(Bloomberg) — Wall Street’s final session of 2023 saw stocks taking a breather near all-time highs. For bulls defying every doomsday scenario, that was just a blip for a market notching its longest weekly advance since 2004.
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The uneventful Friday before the holiday had US equities halting a five-day advance. Signs of exhaustion emerged after an over $8 trillion surge in the S&P 500 this year, with the gauge still notching its ninth straight week of gains. Traders have looked past Federal Reserve uncertainty, recession angst and geopolitical risks. And many who came into 2023 dreading all that have ended up scrambling to chase the rally.
“The market shows signs of fatigue and undoubtedly needs to consolidate,” said Quincy Krosby at LPL Financial. “As long as participation remains broad, the bullish sentiment should carry the indexes as they navigate geopolitical and domestic scenarios, and an overarching positive consensus that 2024 will be a similarly strong year.”
Fueled by the artificial-intelligence boom, stretched positioning and the “fear of missing out,” the S&P 500 soared 24% in 2023, while the Nasdaq 100 had its best year since 1999. Chipmakers saw their biggest annual gain in more than a decade, led by major AI players Nvidia Corp. and Advanced Micro Devices Inc.
After a year of massive swings and numerous head fakes, the US 10-year yield ended 2023 pretty close to where it began. It’s an almost farcical conclusion to 12 months of trading that saw it tumble to as low as 3.25% in the wake of March’s banking crisis — only to surpass 5% just a few months later.
Benchmark 10-year US rates rose to almost 3.9% on Friday. The dollar was little changed on the day, but posted its worst year since 2020.
Key inflation data endorsing a growing narrative that central bankers will aggressively cut rates in 2024 fueled solid gains for both equities and bonds in the last two months. The rally was also driven by Fed Chair Jerome Powell’s dovish pivot at the December policy meeting.
“The notion that the major central banks have surely done enough to quell the inflationary surge of 2022-23 is powering the rally,” said Brian Barish at Cambiar Investors LLC. “It’s not hard to imagine new things for the markets to be concerned by, such as elections, the sizable bond funding requirements of the US government, and/or any notion that inflation resurges anew. But for now, there’s not much news and not a lot of sellers.”
Former Treasury Secretary Lawrence Summers said investors are probably underestimating inflation risk as markets move swiftly toward expectations for Fed easing.
“I think there’s still a risk that the market is probably underestimating: that we’re not going to quite make as much progress on inflation as people hope, and that there’s not going to be quite as much room for Fed easing as people hope,” Summers said on Bloomberg Television’s Wall Street Week with David Westin.
Equity markets have gone up so quickly that they’re highly vulnerable to a pullback if the US economy slips into even a mild recession, according to RBC Global Asset Management. Rate cuts are likely to happen in 2024, but the global economy hasn’t yet absorbed the full impact of almost two years of tightening, RBC economist Eric Lascelles said.
“What’s baked into the cake is a sizable jump in earnings, which is really only achievable in a soft-landing scenario,” Lascelles said.
The lack of anxiety is also visible in the market’s favorite volatility gauge — the VIX — which has held below 13 this week, near pre-pandemic lows and well below the five-year average.
That low reading “could be suggestive of a degree of investor complacency, even exuberance,” said Russ Mould, investment director at AJ Bell.
To Adam Turnquist at LPL Financial, momentum remains overbought but bullish.
“While extremely overbought conditions raise the odds of a temporary pause or pullback, longer-term returns have been positive and above average based on comparable periods,” he noted.
Following a nine-week winning streak, the S&P 500 has posted average and median 12-month forward returns of 8.1% and 12.2%, respectively, Turnquist said, citing data going back to 1950. Seven out of nine occurrences produced positive results, he noted.
Elsewhere, oil posted its biggest annual drop since 2020 as war and OPEC+ production cuts failed to propel prices higher in a year dominated by supply growth outside of the grouping. Emerging-market currencies closed out their best year since 2017 as the outlook for lower interest rates in the US revived investor appetite for risk.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.3% as of 4 p.m. New York time
The Nasdaq 100 fell 0.4%
The Dow Jones Industrial Average was little changed
The MSCI World index fell 0.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.2% to $1.1039
The British pound was little changed at $1.2744
The Japanese yen rose 0.2% to 141.07 per dollar
Cryptocurrencies
Bitcoin fell 1% to $42,042.01
Ether fell 1.8% to $2,304.86
Bonds
The yield on 10-year Treasuries advanced three basis points to 3.88%
Germany’s 10-year yield advanced eight basis points to 2.02%
Britain’s 10-year yield advanced four basis points to 3.54%
Commodities
West Texas Intermediate crude fell 0.6% to $71.36 a barrel
Spot gold fell 0.1% to $2,063.18 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joanna Ossinger, Matthew Burgess, Divya Patil, Robert Brand and Elena Popina.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
