Stock Region Market Briefing
Stock Region Market Briefing Newsletter - Thursday, December 26, 2024.
Stock Region Market Briefing Newsletter - Thursday, December 26, 2024
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Market Overview:
Natural Gas Retreats After Hitting $4 Milestone
U.S. natural gas prices ($NG_F) displayed high volatility, briefly touching the $4 level—a price point not seen in nearly two years—before retreating quickly. This spike and reversal highlight the ongoing supply and demand dynamics in the energy market, driven by seasonal weather patterns and fluctuating global energy demands. Investors should monitor key natural gas stocks such as Cheniere Energy (LNG), which saw a 19% year-to-date (YTD) increase, and EQT Corporation (EQT), which remains a strong player in the natural gas sector.
Growth Stock Watch:
Southwestern Energy (SWN): This low-cost operator could experience upside in a tightening gas market.
Australian Shares Extend Gains
Australia’s S&P/ASX 200 index (XJO) is poised for a third consecutive session of gains ahead of the Christmas holidays. Sectors driving this rally include mining, financials, and consumer staples, reflecting a broad-based recovery. Significant players to watch include BHP Group (ASX:BHP), up 7% over the past month, and Commonwealth Bank of Australia (ASX:CBA), which has delivered consistent dividends amidst robust earnings.
Growth Stock Watch:
Pilbara Minerals (ASX:PLS): A major player in lithium mining, benefiting from global EV adoption.
Gold Steady in Holiday-Thinned Markets
Gold futures ($GC_F) remained rangebound amid muted holiday trading, with prices holding steady at $1,950 per ounce. Gold often gains traction as a hedge in uncertain economic climates. Notable ETFs like SPDR Gold Shares (GLD) and mining stocks like Newmont Corporation (NEM) and Barrick Gold Corporation (GOLD) provide exposure to investors seeking stability during market downturns.
Oil Slips Amid Unclear Market Signals
Amid subdued Asian trading, crude oil prices ($CL_F) dipped slightly, with Brent crude trading near $79 per barrel. Geopolitical uncertainties and cautious trading have kept oil markets on edge. Investors remain focused on Exxon Mobil (XOM), which continues to display strength with a 42% YTD return, and Chevron Corporation (CVX), a dividend juggernaut boasting an attractive yield of 3.6%.
Growth Stock Watch:
Devon Energy (DVN): Well-positioned for a recovery in oil prices.
Ringgit Faces Early 2024 Pressure
The Malaysian ringgit (MYR) is projected to remain under pressure into Q1 2024, driven by U.S. monetary policy tightening and persistently high inflation domestically. This could impact Malaysian export-focused equities and ETFs such as iShares MSCI Malaysia ETF (EWM).
Overall Stock Market Forecast:
Looking into the close of the year and early 2024, the global stock markets appear poised for a period of caution, with key watchpoints including central bank actions, inflation data, and geopolitical uncertainty. U.S. markets, represented by the S&P 500 (SPX), have maintained a solid 14% YTD return, fueled by the strength of mega-cap tech stocks such as Microsoft (MSFT) and NVIDIA (NVDA). However, volatility could increase as investors weigh the impact of slowing economic growth against the potential for a pivot in Federal Reserve policy.
Sectors to Watch in 2024:
Energy: Supply dynamics and geopolitical factors will drive volatility in oil and gas.
Technology: AI and cloud computing remain key drivers, with companies such as Alphabet (GOOGL) and emerging players like Palantir (PLTR) leading the innovation space.
Materials: Supported by recovery in industrial production and green energy demand.
Market Overview:
Thursday Wrap-Up
It was a mixed day of trading, as the major indices mostly hovered near their previous closing levels in a thinly traded post-holiday market. The standout performer was the Russell 2000 (+0.9%), a reflection of increased risk-taking sentiment among investors as speculative buying returned.
The S&P 500 sectors showed little movement, with no sector gaining or losing more than 0.6%. Leading the day were Financials and Health Care, both closing up 0.2%. The Consumer Discretionary sector was the weakest performer, down by 0.6%, as consumer demand concerns weighed on investor sentiment.
Notably, mega cap stocks saw choppy action. The Vanguard Mega Cap Growth ETF (MGK) fluctuated between a session high of +0.1% and a session low of -0.7%.
Year-to-date performances of key indices remain strong, as reflected below:
Nasdaq Composite: +33.4% YTD
S&P 500: +26.6% YTD
Dow Jones Industrial Average: +15.0% YTD
S&P Midcap 400: +13.9% YTD
Russell 2000: +12.5% YTD
Economic Data Highlights:
Weekly Initial Jobless Claims: 219K (lower than the expected 232K). Jobless claims continue to signal a low level of layoffs.
Continuing Claims: 1.910 million, the highest since November 2021, suggesting some challenges in re-employment.
Key Takeaway:
The labor market remains tight, but individuals who lose jobs may find it harder to secure new roles, a factor that could weigh on consumer confidence heading into the new year.
Treasuries and Rates:
The bond market saw some volatility following the labor data, with the 10-year Treasury yield spiking to 4.64% before closing at 4.58%, one basis point lower than its prior level. Demand for Treasuries benefited from a well-received 7-year note auction.
Notable Stock Market Updates:
Seadrill (SDRL)
Seadrill Ltd. announced the completion of the sale of its jack-up rig, West Prospero, for $45 million in cash. Shares closed at $36.70 (+2.2%). The company’s strategic divestments make it a player to watch for those following the offshore drilling segment.
Preferred Bank (PFBC)
Preferred Bank declared an increase in its quarterly dividend to $0.75 per share, up from $0.70. The stock gained +0.69%, closing at $87.34. PFBC remains a solid contender within the financial sector, supported by strong earnings growth and a higher dividend yield.
Growth Stock Watch:
Preferred Bank (PFBC): Consistent revenue growth and increased shareholder returns make PFBC a solid financial pick.
Martin Midstream (MMLP)
Martin Midstream's stock closed unchanged at $4.01 after announcing the termination of its previously announced merger agreement with Martin Resource Management Corporation.
Economic Data to Watch on Friday:
08:30 ET: November Advanced International Trade in Goods, Retail Inventories, Wholesale Inventories
10:30 ET: EIA Natural Gas Inventories
13:00 ET: EIA Crude Oil Inventories
Growth Stocks to Watch in Related Sectors:
Consumer Discretionary Weakness:
Amazon (AMZN): Down slightly on the day but remains resilient in e-commerce and cloud innovation.
Tesla (TSLA): A long-term leader in EVs and clean energy solutions, expect increased volatility in this space.
Financial Sector Strength:
JPMorgan Chase (JPM): Continues to capitalize on elevated interest rates.
Health Care Sector Growth:
UnitedHealth Group (UNH): A consistent outperformer benefiting from aging demographics and robust growth in managed healthcare plans.
Market Forecast:
End-of-Year and Q1 2024 Outlook:
The stock market is expected to end the year on a relatively solid note, driven by strong year-to-date performances in tech, healthcare, and financials. However, as we step into 2024, investors should prepare for heightened volatility.
Key factors to monitor include:
Inflation Trends: Market participants remain on edge, awaiting signals from the Federal Reserve about the future trajectory of rates. Persistent inflationary pressure could limit upside potential.
Employment Data: The low level of layoffs remains supportive of consumer spending but rising continuing claims could reflect underlying challenges in economic growth.
Sector Rotations: Look for continued strength in defensive sectors like healthcare, with speculative moves in technology and mid-cap growth names.
Global Uncertainty:
Geopolitical tensions and potential slowdowns in growth across China and Europe may weigh on U.S.-focused indices, but they also create opportunities in commodities like gold and energy.
Sectors to Focus On in 2024
Energy: A long-term play on supply constraints and geopolitical challenges. Consider Exxon Mobil (XOM) and Chevron (CVX).
Technology: Driven by AI, cloud, and automation, Microsoft (MSFT), NVIDIA (NVDA), and emerging companies like Palantir (PLTR) remain key players.
Healthcare: Sector stability with growth through innovation makes Pfizer (PFE) and Abbott Laboratories (ABT) particularly appealing.
Thank you for trusting Stock Region for your market updates. Stay informed and invest wisely!
Disclaimer: Stock Region does not guarantee the accuracy or completeness of this information. Past performance is not indicative of future results. Always invest according to your unique financial situation and investment objectives.
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