Daily Markets: Tech Rally Looks to Continue, But Here's What the Market Faces Next Week

Today’s Big Picture

Asia-Pacific equity markets finished the day higher except for China’s Shanghai Composite which fell 0.47% and Hong Kong’s Hang Seng which declined 0.54%. India’s SENSEX rose 0.70%, Australia’s ASX All Ordinaries gained 1.01%, South Korea’s KOSPI added 1.34%, and Japan’s Nikkei pushed 1.40% higher, on its way toward 36,000. Taiwan’s TAIEX closed 2.63% higher as Technology names surged.

European markets are mostly higher in midday trading and U.S. equity futures point to the stock market looking to build on yesterday’s tech-led rally. Looking at today’s earnings and economic data docket, there isn’t much that would deter the market from closing out the week on a positive note. That will change next week with more than 430 companies reporting quarterly results, and the January U.S. Flash PMI data as well as the December PCE Price Index are published.

Following three appearances by Atlanta Fed President Raphael Bostic yesterday, during which he stated he does not see the Fed’s first rate cut coming until 3Q 2024, we do have another round of Fed speakers today. At 1 PM ET, we have Michael Barr, Vice Chair for Supervision, and soon after the stocks stop trading for today, we’ll hear from San Francisco Fed President Mary Daly. Given recent data that has lifted 4Q 2023 GDP expectations, we would be surprised if their comments about monetary policy differed significantly compared to Bostic’s. Should their messaging lean more hawkish, it could fuel some profit taking into the weekend, especially on some of the higher flying tech stocks.

Data Download

International Economy

The annual inflation rate in Japan fell to 2.6% in December from 2.8% in the prior month, pointing to the lowest figure since July 2022, as food prices rose the least in 14 months. The core consumer price index in Japan, which excludes fresh food but includes fuel costs, rose 2.3% in December, slowing from a 2.5% gain in November and posting the lowest reading since June 2022.

Retail sales in the UK fell by 2.4% YoY in December, missing the market expectation of a 1.1% growth. Excluding fuel, December retail sales fell 3.3% YoY.

Foreign direct investment into China fell by 8% YoY to CNY 1.13 trillion or $157.1 billion in 2023.

Domestic Economy

At 10 AM ET, the Existing Home Sales report for November will be published, and the market consensus is looking for 3.82 million homes, unchanged compared with November.

Also at 10 AM ET, the preliminary January reading for the University of Michigan Consumer Sentiment Index will be released. Expectations see the January print edging up to 70.0 from December’s 69.7.

Congress on Thursday sent legislation to avert a partial government shutdown to President Biden. Passage of the bill affords lawmakers another six weeks to negotiate and pass a dozen spending bills totaling $1.66 trillion to fund the government through the fall.

Markets

The Splendid Six seems to have picked up from where last year’s Magnificent Seven left off as Tesla (TSLA) was, once again, the only name to falter. Technology (2.03%) and Communications Services (1.22%) led markets. Industrials (1.35%) also had a strong day as Boeing (BA) stirred back to life, gaining 4.12% and shares of Fastenal (FAST) gained 7.18% on a strong reported quarter. Broad indexes were all higher with the Dow and the Russell 2000 both coming in around 0.55%, the S&P 500 rising 0.88% and the Nasdaq Composite closing 1.35% higher.

In individual names, shares of Discover Financial Services (DFS) fell 10.80% after the company came woefully short of earnings expectations despite rising revenue. The company cited an almost doubling of provisions for anticipated uncollectible charges from $1 billion to $1.9 billion.

Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: -0.59%
• S&P 500: 0.23%
• Nasdaq Composite: 0.30%
• Russell 2000: -5.10%
• Bitcoin (BTC-USD): -1.73%
• Ether (ETH-USD): 7.46%

Stocks to Watch

Ally Financial (ALLY), Comerica (CMA), Fifth Third (FITB), SLB (SLB), State Street (STT), and Travelers Companies (TRV) are among the companies that are expected to release quarterly earnings before equities begin trading later this morning.

Pre-market breadth is healthy today as 237 names in the S&P 500 have traded hands so far this morning with 178 gainers and 59 decliners. Technology seems poised to have another strong day as the premarket leaderboard is littered with names like IBM (IBM), Qualcomm (QCOM), Texas Instruments (TXN), Advanced Micro Devices (AMD), Skyworks Solutions (SWKS), and Nvidia (NVDA). Shares of Incyte Corporation (INCY) are being bid lower this morning.

Shares of Super Micro Computer (SMCI) jumped in aftermarket trading after the company bumped up its quarterly sales and profit guidance. The company now expects net sales of $3.60-$3.65 billion versus an earlier forecast of $2.7 to $2.9 billion. Super Micro makes products such as rackmount servers and graphics processing unit (GPU) servers, motherboards and chassis, and ethernet switches and adapters.

On Instagram, Meta (META) CEO Mark Zuckerberg posted that the company is purchasing AI products including 350,000 H100s from Nvidia by the end of this year.

Shares of iRobot (IRBT) were hit hard following a report that the EU will block its planned acquisition by Amazon.

Alphabet's (GOOGL) YouTube and Spotify Technology SA (SPOT) are joining Netflix (NFLX) in plans not to launch a new app for Apple’s (AAPL) Vision Pro mixed reality headset. Reportedly the company will also not allow their respective iPad apps to work on the new device.

Amazon (AMZN) Web Services will invest about ¥2.3 trillion ($15.53 billion) in Japan through 2027 to increase its data centers in Tokyo and Osaka.

VF Corp. (VFC) shared that the personal data of approximately 35.5M individual consumers was stolen in the cybersecurity incident that hit the footwear and apparel maker in December and impacted the company's ability to fulfill orders.

The Wall Street Journal reports Macy’s (M) plans to lay off about 13% of its corporate staff and close five stores in a bid to trim costs and redirect spending to improve the shopping experience for customers.

IPOs

Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

No companies are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Monday, January 22

• US: Leading Indicators – December

Tuesday, January 23

• Japan: Bank of Japan Interest Rate Decision
• Eurozone: Flash Consumer Confidence - January

Wednesday, January 24

• Japan: Jibun Bank Flash Manufacturing and Services PMIs – January
• Eurozone: HCOB Flash Manufacturing and Services PMIs – January
• US: Weekly MBA Mortgage Applications
• US: S&P Global Flash Manufacturing and Services PMIs – January
• US: Weekly EIA Crude Oil Inventories

Thursday, January 25

• Eurozone: European Central Bank Interest Rate Decision
• US: Weekly Initial & Continuing Jobless Claims
• US: Durable Orders – December
• US: GDP – 4Q 2023
• US: New Home Sales – December
• US: Weekly EIA Natural Gas Inventories

Friday, January 26

• Japan: Tokyo CPI – January
• Japan: Leading Economic Index (Final) – November
• US: Personal Income & Spending, PCE Prices – December
• US: Pending Home Sales – December

Thought for the Day

“The mind must be given relaxation. It will rise improved and sharper after a good break.” ~ Seneca

Disclosures

• Qualcomm (QCOM), Advanced Micro Devices (AMD), Skyworks Solutions (SWKS), Nvidia (NVDA), Super Micro Computer (SMCI) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Technology Earnings Economy Central Banks Smart Investing