the Federal Reserve’s interest-rate setting Open Market Committee, said that central-bank policy makers weren’t actively debating when to cut interest rates. That’s sure not what the stock market heard on Wednesday.
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