Goldman Sachs (GS, Financial) has provided guidance for investors as we approach the late-cycle period of 2024, suggesting a focus on quality stocks. The equity strategy team at Goldman Sachs predicts a modest rise in the S&P 500 for the next year, recommending stocks with strong balance sheets, stable growth, and high return on equity. They have identified a basket of high-quality stocks across various sectors, including Alphabet (GOOG, Financial), O'Reilly Automotive (ORLY, Financial), and Church & Dwight (CHD, Financial), which have outperformed the broader market year-to-date.
Stock index futures indicated a positive sentiment among investors, with S&P futures (SPX, Financial), Dow futures (INDU, Financial), and Nasdaq 100 futures (NDX:IND) all showing slight increases. This optimism is reflected in the performance of the major indices for the week, with the S&P 500 (SP500), Nasdaq (COMP.IND), and Dow (DJI) all posting gains. The decline in longer yields, with the 10-year Treasury yield (US10Y) and the 2-year yield (US2Y) both dropping, suggests that the market is anticipating a shift in the rate cycle, with potential rate cuts from the Fed expected next year.
The U.S. housing market showed resilience with housing starts climbing 1.9% month-over-month in October, surpassing expectations. The increase in building permits also beat forecasts, signaling a potential uptick in future construction activity. Despite the positive month-over-month data, the annual comparison still shows a decline, indicating a mixed picture for the housing sector. LPL Financial's chief economist Jeffrey Roach provided insights into the housing data, highlighting its implications for the economy.
Bank of America's strategist Michael Hartnett has highlighted several unexpected scenarios that money managers are not preparing for in 2024. According to the BofA November Fund Managers Survey, investors are not anticipating events such as improved geopolitics, a hard or no landing for the economy, higher inflation or interest rates, and other potential market shifts. These insights suggest that there may be opportunities for contrarian investors to capitalize on these unanticipated outcomes.
Applied Materials (AMAT) shares faced a significant drop in premarket trading following news of a pending criminal investigation, overshadowing the company's fourth-quarter results and guidance. Despite the negative impact, analysts from Bank of America and Evercore ISI have provided their perspectives on the company's future, noting the potential for strong sales in China and a recovery in leading-edge logic technology in the latter half of 2024.
IBM (IBM) has taken a firm stance against hate speech by suspending advertising on Elon Musk's X platform after reports surfaced of their ads appearing next to pro-Nazi content. The company's swift action reflects its commitment to combating discrimination and maintaining its brand integrity. X has responded by stating that the ad placements were unintentional and that the offensive content would no longer be monetized.
Rithm Capital (RITM) has finalized its acquisition of Sculptor Capital Management (SCU) for approximately $720 million, following legal settlements and shareholder approval. This acquisition marks the end of a contentious period that included lawsuits and competing bids, paving the way for Rithm Capital to expand its asset management portfolio.
Johnson & Johnson (JNJ) has reached a settlement in the first two talc powder-related cases since its subsidiary LTL Management's bankruptcy attempts were denied. The terms of the settlement were not disclosed, but it represents a significant development in the ongoing litigation involving tens of thousands of claims related to J&J's talcum powder products.
Coherus BioSciences (CHRS) saw its shares rise in premarket trading after Baird initiated coverage with an Outperform rating. The positive outlook is based on the company's approved biosimilars and its expansion into immuno-oncology. Despite some challenges, Baird expects Coherus to achieve accelerated growth in 2024 and maintain its guidance for cash-flow positivity.
Dividend activity this week included announcements from Sun Life Financial (SLF), Noble (NE), Clorox (CLX), and Nike (NKE), with some companies increasing their payouts. Investors are also anticipating the ex-dividend dates for upcoming payments from Johnson & Johnson (JNJ) and Marriott (MAR).
2U (TWOU) announced a leadership change, with CFO Paul Lalljie stepping up as CEO and Matt Norden taking over as CFO. The transition follows the departure of former CEO Christopher Paucek, who will serve as a special advisor until mid-December.
Alphabet's Google (GOOG, Financial) is delaying the launch of its new large language model, Gemini, potentially rivaling AI models from Microsoft (MSFT)-backed OpenAI. The delay until next year suggests that Google is prioritizing its consumer offerings before granting access to external developers, even as its cloud revenue faces competition from Microsoft's Azure.
The oil market has entered a bear market, with West Texas Intermediate crude prices falling more than 20% from recent highs. Factors contributing to the decline include excess supply, concerns about OPEC+ compliance, and weakening global demand, particularly from China.
FedEx (FDX) has declared a quarterly dividend, maintaining its previous rate, with a forward yield of 1.98%. The dividend is payable at the start of the new year, and FedEx remains a topic of interest among investors and analysts, with various reports discussing its earnings, dividend growth, and industry challenges.
