New Year: Mortimer Sells
As the OHFG investment team expected, the major averages started 2024 with a losing week, snapping a nine-week winning streak. The excuse de jor was the Federal Reserve walking back some early 2024 interest rate expectation cuts. The S&P 500 fell -1.5% last week, with gains in “boring” health care and utilities not fully offsetting weakness in technology and consumer discretionary which have bigger index weights.
The minutes from the FOMC’s December 12-13 policy meeting reiterated that, while rate cuts are on the table this year, the Fed isn’t going to act until it is sure. Fed members, “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee’s objective”. The December U.S. BLS payrolls report showed a better-than-expected +216k jobs created to finish the year, while prior-month revisions were again negative. More on this data in Friday, 1/12/24, coming video.
The S&P 500 ended last week at 4,697, down from the year end 2023 level of 4,770. The move came in just four sessions as the US stock market was closed Monday for New Year’s Day. The S&P 500’s decline last week came as investors took profits following a +24% jump in 2023. Most indexes were near record highs last week. While the S&P 500 was down in the first three sessions of 2024, it rose +0.2% on Friday.
Technology stocks had the largest percentage drop last week, falling -4.1%, followed by a -3.5% drop in consumer discretionary and a -2.1% decline in industrials. Other sectors in the red last week included real estate, materials, and communication services.
Five groups rose last week, limiting the S&P 500’s decline. Health care led the gainers with a +2.1% increase, followed by a +1.8% rise in utilities and a +1.1% advance in energy. All three were lagging groups in 2023. Financials edged up +0.3% while consumer staples rose less than +0.1%.
Decliners in the technology sector included shares of solar maker Enphase Energy (ENPH), which fell -13% on the week. In consumer discretionary, cruise lines sank with shares of Norwegian Cruise Line (NCLH) off -11%.
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