Stock Market 1/2/24: Dow Gains Slightly; Apple, Tesla, BYD, ASML, and More Movers; Bitcoin Price Rally; Oil Prices Rise on Red Sea Tension; Treasury Yields Rise (2024)

What to Watch Today

Oil prices were giving back their gains Tuesday, on news Iran-supported Houthi rebels sent a warship into the Red Sea. Maersk said would halt transits through the Red Sea and Gulf of Aden until further notice.

In bond markets, the yield on the benchmark 10-year Treasury note stood at 3.959%, rising from 3.88% the previous week.

Elsewhere, Tesla set a delivery record—but its Chinese rival is still bigger. And Apple stock was downgraded after signs of sales weakness.

Tech stocks had a rough start to the new year, with the Nasdaq Composite marking its worst first trading day since 2016.

The Dow Jones Industrial Average gained 25.50 points or 0.1%. The S&P 500 fell 0.6%. The tech-heavy Nasdaq declined 1.6%, marking its worst first trading day of the year since 2016, when it fell 2.08%.

All three indexes had ended 2023 on a high note, notching nine straight weeks of gains with the Nasdaq marking its largest nine-week percentage gain since early in the pandemic.

The reversal comes as Apple, which accounts for a big chunk of the Nasdaq, was downgraded by Barclays on Tuesday. The analysts recommended selling the stock instead of holding it, citing weakness in iPhone sales.

Pressure was felt across the tech arena, with the Magnificent Seven tech stocks—which include Amazon.com, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla and are deemed as growth stocks—all down on Tuesday.

Value stocks, comparatively, had a nicer day. The iShares S&P 500 Value exchange-traded fund was up 0.6%.

A New Year spike in oil prices on rekindled Red Sea tensions evaporates and crude futures fall into the red, with demand growth and adherence to OPEC's announced additional output cuts for 1Q moving back into focus.

"Any outperformance for the global economy would ease the burden on OPEC+ at a time when compliance with quotas looks like it's going to be a struggle," Oanda's Craig Erlam says in a note.

WTI for February settles down 1.8% at $70.38 a barrel, off the day's high of $73.64. March Brent retreats from an earlier $79.06 a barrel to settle 1.5% lower at $75.89.

Blackstone said its non-traded Blackstone Real Estate Income Trust received redemption requests totaling about $1.1 billion last month, the lowest monthly total since before it began pro-rating repurchases of fund shares in November 2022, under a plan that limits the total to no more than 2% of net asset value in any month and 5% of NAV in any quarter.

Since November 2022, investors have redeemed $14.3 billion from BREIT.

Blackstone is dispersing about $569 million to meet repurchase requests from last month, or about 1% of the fund's NAV, which was the amount remaining to be redeemed under its repurchase plan for the quarter.

Treasury yields start the year with an upswing, although they remain well below last year's highs.

The 10-year gained 0.084 percentage point, to 3.944%, and the two-year rose 0.080 p.p. 4.328%.

Markets remain convinced that the Fed will leave rates unchanged this month and start cutting them in March, while some forecasters doubt the pace of easing will be as fast as priced so far.

"If the Fed pivot continues to push mortgage rates lower, stock prices higher, and credit spreads tighter, we could get a solid rebound in the economy over the coming months," Apollo's Torsten Slok says in a note.

The Dow Jones Industrial Average fell back into negative territory in afternoon trading Tuesday.

The Dow, which opened with a loss, had declined 0.1% by 2:36 p.m Eastern.

It was in the positive territory for part of the day.

The S&P 500 and the tech-heavy Nasdaq Composite have remained firmly in the red, down 0.7% and 1.8%, respectively.

Warmer weather in 4Q means cooler earnings for utilities and other energy companies.

Siebert Williams Shank analysts Christopher Ellinghaus and Ida Wozniak say in a research note that observed temperatures generally predict consumer energy usage, and can swing utility, pipeline, natural gas storage and electricity generation results in the short term.

Their analysis of quarterly temperatures found that zero sampled cities had cooler than normal temperatures in 4Q.

El Niño conditions generally lead to warmer temperatures, and the analysts say that's likely a harbinger of sliding earnings when utility and natural gas companies report results.

Bears were delighting in the stock market’s drop to start off the new year.

Only problem? It has little bearing on where the market finishes.

The S&P 500 was down 0.7% on Tuesday. From 1929 to 2023, the S&P 500 has followed the same direction as its first trading day 48.4% of the time, according to Dow Jones Market Data.

That suggests odds for the major market index to go higher from here are nearly equally divided.

On average, when the S&P 500 falls on the first trading day, the average gain has been plus 6.41% for the year.

Big bank strategists have been out with their crystal balls over the last few months, predicting the S&P 500 would pile up gains in 2024.

But a Bank of America indicator suggests the overall sentiment may not be that bullish.

According to FactSet market aggregates, 55% of strategists expect the S&P 500 to generate positive results in 2024, with an average estimate of a 7.5% year-over-year gain.

BofA said Tuesday its Sell Side Indicator, a broader market gauge, was the most bullish in one and a half years at 54.6%. The level, though, was also in line with its 15-year average.

In other words, it is firmly in neutral, or halfway between its Buy and Sell thresholds, the firm said.