Following the largest daily sell-off in months for the main indices, US equities rose on Thursday.
The S&P 500 (^GSPC) had a 1% rise. After both indexes ended nine-day winning streaks, the teach-heavy Nasdaq Composite (^IXIC) surged more than 1.2%, while the Dow Jones Industrial Average (^DJI) increased by 0.9%.
A flurry of economic data was released on Thursday: The US economy increased 4.9% on an annualised basis during the third quarter, according to the latest reading of the GDP, which was less than the consensus forecast of 5.2% growth. In the meanwhile, 205,000 persons applied for unemployment insurance in the week ending December 16, according to the most recent data on first claims for unemployment. According to economists, 215,000 claims were made.
Amid an ongoing patent issue, Apple (AAPL) has stopped selling several of its smartwatches in the US, according to corporate news. On Thursday, the shares fell by just 0.1%.
In the meanwhile, Micron Technology’s (MU) stock increased by more than 8% as the memory chip manufacturer exceeded Wall Street’s projected revenue for the second quarter. The prediction calls for a considerable price decline in the memory chip industry to be followed by a rebound by 2024.
Because of a patent dispute between the tech giant and the medical technology startup Masimo (MASI), Apple (AAPL) has officially stopped selling its Apple Watch Series 9 and Apple Watch Ultra 2 online in the US.
At 3:00 p.m. ET on Thursday, Apple ceased offering its best-selling smartwatches for purchase through its online shops. Both the Series 9 and Ultra 2 sites indicate that they are not available at this time and do not provide a way to buy them. Dec. 24 will mark the end of in-store sales as well as the delivery and pickup of online orders.
Following a formal investigation, the International Trade Commission (ITC) issued limited exclusion and cease-and-desist orders in October, compelling Apple to discontinue importing the watches and selling them through its first-party shops.
Apple is withdrawing the watches ahead of schedule to make sure it is compliant in the event that the White House takes no action, even though the Biden administration has the option to reject the directives.
It is still possible for independent merchants like Best Buy to carry the timepieces. Due to the Apple Watch SE’s lack of a blood oxygen sensor, Apple will also be permitted to keep selling it.
In order to resolve the patent battle, Apple may choose to work with Masimo, modify the hardware of the Apple Watch, or even update the wearables’ software.
The most profitable market for Apple is the US. Although the firm is still able to sell Apple Watches outside of its nation of origin, it runs the danger of missing out on a significant portion of possible earnings.
Nevertheless, most strategists clarify that they aren’t specifically discussing the Russell 2000 when pressed more about small caps.
The Russell 2000 does not employ a profitability criteria, as Liz Ann Sonders, chief investment strategist at Charles Schwab, pointed out to Yahoo Finance Live. According to her estimation, 31% of equities are “zombie companies,” meaning they are barely alive and account for 40% of the index’s companies that aren’t profitable.
Sonders declared, “I’m not recommending the index.” “But if you’re looking for an index as a source for ideas, inherently, you have a higher quality index with the S&P 600 (^SP600) because of that profitability filter.”
Northwestern Mutual Wealth Management senior portfolio strategist Matt Stucky has been “overweight small caps.” However, he also perceives a significant distinction in the meaning of it. His preference is to fish in the S&P 600 as well.
“That’s not abnormal for smaller companies that are growing to scale, but with our assessment, we think overweighting factors like profitability makes sense.”
The returns in the two indices over the past month have been about equal. Looking back five years, though, the value-oriented S&P 600 has done better, rising by almost 65% as opposed to the 55% return of the Russell 2000.
The 30-year fixed mortgage rate dropped from 6.95% the previous week to 6.67%, per Freddie Mac data that was made public on Thursday. For the ninth week in a row, rates decreased, reaching their lowest point since June.
The decrease contrasts with recent months, when rates increased by more than 7% to the highest level in 23 years. After reaching a peak of 7.79% in October, rates have subsequently decreased by more than one full percentage point.
It also coincides with indications of declining inflation, which supported the Federal Reserve’s decision last week to maintain the current level of its benchmark rate while hinting at three potential rate reductions in 2024. Lower mortgage rates, while good news for some purchasers, won’t solve the majority of Americans’ affordability problems.
Analysts at JPMorgan are growing increasingly positive about the homebuilding industry.
In response to market excitement over the Fed’s projected rate reduction in December 2024, bank analysts increased their price expectations for builder companies.
goal increases included big-cap firms like Toll Brothers (TOL), which increased to $127 from $108, and PulteGroup (PHM), which now has a $139 goal, up from a prior $117. Among the businesses that experienced rises were smaller rivals like Taylor Morrison Home Corporation (TMHC) and Meritage Homes Corporation (MTH).
Additionally, the bank increased its projections for the sector’s EPS in 2024 and 2025 by 3% and 6%, respectively.
The revised estimates coincide with a significant increase in homebuilder stocks since November, which was sparked by a decline.
The market and the sector have rallied more recently than they had over the previous three months, according to JPMorgan analyst Michael Rehaut. “Ultimately, we believe this is due to investors’ increased certainty regarding a more constructive market outlook for 2024, which includes the Fed beginning to cut rates midyear, along with the economy moderating but avoiding even a mild recession,” Rehaut wrote in a note to clients on Thursday.
While small-cap builder stocks have gained more than 70%, large-cap builder stocks have surged by more than 80% year to date.
With shares up about 7% on Thursday, Micron (MU) lead the Yahoo Finance hot tickers page following the semiconductor company’s above-average earnings projection. The corporation exceeded predictions for $4.97 billion in revenue by projecting $5.3 billion for the upcoming quarter.
Thursday’s results from Carnival Corporation (CCL) exceeded Wall Street’s projections, causing shares to rise more than 7% intraday. The company’s $5.4 billion in sales topped the $5.3 billion experts had predicted, and the cruise liner said that fourth-quarter booking volumes were higher than 2019 levels.
The company’s fourth-quarter sales outlook, which came in below analysts’ projections of $190 million at $150 million to $159 million, caused BlackBerry (BB) to drop 13% on Thursday.
Wall Street short sellers have lost around $178 billion so far this year, according to information that S3 Partners gave Yahoo Finance.
Alphabet (GOOGL) is the only tech giant not ranked first among the top six equities in which these investors have lost money. The other stocks are all members of the Magnificent 7. The actions are a reflection of how the 2023 stock market rise was unexpected, since many on Wall Street had not anticipated it at the beginning of the year.
However, when the digital revolution began to gain traction in the spring of 2023, stocks of businesses like as Nvidia (NVDA), Tesla (TSLA), and Meta (META) surged by over 100% this year.