Explosions rocked two tankers sanctioned for carrying Russian oil, the latest in a spate of blasts on such vessels, sparking a rescue operation off Turkey’s Black Sea coast.
The 900-foot Kairos was en route from Egypt to Russia when it suffered a blast and caught fire, according to Turkish authorities. Emergency response vessels managed to evacuate its 25 crew members. Meanwhile, the 820-foot Virat began spewing heavy smoke from its engine room after being hit at a point farther east along the coast. The 20 personnel on board were in good condition, authorities said.
One of the biggest questions in global affairs is whether President Trump is chasing a grand bargain with Beijing’s Xi Jinping—and at what cost to the United States. So it’s good news that the Administration is showing that America won’t be bullied from defending its Pacific interests, with an arms sale to our friends in Taiwan.
The Defense Security Cooperation Agency has notified Congress of a $330 million potential arms sale for the island democracy. Items include spare parts for fighter jets and transport aircraft, as well as U.S. technical and logistics support. But more important than the details is that this marks the Administration’s first sale to Taiwan in Mr. Trump’s second term. Rumors had spread this year that Mr. Trump was withholding arms for Taiwan as he wooed Mr. Xi on a trade deal.
Iran seized a Cyprus-registered fuel tanker Friday, its first such interdiction in the Strait of Hormuz in more than a year.
The seizure of the tanker Talara, which was carrying diesel fuel from the United Arab Emirates to Singapore, comes amid a still unresolved standoff between Tehran and the West over Iran’s nuclear program.
The stock plunged as much as 9% before paring losses. It closed 5.8% lower at 103,100 won, equivalent to $72.28, compared with the benchmark Kospi’s 0.6% fall.
ABOARD THE MV NUNALIK—Greenland lurked in the distance as Capt. Donald Gibson rushed to the bridge of his cargo ship amid a sudden Arctic storm. Snow lashed against the pilothouse windows while he and his crew struggled to control the vessel and steer clear of icebergs.
Down in the ship’s hold was construction material needed to upgrade the northernmost military outpost, a Canadian spy station providing crucial intelligence on Russia’s military.
Germany’s Munich Airport grounded flights overnight after several drone sightings, the latest in a string of interruptions in European airspace that have spurred NATO members to retune defenses. The airport reopened and flights resumed on Friday morning.
Air traffic was suspended Thursday night after the drones were spotted, grounding 17 departing flights and affecting nearly 3,000 passengers, the airport said. Additionally, 15 incoming flights were diverted to other airports in Germany and Austria.
PARIS—French authorities detained crew members of a tanker carrying Russian crude oil and are investigating whether it played a role in last week’s drone incursions in Denmark.
French soldiers boarded the tanker, which is under Western sanctions, as it was en route to India from Russia’s Baltic Sea port of Primorsk. The vessel was traveling south through the Bay of Biscay when it turned east and headed toward Saint-Nazaire, home to Europe’s largest shipyard, according to the ship-tracking service Kpler. Authorities took the tanker’s captain and second-in-command into custody.
Denmark said it had suffered a hybrid attack by a professional actor after drones were observed over several airports late on Wednesday, the second time in less than a week that unmanned aircraft have disrupted air traffic in the Nordic nation, a NATO member.
Drones were spotted over at least four airports in the western part of the country, including a military air base housing most of Denmark’s F-16 and F-35 jet fighters.
Ryanair Holdings said third-quarter adjusted profit after tax fell as higher fuel costs offset revenue gains, and narrowed its guidance for the year.
The Irish budget airline said Monday that for the quarter ended Dec. 31 adjusted post-tax profit–its preferred metric–was 15 million euros ($16.3 million) compared with EUR211 million the year before.
Revenue for the quarter was EUR2.70 billion, compared with EUR2.31 billion a year ago.
The company said revenue per passenger rose 9%, with ancillary revenue up 2% to around EUR23 and average fares up 13% to over EUR42.
The airline carried 41.4 million passengers in the quarter compared with 38.4 million a year ago. Load factor–a measure of how full a plane is–for the period fell one percentage point to 92%.
The company narrowed its profit after tax guidance for the year to between EUR1.85 billion and EUR1.95 billion, from prior guidance of between EUR1.85 billion and EUR2.05 billion.
The company said that although it will benefit from the first half of Easter traffic falling in late March, this was unlikely to fully offset weaker-than-previously-expected load factors and yields in late third quarter and early fourth quarter.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
By Anthony O. Goriainoff
Ryanair Holdings said third-quarter adjusted profit after tax fell as higher fuel costs offset revenue gains, and narrowed its guidance for the year.
The Irish budget airline said Monday that for the quarter ended Dec. 31 adjusted post-tax profit–its preferred metric–was 15 million euros ($16.3 million) compared with EUR211 million the year before.
Revenue for the quarter was EUR2.70 billion, compared with EUR2.31 billion a year ago.
The company said revenue per passenger rose 9%, with ancillary revenue up 2% to around EUR23 and average fares up 13% to over EUR42.
The airline carried 41.4 million passengers in the quarter compared with 38.4 million a year ago. Load factor–a measure of how full a plane is–for the period fell one percentage point to 92%.
The company narrowed its profit after tax guidance for the year to between EUR1.85 billion and EUR1.95 billion, from prior guidance of between EUR1.85 billion and EUR2.05 billion.
The company said that although it will benefit from the first half of Easter traffic falling in late March, this was unlikely to fully offset weaker-than-previously-expected load factors and yields in late third quarter and early fourth quarter.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
United Airlines Holdings Inc. on Tuesday said it was rethinking its longer-term plans for Boeing’s biggest 737 Max jet, the Max 10, after the government’s grounding of dozens of Max 9s this month raised questions over whether the aircraft maker could still deliver planes on time.
United UAL, +5.31%
Chief Executive Scott Kirby said during the airline’s earnings call on Tuesday that it wasn’t canceling its orders for the Max 10. But he said the airline was taking the jet “out of our internal plans.”
“We’ll be working on what that means exactly with Boeing,” he said. “But Boeing is not going to be able to meet their contractual deliveries on at least many of those airplanes.”
United, during the call, said that it had 277 Max 10 jets on order for the rest of the decade. Of the 107 jets set for delivery this year, 31 were Max 9s. But Chief Financial Officer Michael Leskinen said was “unrealistic” to expect those jets to arrive as currently planned.
“Look,” he said. “The reality is that with the with the Max grounding, this is the kind of straw that broke the camel’s back with believing that the Max 10 will deliver on the schedule we had hoped for.”
He added: “It’s a great aircraft. But we can’t count on it. So we’re working on alternate plans.”
The decision on the Max 10 marks the latest blow to Boeing’s BA, -1.60%
reputation, as safety concerns pile up after a panel tore off a 737 Max 9 jet flown by Alaska Airlines earlier this month.
The Federal Aviation Administration grounded 171 Boeing 737 Max 9s for inspections, leading to scores of flight cancellations for both United and Alaska ALK, +2.87%.
United, when it reported fourth-quarter results on Monday, said it expected to lose money in the first quarter, following the impact of those cancellations. Still, shares were up on Tuesday on United’s full-year profit forecast.
The FAA over the weekend also recommended that operators of Boeing’s 737-900ER planes “visually inspect mid-exit door plugs to ensure the door is properly secured.” Regulators around the world grounded the 737 Max in 2019 after two fatal crashes.
Meanwhile, Ben Minicucci, the chief executive of Alaska Airlines, in an interview with NBC News published Tuesday, said inspectors found loose bolts on “many” of its Boeing 737 Max 9s after the mid-flight blowout.
“I’m more than frustrated and disappointed,” he said in that interview. “I am angry. This happened to Alaska Airlines. It happened to our guests and happened to our people. And my demand on Boeing is, what are they going to do to improve their quality programs in-house?”
JetBlue Airways Corp. and Spirit Airlines Inc. said late Friday that they have appealed a court ruling that earlier this week blocked their planned merger.
JetBlue JBLU, -1.19%
and Spirit SAVE, +17.19%
announced the appeal in a terse press release that provided no more details, adding only that the process is “consistent with the requirements of the merger agreement.”
Wall Street was split on whether the airlines would be legally obliged to appeal the Tuesday ruling, which sided with the Justice Department in saying that a merger between low-cost JetBlue and ultra-low-cost Spirit would hurt competition.
Shares of Spirit rallied 12% after hours Friday, while JetBlue shares fell nearly 2%. Analysts at JP Morgan said this week that the ruling freed JetBlue from a “costly merger.”
The likelihood of Spirit attracting a new merger or takeover bid is considered low without a debt restructuring. Frontier Group Holdings Inc. ULCC, -2.13%
and JetBlue competed for Spirit in 2022, with Frontier ultimately bowing out in July of that year.
Raymond James analyst Savanthi Syth said in a note earlier Friday that it was “clear to us that Spirit is pressing JetBlue to appeal the antitrust ruling, but we continue to believe the chances of success are low.”
Syth has estimated that an appeal would take some four to five months.
Shares of Spirit have lost 67% in the past 12 months, while shares of JetBlue are down 41%. The U.S. Global Jets ETF JETS
has lost 9% in the same period. Those losses contrast with gains of 24% for the S&P 500 index SPX.
Alaska Airlines, United Airlines and Turkish Airlines have all grounded their Boeing 737 Max 9 airplanes after part of one such jet tore away during an Alaska Airlines flight on Friday. But despite the potential safety risks for travelers and further damage to Boeing’s BA, -8.03%
reputation, some Wall Street analysts, for now, have downplayed the financial impact for the jet maker.
In part, they pointed to the company’s status as one of two major players in aircraft production — the other being Airbus EADSY, +3.52%.
They also cited a tighter supply of available aircraft and limited near-term impact, at least while investigators try to figure out the cause of the incident.
Those airlines and others took the action over the weekend after a panel on a jet blew out about 10 minutes into Alaska Airlines Flight 1282 at an altitude of about 16,000 feet.
No one died in the incident. But the Federal Aviation Administration ordered the temporary grounding of certain Boeing 737 Max 9 aircraft. The order covered 171 planes.
Still, some Wall Street analysts on Monday said to buy the stock anyway. They said the latest difficulties with the aircraft — which follow the 2019 grounding of Max jets by many nations following two fatal crashes — were unlikely to have a big near-term financial impact.
BofA analysts, in a research note dated Sunday, said that “at this point in time, due to the duopoly nature of the industry, we do not see this impacting orders for any of the 737 MAX variants. However, if the hits to the program do keep coming … at some point, the flying public may lose confidence in the 737 MAX which could ultimately impact sales.”
The analysts said it wasn’t clear yet whether the blowout on Friday was due to an assembly mistake at Boeing, an improper installation from fuselage maker Spirit AeroSystems or oversight issues elsewhere. But they noted that the aircraft was relatively new, having been delivered on Oct. 31. And they said that “some scrutiny must be saved for regulators as well, as the FAA is ultimately responsible for certificating these aircraft before delivery.”
Spirit AeroSystems’ stock SPR, -11.13%
was down 11%.
Analysts at William Blair also said they didn’t expect a big hit to Boeing’s financials.
“While the Alaska Airlines door plug accident was terrifying, we do not believe that it will have a major financial impact, unless another incident occurs after the aircraft returns to service,” they said in a note on Monday.
Analysts there estimated that over the past two months, the Max 9 made up less than one-fifth of Boeing’s total deliveries. They said those deliveries would only be “modestly impacted over the first quarter as it could take some time to determine the cause.”
Of the 23 analyst ratings on Boeing’s stock tracked by FactSet, 18 are buy ratings or the equivalent.
However, Morgan Stanley analyst Ravi Shanker said the 737 Max 9 issues will likely disrupt first-quarter results for United Airlines UAL, +2.78%
and Alaska Air ALK, -0.21%.
“This will hopefully be a situation resolved in days/weeks rather than months, but it will also serve as a reminder of how fragile airline capacity can be despite the overhang of capacity,” Shanker said in a Monday research note.
United Airlines’ stock rose 2.4% on Monday, while Alaska Air’s dipped by 0.3%.
Along with United Airlines, Alaska Airlines and Turkish Airlines, Copa Airlines and Aeromexico grounded about 40 Boeing 737 Max 9 planes, according to reports.
According to Deutsche Bank analysts, the affected fleet accounts for 16.1% of Alaska Airlines flights and 6.6% of United flights, although United has more 737 Max 9 aircraft than Alaska.
Other airlines with the plane in their fleet include Jet Airways of India with one plane, Jin Air of Korea with three, KLM Royal Dutch Airlines KLMR,
with five and Korean Air Lines 003490, -1.52%
with nine, according to Planespotter.net.
European regulators also grounded the 737 Max 9 for inspection.
Some major airlines do not have any 737 Max 9s in their fleets, including American Airlines AAL, +7.21%,
Southwest Airlines LUV, -0.10%
and Air Canada AC, +3.42%,
according to reports.
Stock investors have gotten off to a wobbly start to the new year, hobbled by shifting expectations on the timing and extent of Federal Reserve interest-rate cuts in 2024.
All three major U.S. stock indexes snapped a nine-week winning streak on Friday, after unexpectedly strong December job gains prompted traders to briefly pull back on the chances of a March rate cut. The S&P 500 SPX
and Nasdaq Composite COMP
also failed to stage a Santa Claus Rally from the five final trading days of 2023 through the first two sessions of 2024, as questions grew about the market’s multiple rate-cuts view.
It all adds up to a glimpse of what might be in store for investors in the year ahead. Already, the so-called “January effect,” or theory that stocks tend to rise by more now than any other month, could be put to the test by headwinds that include stalling progress on inflation. Inflation’s downward trend in recent months had given traders and investors hope that as many as six or seven quarter-percentage-point rate cuts from the Federal Reserve could be delivered in 2024, starting in March.
Over the first handful of days in the new year, however, reality has started to sink in. For one thing, multiple rate cuts tend to be more commonly associated with recessions and not soft landings for the economy.
Moreover, the idea that the Fed could follow through with as many rate cuts as envisioned by traders would significantly increase the probability that policymakers lose their battle against inflation, according to Mike Sanders, head of fixed income at Wisconsin-based Madison Investments, which manages $23 billion in assets. That’s because six or more rate cuts would loosen financial conditions by too much, and boost the risk of another bout of inflation that forces officials to hike again, he said.
Minutes of the Fed’s Dec. 12-13 meeting show that policymakers were uncertain about their forecasts for rate cuts this year and failed to rule out the possibility of further rate hikes. Nonetheless, fed funds futures traders continued to cling to expectations for a big decline in borrowing costs, with the greatest likelihood now coalescing around five or six quarter-point rate cuts that total 125 or 150 basis points of easing by year-end. That’s roughly twice as much as what policymakers penciled in last month, when they voted to keep interest rates at a 22-year high of 5.25% to 5.5%.
Source: CME FedWatch Tool, as of Jan. 5.
Uncertainty over the path of U.S. interest rates could leave investors flat-footed once again, and damp the optimism that sent all three major stock indexes in 2023 to their best annual performances of the prior two to three years. In November, analysts at Deutsche Bank AG DB, +0.81%
counted seven times since 2021 in which markets expected the Fed to make a dovish pivot, only to be wrong.
Sources: Bloomberg, Deutsche Bank. Chart is as of Nov. 20, 2023.
Financial markets have been operating with “sky-high expectations” for 2024 rate cuts, but the only way to substantiate six cuts this year is with an “abrupt and sharp downturn in the economy,” said Todd Thompson, managing director and portfolio co-manager at Reams Asset Management in Indianapolis, which oversees $27 billion.
Heading into 2024, euphoria over the prospect of lower borrowing costs produced what Thompson calls “an alarming, everything rally,” which he says leaves equities and high-yield corporate debt vulnerable to pullbacks between now and the next six months. Beyond that period, however, “the trend is likely to be lower rates as the economy finally succumbs to tightening conditions at the same time inflation continues to recede.”
The coming week brings the next major U.S. inflation update, with December’s consumer price index report released on Thursday. The annual headline rate of inflation from CPI has slowed to 3.1% in November from a peak of 9.1% in June 2022. In addition, the core rate from the Fed’s favorite inflation gauge, known as the PCE, has eased to 3.2% year-on-year in November from a 4.2% annual rate in July.
The Fed needs to keep interest rates higher because of all the uncertainty around inflation’s most likely path forward, and the U.S. labor market “won’t degrade fast enough in the first quarter to justify a first rate cut in March,” according to Sanders of Madison Investments.
Rate-cut expectations are “going to be the issue for 2024, and a lot of it is going to be revolving around inflation getting back to that 2% target,” Sanders said via phone. “We think somewhere between 75 and 125 basis points of rate cuts make sense, and that the first move is more of a June-type of event. We don’t think it makes sense to have a March rate cut unless the labor market falls off a cliff.”
History shows that Treasury yields tend to fall in the months leading up to the first rate cut of a Fed easing cycle. However, that isn’t happening right now. Yields on government debt have been on an upward trend since the end of December, with 2- BX:TMUBMUSD02Y,
10- BX:TMUBMUSD10Y,
and 30-year yields BX:TMUBMUSD30Y
ending Friday at their highest levels in more than two to three weeks.
While financial markets generally tend to be efficient processors of information, they “haven’t been very accurate in terms of pricing in rate cuts” this time, said Lawrence Gillum, the Charlotte, North Carolina-based chief fixed-income strategist for broker-dealer for LPL Financial. He said the big risk for 2024 is if financial conditions ease too much and the Fed declares victory on inflation too soon, which could reignite price pressures in a manner reminiscent of the 1970s period under former Fed Chairman Arthur Burns.
“We think rate-cut expectations have gone too far too fast, and that the backup in yields we are seeing right now is the market acknowledging that maybe rate cuts are not going to be as aggressive as what was priced in,” Gillum said via phone.
December’s CPI report on Thursday is the data highlight of the week ahead.
On Monday, consumer-credit data for November is set to be released, followed the next day by trade-deficit figures for the same month.
Wednesday brings the wholesale-inventories report for November and remarks by New York Fed President John Williams.
Initial weekly jobless claims are released on Thursday. On Friday, the producer price index for December comes out.
Alaska Airlines grounded all of its Boeing 737-9 aircraft late Friday, hours after a window and piece of fuselage on one such plane blew out in midair and forced an emergency landing in Portland, Oregon.
The incident occurred shortly after takeoff and the gaping hole caused the cabin to depressurize. Flight data showed the plane climbed to 16,000 feet (4,876 meters) before returning to Portland International Airport.
The airline ALK, +3.10%
said the plane landed safely with 174 passengers and six crew members.
“Following tonight’s event on Flight 1282, we have decided to take the precautionary step of temporarily grounding our fleet of 65 Boeing 737-9 aircraft,” Alaska Airlines CEO Ben Minicucci said in a statement.
Each of the aircraft will be returned to service after full maintenance and safety inspections, which Minicucci said the airline anticipated completing within days.
The airline provided no immediate information about whether anyone was injured or the possible cause.
The plane was diverted about about six minutes after taking off at 5:07 p.m., according to flight tracking data from the FlightAware website. It landed at 5:26 p.m.
The pilot told Portland air traffic controllers the plane had an emergency, was depressurized and needed to return to the airport, according to a recording made by the website LiveATC.net.
A passenger sent KATU-TV in Portland a photo showing the hole in the side of the airplane next to passenger seats. Video shared with the station showed people wearing oxygen masks and passengers clapping as the plane landed.
The National Transportation Safety Board said in a post on X, formerly known as Twitter, that it was investigating an event on the flight and would post updates when they are available. The Federal Aviation Administration also said it would investigate.
The Boeing 737-9 MAX involved in the incident rolled off the assembly line and received its certification just two months ago, according to online FAA records.
The plane had been on 145 flights since entering commercial service on Nov. 11, said FlightRadar24, another tracking service. The flight from Portland was the aircraft’s third of the day.
Boeing BA, +1.66%
said it was aware of the incident, working to gather more information and ready to support the investigation.
The Max is the newest version of Boeing’s venerable 737, a twin-engine, single-aisle plane frequently used on U.S. domestic flights. The plane went into service in May 2017.
Two Max 8 jets crashed in 2018 and 2019, killing 346 people and leading to a near two-year worldwide grounding of all Max 8 and Max 9 planes.
The planes returned to service only after Boeing made changes to an automated flight control system implicated in the crashes.
Last year, the FAA told pilots to limit use of an anti-ice system on the Max in dry conditions because of concern that inlets around the engines could overheat and break away, possibly striking the plane.
Max deliveries have been interrupted at times to fix manufacturing flaws. The company told airlines in December to inspect the planes for a possible loose bolt in the rudder-control system.
The Russell 2000 Index soared 12% in December, which might reflect investors’ exuberance about the state of the U.S. economy — it appears the Federal Reserve has won its battle against inflation.
But if you are looking to broaden your exposure to the stock market beyond the large-cap S&P 500 SPX,
buying shares of a fund that tracks the Russell 2000 Index RUT
might not be the best way to do it. This is because the Russell 2000 isn’t selective — it is made up of the smallest 2,000 companies by market capitalization in the Russell 3000 Index RUA,
which itself is designed to capture about 98% of the U.S. public equity market.
A better choice might be the S&P Small Cap 600 Index SML
because S&P Global requires companies to show four consecutive quarters of profitability to be initially included in the index, among other criteria.
Below is a screen of analysts’ favorite stocks among the S&P Small Cap 600, along with another for the Russell 2000.
Watch for a “head fake”
Much of the small-cap buying in December might have resulted from covering of short positions by hedge-fund managers. This idea is backed by the timing of trading activity immediately following the Federal Open Market Committee’s announcement on Dec. 13 that it wouldn’t change its interest-rate policy, according to MacroTourist blogger Kevin Muir. The Fed’s economic projections released the same day also indicate three cuts to the federal-funds rate in 2024.
Heading into the end of the year, a fund manager who had shorted small-caps, and then was surprised by the Fed’s interest-rate projections, might have scrambled to buy stocks it had shorted to close-out the positions and hopefully lock in gains, or limit losses.
That buying activity and resulting pop in small-cap prices could set up a typical “head fake” for investors as the new year begins, according to Muir.
The long-term case for quality
Looking at data for companies’ most recently reported fiscal quarters, 58% of the Russell 2000 reported positive earnings per share, according to data provided by FactSet. In other words, hundreds of these companies were losing money. These might include promising companies facing “binary events,” such as make-or-break drug trials in the biotechnology industry.
In comparison, 78% of companies among the S&P Small Cap 600 were profitable, and 93% of the S&P 500 were in the black.
Here are long-term performance figures for exchange-traded funds that track all three indexes:
For the first screen, we began with the S&P Small Cap 600 and narrowed the list to 385 companies covered by at least five analysts polled by FactSet. Then we cut the list to 92 companies with “buy” or equivalent ratings among at least 75% of the covering analysts.
Here are the 20 remaining stocks among the S&P Small Cap 600 with the highest 12-month upside potential indicated by analysts’ consensus price targets:
Any stock screen should only be considered a starting point. You should do your own research to form your own opinion before making any investment. one way to begin is by clicking on the tickers for more about each company.
Moving on to the Russell 2000, when we narrowed this group to stocks covered by at least five analysts polled by FactSet, we were left with 936 companies. Among these, 355 have “buy” or equivalent ratings among at least 75% of the covering analysts.
Among those 355 stocks in the Russell 2000, these 20 have the highest implied upside over the next year, based on consensus price targets:
The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.
The S&P 500 SPX
ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.
This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.
The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.
Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes BX:TMUBMUSD10Y,
whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.
Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:
A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.
Biggest price increases among the S&P 500
Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:
Inside the $26 trillion Treasury market, perhaps the deepest and most liquid place for government debt in the world, a particular trade continues to draw scrutiny ahead of year-end. It’s the “basis trade,” a way of profiting on the differences in prices between Treasurys and Treasury futures. While such differences can be relatively tiny, one’s potential profit or loss can be exponentially magnified when leverage is involved.In a nutshell, the basis trade takes an arbitrage approach: It involves borrowing from the repo market for leverage and financing, and then taking a short Treasury futures position and a long Treasury…
Stock futures traded flat Tuesday, a day after the S&P 500 finished up 0.5% and moved closer to its all-time. The broad market index stands just 1.2% below its record of 4,796.56 reached in early January 2022.
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Oil futures fell on Friday, but finished off the session’s lows to eke out a gain for the week — the first for U.S. and global benchmark crude prices in eight weeks.
Attacks on ships traveling through the Red Sea, blamed on Yemen’s Houthi rebels, raised the potential for disruptions to the transport of oil and other goods, providing some support for prices.
Oil saw larger declines early Friday after a Federal Reserve official walked back dovish comments made earlier this week by the Fed Chair Jerome Powell, helping to strengthen the U.S. dollar.
Price action
West Texas Intermediate crude for January CL00, +0.49%
CLF24, +0.49%
declined by 15 cents, or 0.2%, to settle at $71.43 a barrel on the New York Mercantile Exchange, with prices ending 0.3% higher for the week, according to Dow Jones Market Data.
BRNG24, +0.52%,
the global benchmark, fell 6 cents, or nearly 0.1%, to $76.55 a barrel on ICE Futures Europe, settling 0.9% higher for the week.
January gasoline RBF24, -0.16%
added 0.9% to $2.14 a gallon, up almost 4.3% for the week, while January heating oil HOF24, +0.20%
climbed 1.1% to $2.62 a gallon on Nymex, marking a weekly rise of 1.5%.
Natural gas for January delivery NGF24, -0.88%
gained 4.1% to $2.49 per million British thermal units, but still logged a weekly loss of 3.5%.
The Red Sea is “one of the hot pockets of seaborne crude flows,” accounting for approximately 10% of global volume, said Manish Raj, managing director at Velandera Energy Partners. “Although the attackers lack sophistication … shipping crews are even less sophisticated, making them easy targets.”
A potential blockage of the Red Sea route would be “chaotic indeed, but not nearly as detrimental as blockage of [the] Strait of Hormuz near Iran, for which there is no viable alternative,” Raj said.
For now, there is concern over higher insurance costs for these ships, said Phil Flynn, senior market analyst at the Price Futures Group.
“With ships in the Red Sea continuing to be at high risk, ‘it won’t take that much for the market’ to see oil prices spike if an oil tanker should be hit.”
— Phil Flynn, Price Futures Group
Obviously, the risk to oil supply is large, although “so far, most of the attacks have been on cargo ships and not oil-related ships,” Flynn told MarketWatch.
However, as ships in the Red Sea continue to be at high risk, “it won’t take that much for the market” to see oil prices spike if an oil tanker is hit, Flynn said.
For the week, both U.S. and global benchmark crude prices posted gains.
“The combination of lower U.S. inventories, stronger economic data, and improved OPEC compliance [with production cuts] for the month of November were the highlights of the week,” said Peter McNally, global head of sector analysts at Third Bridge.
“However, there are ongoing seasonal challenges that forced OPEC to sustain production cuts through the first quarter of 2024, so it remains to be seen if they have done enough to prevent inventories from continuing their upward trend,” he said.
Oil had been trading lower early Friday after New York Federal Reserve President John Williams told CNBC that it is “premature” to discuss whether it is time to cut interest rates. “We aren’t really talking about cutting interest rates right now,” Williams said.
That ran contrary to Powell’s comments Wednesday that Fed officials were starting to discuss when to cut rates.
After the euphoria in the U.S. stock market over the Powell “pivot party” on Wednesday, we got a “wake-up call” from Williams when he pushed back on market expectations for a March rate cut, Michael Hewson, chief market analyst at CMC Markets UK, said in market commentary.
