January – Strong Like Bull

The S&P 500 rose last week as the first reading of Q4 economic growth came in stronger than expected and some financial earnings beat estimates. The index ended last week at 4891, a few points up from the prior week’s 4840.  The index is now up 2.5% for the month of January and year-to-date.

US real GDP rose at an annual rate of 3.3% in 4Q2024, according to early estimates by the Bureau of Economic Analysis. The consensus was for a +2% gain in a survey compiled by Bloomberg. In the third quarter of 2023, real GDP grew +4.9%.

The energy sector had the biggest percentage increase of the week, gaining +5.1%, followed by a +4.5% gain in communication services and a +1.9% rise in financials. Other gainers included technology, industrials, consumer staples, utilities, and materials.  The energy sector’s climb came as crude oil futures rose. Gainers included Halliburton (HAL), which posted fiscal Q4 adjusted earnings per share above analysts’ mean estimate despite revenue that slightly missed the Street view. Halliburton’s shares rose +10% on the week.

In communication services, shares of Netflix (NFLX) jumped +18%. The streaming entertainment company’s Q4 revenue exceeded Wall Street’s estimates amid stronger-than-anticipated membership growth and the company said it is entering 2024 with “good momentum.”

Three sectors fell on the week: consumer discretionary slipped -1.4%, real estate shed -0.5% and health care ticked down -0.2%.

Tesla (TSLA) shares led the consumer discretionary sector’s decliners amid weaker-than-forecast Q4 results. The electric vehicle manufacturer’s shares lost -14% as the company’s Q4 report showed its margin nearly halved year on year. The company also issued a warning that its volume growth this year will likely trail the rate achieved in 2023.

The Fed is widely expected to stand pat for the fourth straight meeting on January 30-to-31. Investors will review their statement and listening carefully to Chair Powell’s presser for any clues on the timing of a potential rate cuts.

This week’s earnings feature companies including Microsoft (MSFT), Google parent Alphabet (GOOGL), Advanced Micro Devices (AMD), Mastercard (MA), Boeing (BA), Apple (AAPL), Amazon.com (AMZN), Meta Platforms (META), Merck (MRK), Exxon Mobil (XOM) and Chevron (CVX).

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WEEK ENDING 1/26/2024 
(CUMULATIVE TOTAL RETURNS)