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It was a disappointing start to the year, but the long-term outlook remains positive.

What you need to know right now

First-day nerves

On the first day of trading in 2024, US markets fell mostly, with the Nasdaq Composite having its worst day since October. Meanwhile, US Treasury yields have risen. Europe’s Stoxx 600 index fell 0.11%, wiping out gains of nearly 0.7% earlier in the day, as data showed that factory activity in the eurozone fell in December.

Tesla provides

Tesla, Elon Musk’s electric vehicle company, reported 484,507 fourth-quarter deliveries, bringing its total annual deliveries for 2023 to 1,808,581. This represents a 38% year-on-year increase and barely meets Tesla executives’ target of 1.8 million deliveries stated during the company’s most recent earnings call in October 2023.

Apple drops

Apple stock dropped 3.58% after Barclays downgraded it to underweight. In addition, the bank reduced its price target for Apple from $161 to $160. In a note to clients, Barclays analyst Tim Long stated that Apple’s iPhone 15 sales were “lackluster,” particularly in China, a weakness that Long believes will extend to the rest of Apple’s product lines.

Shipping detour for an extended period

Maersk has halted all shipping through the Red Sea and Gulf of Aden until further notice, following the weekend attack on one of its vessels by Houthi militants based in Yemen. The Dutch shipping giant’s decision demonstrates how the US-led initiative to ensure passage in that area, known as Operation Prosperity Guardian, is facing difficulties. Tuesday’s oil prices fell.

Where is the S&P going?

The S& P 500 finished 2023 up more than 20%. So, what happens next? Bob Pisani of CNBC Pro examines historical data to determine how likely it is for the S&P 500 to continue its upward trend in 2024 — and whether the index can repeat its stellar performance twice in a row.

In conclusion

Investors had hoped for a more upbeat start to the new year.

The 10-year US Treasury yield increased by about 8 basis points to 3.941%, approaching the 4% level once more, while the 2-year yield increased by more than 7 basis points to 4.324%.

Stocks were put under pressure as a result. The S& P 500 fell 0.57%, dashed hopes of a new closing high to begin the new trading year, while the Nasdaq Composite fell 1.63%, its worst performance since October.

Several major stocks fell, weighing down the tech-heavy index. Apple’s stock dropped after Barclays downgraded the company, causing other Magnificent Seven stocks to follow suit. The iShares Semiconductor ETF was down 3.6%.

Meanwhile, Rivian shares fell more than 10% on news that the electric vehicle manufacturer delivered 10% fewer vehicles in the fourth quarter compared to the previous period.

Even so, there was some good news yesterday.

The Dow Jones Industrial Average held steady, eking out marginal gains. Moderna shares rose 13.12% after Oppenheimer said the Covid vaccine maker could introduce several new products in the next 12 to 18 months.

Meanwhile, Bitcoin traded above the $45,000 mark for the first time since April 2022, adding to its recent gains of more than 170%.

According to several analysts, the long-term outlook for stocks remains positive.

The Nasdaq could reach 20,000 by 2024 as a result of an “AI monetization cycle,” according to Wedbush Securities’ Dan Ives. Separately, Goldman Sachs managing director Scott Rubner noted that stock inflows were only $172 billion last year, the lowest since 2019, implying that there is more money on the sidelines to boost stock prices this year.

There is also the prospect of the first interest rate cut, which has historically helped stocks “rally for 6-7 months with a mean gain of roughly 12%,” according to Joe Kalish, chief global macro strategist at Ned Davis Research.

A slow start to the new year should not discourage investors. Perhaps a slow start, but the year still holds promise.



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