U.S. stock markets presented a mixed picture on Friday, with technology stocks showing resilience amidst a broader market that faced downward pressure. The tech-heavy Nasdaq Composite managed to edge higher, while the S&P 500 and Dow Jones Industrial Average experienced slight declines. The day was marked by a jump in oil prices and a dip in airline and health insurer shares, which overshadowed the positive impact of lower-than-expected producer price inflation. Notably, Delta Air Lines (DAL, Financial) issued a profit warning that affected its stock as well as that of its industry peers United Airlines (UAL, Financial) and American Airlines (AAL, Financial). UnitedHealth (UNH, Financial) also saw a decline despite beating quarterly expectations, as higher medical costs became a concern.
In the technology sector, Robinhood Markets (HOOD, Financial) saw its shares decline in line with a drop in Bitcoin (BTC-USD), reflecting the sensitivity of the stock to cryptocurrency market movements. Meanwhile, Costco Wholesale (COST, Financial) shares soared, continuing a seven-session winning streak and approaching its 52-week high. The company's stock has seen significant growth over the past year, and analysts maintain a positive outlook for the second half of 2024.
The Industrial sector of the S&P 500 (SP500-20) and its corresponding ETF, the Industrial Select Sector SPDR Fund (XLI, Financial), both saw gains in the fourth quarter, outperforming the broader S&P 500 index. As earnings season approaches, the sector received a moderate health score from Seeking Alpha's Quant ratings, indicating a cautious optimism among investors.
In the realm of artificial intelligence and cybersecurity, UBS highlighted the potential for investor gains in the enabling tech subsector, which is expected to grow significantly by 2025. Companies like Adobe Systems (ADBE, Financial) and ASML Holdings N.V. (ASML, Financial) were noted for their strong growth prospects, reflecting the broader momentum in technology stocks.
DocuSign (DOCU, Financial) experienced a rise in its share price amid speculation of a potential buyout by private equity, with analysts estimating a possible premium based on recent software company takeovers.
The Consumer Discretionary Select Sector SPDR Fund ETF (XLY, Financial) has outperformed the S&P 500 over the past year, with companies like Amazon (AMZN, Financial) and Tesla (TSLA, Financial) contributing to the sector's robust performance. Despite inflation concerns, the sector remains a high-risk but potentially rewarding investment area.
Information Technology stocks had a strong week, with companies like Nvidia Corporation (NVDA, Financial) and Juniper Networks (JNPR, Financial) leading the gains. The sector's performance helped offset some of the broader market's losses, underscoring the importance of tech in the current market environment.
Cryptocurrency-related stocks such as MicroStrategy (MSTR, Financial) and Coinbase Global (COIN, Financial) saw declines as Bitcoin retreated from recent highs. The volatility in the crypto market continues to impact related equities, with significant price movements observed on a weekly basis.
Bank earnings revealed a mixed picture, with net interest income showing modest growth from the previous quarter. The financial sector is closely watching interest rate movements, as expectations of rate cuts could impact net interest income in 2024.
Nio (NIO, Financial) shares continued their downward trend, marking the seventh consecutive session of losses. The Chinese EV maker's stock has seen a significant decline over the past year, with short interest remaining high.
The yield curve between the U.S. 2 Year Treasury yield (US2Y) and the U.S. 30 Year Treasury yield (US30Y) un-inverted, signaling a shift in investor expectations regarding interest rates. The yield curve's movements are closely monitored as an indicator of economic sentiment.
Uranium-related stocks surged after Kazatomprom, the world's largest producer, announced production shortfalls for the next two years. The news sparked a rally in companies like Uranium Royalty (UROY, Financial) and Uranium Energy (UEC, Financial), highlighting the commodity's supply challenges.
Shipping stocks like ZIM Integrated Shipping (ZIM, Financial) and Nordic American Tankers (NAT, Financial) gained on Friday amid heightened tensions in the Red Sea following U.S. and British airstrikes in Yemen. The geopolitical situation has led to increased oil prices and has put shipping stocks in focus.
