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Market FRENZY: Dow, Tech, China
In a complex market session, the Dow slips but tech stands resilient.
Kenny
December 06, 2023
HOT OFF THE PRESS🔥
Market FRENZY: Dow, Tech, China
In a complex market session, the Dow slips but tech stands resilient. Apple's return to the $3 trillion club lifts tech, backed by falling Treasury yields. CVS and Gitlab show diverse outcomes, while the labor market softens.
Bitcoin surges, OPEC+ cuts are questioned, and Bill.com restructures for profitability. Global currency shifts impact markets, and Moody's downgrade shakes China.
Let’s go!
BIG IDEA 1💡
Tech Rescues Market as Dow Dips; Apple Surges with $3T Return
Mixed Market Performance- Dow Slips, Tech Resilient:
In a session marked by mixed performance, the Dow Jones Industrial Average experienced a modest decline of 79 points (0.2%). This dip was counteracted by the resilience of the tech sector, with the S&P 500 remaining flat and the NASDAQ Composite gaining 0.3%.
Apple's Reentry to $3 Trillion Club Boosts Tech:
Apple Inc. (AAPL) surged 2%, propelling its market value back above $3 trillion. This gain followed Bank of America's report on a notable 11% rise in Apple App store revenue for the current quarter. However, UBS tempered enthusiasm, noting that while the double-digit growth was encouraging, actual spending in the App Store remained relatively flat since December 2022.
Tech Supported by Falling Treasury Yields:
The tech sector received additional support from falling Treasury yields, attributed to increasing expectations of a Federal Reserve rate cut. The yield on the 10-year Treasury dropped by 12 basis points to 4.169%.
BIG IDEA 2💡
Market Moves: CVS, Procter & Gamble, Gitlab Amid Economic Shifts
Company News- CVS, Procter & Gamble, and Gitlab:
CVS Health saw a 3.7% rise following robust revenue forecasts for 2024 and plans to simplify drug pricing, coupled with a 10% dividend increase. Procter & Gamble, however, faced a 3.5% fall due to $2.5 billion in impairment charges related to its Gillette business and market restructuring. Gitlab experienced an 11% surge after an impressive Q3 and optimistic guidance.
Labor Market Softens- JOLTS Report and Rate Cut Bets:
The JOLTS report indicated a decline in job openings to 8.7 million in October, the lowest in two years. This softening in labor demand raised the probability of a Fed rate cut to 56%, up from 35% the previous week, according to Investing.com's Fed Rate Monitor Tool.
Services Sector Outperforms Amid Economic Concerns:
Despite concerns about the labor market, the U.S. services sector demonstrated unexpected strength, with activity rising to a reading of 52.7 in November, up from 51.8 the previous month.
BIG IDEA 3💡
Crypto Highs, Oil & Workforce Lows
Bitcoin Surges 4%, Briefly Tops $44K, Boosting Crypto Stocks:
Bitcoin experienced a remarkable 4% surge, briefly surpassing $44,000, leading to positive movements in related stocks like Marathon Digital Holdings Inc (MARA) and Riot Platforms (RIOT). This upswing reflects the ongoing volatility and institutional interest in the cryptocurrency market.
OPEC+ Supply Cuts Questioned as Oil Prices Hit 5-Month Low:
The oil market faced challenges, with prices hitting a near five-month low due to a strengthening U.S. dollar and rising demand concerns, resulting in four consecutive days of losses. OPEC+'s announced voluntary supply cuts failed to impress traders, raising doubts about their effectiveness.
Bill.com to Cut Workforce, Close Sydney Office for Profitability:
Bill.com (BILL) is reducing its global workforce by 15%, shutting its Sydney office, and focusing on small to mid-sized businesses to boost core profitability. The restructuring, incurring charges of $29-35 million, aligns with a broader trend, seen in Twilio's recent announcement of a 5% workforce reduction.
BIG IDEA 4💡
Global Currency Trends, Moody's China Warning, and Economic Transformations
Global Currency and Market Movements:
Amid a stronger dollar and subsiding inflation, the U.S. dollar index rose to a two-week high. Sterling fell to $1.258, and the Australian dollar dropped 1.03% to $0.6545. The euro fell to $1.0782, while Bitcoin reached its highest level since April 2022.
Moody's Downgrades China's Credit Outlook- Market Reactions:
Moody's downgraded China's credit outlook to "negative," citing concerns about local government debt and the ongoing downsizing of the property sector. This led to a nearly 2% slump in blue-chip stocks and prompted major state-owned banks to support the yuan. Alibaba and JD.com shares dropped, and China's sovereign debt insurance costs rose.
China's Economic Challenges and Reforms:
Investors are closely watching China's economic challenges, including slowing growth, property troubles, and local debt burdens. Moody's estimate of China's economic growth slowing to 4.0% in 2024-2025 adds to concerns. The markets anticipate potential stimulus measures as China navigates economic shifts, emphasizing the need for structural reforms amid uncertainties.
TAKEHOME MESSAGE📬
Dow and Labor Declines, Tech Rallies Amidst Economic Concerns
Dow Dip, Tech Resilience, and Company Moves:
In a nuanced market, the Dow dipped 79 points, countered by tech resilience and Apple's 2% surge, propelling its value beyond $3 trillion. Falling Treasury yields, influenced by Fed rate cut expectations, further fortified the tech sector. CVS rose 3.7%, driven by robust 2024 forecasts, while Procter & Gamble fell 3.5% due to Gillette-related charges. Gitlab surged 11% on a strong Q3 and optimistic guidance.
Labor Softens, Crypto Surges, and Oil Dips:
The labor market softened, JOLTS reported an 8.7 million job opening decline, raising Fed rate cut chances to 56%. Surprisingly, the U.S. services sector strengthened, reaching 52.7 in November. The cryptocurrency market surged as Bitcoin briefly surpassed $44,000, impacting related stocks. Meanwhile, oil prices hit a five-month low on a strong U.S. dollar and demand concerns, questioning OPEC+'s supply cuts.
Bill.com’s Restructuring, Global Currencies and Crypto:
Bill.com’s strategic restructuring involves a 15% global workforce cut and Sydney office closure for core profitability. This aligns with the broader trend seen in Twilio's 5% workforce reduction. Global currency movements included a rising U.S. dollar, fluctuations in Sterling and the Australian dollar, and Bitcoin hitting its highest level since April 2022.
Moody's Downgrade Sparks China Stock Slump, Economic Concerns:
Moody's negative credit outlook for China led to a 2% stock slump, prompting state-owned banks to support the yuan. Alibaba and JD.com shares dropped, and China's sovereign debt insurance costs rose. Investors monitor China's economic challenges, anticipating potential stimulus amid a slowdown.
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