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MARKET WRAPS

Watch For:

Housing Starts for December; Weekly Jobless Claims; Philadelphia Fed Business Outlook Survey for January; EIA Weekly Petroleum Status Report

Today's Top Headlines/Must Reads:

- The $8.8 Trillion Cash Pile That Has Stock-Market Bulls Salivating

- Oil-Demand Growth Slowdown Marks Return to Prepandemic Trends, IEA Says

- Biden Accedes to Tougher Immigration Policy to Deflect Criticism, Secure Ukraine Aid

Opening Call:

Stock futures inched higher on Thursday, as Treasury yields dipped and stress eased in Asian markets.

"The recent very strong correlation between bonds and equities that started bearishly for both in August around the QRA [quarterly refunding announcement] and flipped bullish in October around the QRA, has flipped bearish again in 2024," Deutsche Bank said.

"History tells us the tight correlation won't last forever, and one will break out from the other, but for now the relationship is lockstep[...], " Deutsche added.

Traders were pricing the chances of at least a 25 basis point rate cut by the Federal Reserve at its March meeting at 63%, down from 73.3% a week ago.

"The recent divergence between market expectations for rate cuts and the recent Fed rhetoric is gradually tilting toward the Fed's stance," SPI Asset Management said.

Premarket Movers

Alcoa reported a narrower-than-expected adjusted loss in the fourth quarter and a revenue decline of 2.5% to $2.6 billion, which just edged estimates. The company said it expects lower production in 2024. The stock was down 0.4%.

Apple again has been banned from selling current versions of the Apple Watch with blood oxygen sensors in the U.S. in connection with a patent-infringement case filed against it by Masimo. Apple shares slipped in premarket trading. Masimo was up 0.4%.

Boeing rose 1.6%. India's Akasa Air has ordered 150 Boeing 737 MAX planes. The order doesn't include the 737 MAX 9, which has been grounded by the FAA.

Sheryl Sandberg said she plans to leave the board at Meta Platforms. Shares of Meta were up 0.3%.

Plug Power fell 14% after disclosing in a filing that it will be selling up to $1 billion of shares. The company said it entered into an at-the-market issuance sales agreement with B. Riley Securities that would allow it to sell up to $1 billion in common stock.

Taiwan Semiconductor Manufacturing reported fourth-quarter profit that fell 19% from a year earlier but still topped analysts' expectations. Revenue in U.S. dollars fell 1.5% in the quarter to $19.62 billion but rose but 13.6% from the third quarter. U.S.-listed shares were up 4%.

Wednesday's Post-Close Movers

Discover Financial Services reported fourth-quarter earnings of $1.54 a share, down from a year ago and below the $2.50 a share that analysts surveyed by FactSet expected. The company's charge-off rate jumped to 4.11%, up from 2.13% a year ago. Shares fell 10%.

LiveRamp said it expects to report revenue of $174 million for its fiscal third quarter, up 10% from the same period a year earlier and above the company's guidance of $165 million. The company also struck a deal to buy data clean room software provider Habu in a cash-and-stock deal that the companies valued at $200 million. Shares rose 9%.

R1 RCM completed its $675 million deal to buy Acclara from Providence. R1 said it expects the Acclara deal and the new partnership to generate more than $625 million in revenue by year five of the partnership. Shares rose more than 3%.

Forex:

The dollar edged slightly lower after strong gains on Wednesday but continued to trade on a strong footing due to rising yields spurring general risk-off sentiment in markets, Danske Bank Research said.

"The general risk-off sentiment in markets alongside rising yields is adding support to the dollar for the time being." However, since the euro is also performing "decently," keeping EUR/USD only just below 1.09, Danske said.

EUR/USD is expected to trade in a tight 1.0880-1.0950 range on Thursday, although ING still expects it to fall to 1.08 by the end of the first quarter.

Sterling continued to edge higher after Wednesday's inflation data caused investors to scale back expectations for interest-rate cuts, and it could be on course to perform better than many analysts had expected.

ING said it will probably soon have to cut its current forecasts for EUR/GBP to rise to 0.88 later this quarter and 0.90 later this year, which now look too aggressive.

The inflation data resulted in a reduction of 20 basis points in 2024 U.K. rate-cut expectations, supporting sterling across the board, ING added.

Bonds:

The 10-year Treasury yield has scope to rise above the 55-day exponential moving average, which is currently at 4.163%, UOB Global Economics & Markets Research said.

Price movements and technical signals suggest the yield could rise further, but upward momentum appears somewhat tentative, so it remains to be seen whether there's sufficient momentum for the yield to clearly breach mid-December high of 4.295%, it said.

On the downside, support is at 3.900% ahead of late-December low of 3.783%, UOB added.

Energy:

Oil prices inched higher following OPEC's growth expectations for demand, and as Middle East tensions and a cold blast in the U.S. raised concerns over supply disruptions.

"For now, the flat price remains firmly below $80/bbl and with the balance expected to be fairly comfortable over 1H24, significant upside is probably limited," ING said.

Metals:

Base metals and gold rose slightly on a softer dollar, but weakening expectations of early interest-rate cuts this year continued to weigh on sentiment.

"Concerns about resurging inflationary pressures due to geopolitical uncertainty in the Middle East, combined with a robust economy, suggest that the Fed may not need to rush into implementing monetary policy easing," Sucden Financial said.

ANZ said that going forward, gold "is set to benefit from easing monetary policy, elevated geopolitical risks and strong central bank buying."

Copper

Copper prices have already likely bottomed, Macquarie said, which had previously seen them cratering deep into 2024.

It now expects a more balanced copper market this year, with prices averaging US$8,125/ton, up some 3.8% on its prior forecast.

TODAY'S TOP HEADLINES

Hyundai and Kia Emerge as Tesla's Biggest U.S. Rivals

As the electric-vehicle race heats up, a pair of Korean automakers are pulling ahead of larger rivals in the U.S. to emerge as Tesla's biggest competition.

Hyundai Motor and affiliate Kia jointly captured the No. 2 slot last year in U.S. electric-vehicle sales, trailing only Tesla, which still holds a commanding lead. Analysts say the allied carmakers, both a part of South Korea's Hyundai Motor Group conglomerate, are poised to cement or advance their lead over non-Tesla rivals this year with fresh EV models and aggressive pricing.

Chip Giant TSMC Foresees Delay at Second Arizona Plant

Taiwanese chip maker TSMC said it expected to delay production at the second of two semiconductor plants it is building in Arizona, and cast uncertainty on an earlier statement that the plant would produce an advanced type of chip.

The statement by TSMC Chairman Mark Liu at a news conference Thursday offered further evidence that the $40 billion Arizona project is running into challenges in meeting aggressive timeline targets.

China Goes All In on Green Industry to Jolt Ailing Economy

China is doubling down on manufacturing to reboot its economy after a turbulent year, a strategy that risks igniting new tensions over trade as countries step up support for prized industries and global growth teeters.

The push for new growth drivers comes as figures showed the world's second-largest economy expanded in 2023 at its weakest rate in decades, aside from the three years when China was closed to the outside world during the Covid-19 pandemic. A drawn-out property crunch means Beijing can no longer rely on debt-fueled real-estate investment to power the economy, and officials have shown little appetite to shift activity decisively toward consumer spending.

The U.S. Plan for a Postwar Middle East Isn't Gaining Much Traction

WASHINGTON-Biden administration officials say the path toward a more stable Middle East goes through the ruins of Gaza. But that goal keeps running into the harsh realities of a region plunged into conflict.

The latest blows to the White House plans are the persistent attacks by Houthi forces in Yemen against international shipping in the Red Sea-a show of Arab support for Palestinian militants in Gaza against Israel that has prompted the U.S. and its allies to hit dozens of areas controlled by the Iran-backed Houthis with air and missile strikes. The exchanges are pulling the U.S. into a wider conflict and threaten to worsen regional tensions.

White House Meeting Revives Hopes for Ukraine, Border Deal

WASHINGTON-Congressional leaders struck a cautiously optimistic tone Wednesday on reaching a deal combining tighter border security with aid for Ukraine, as they emerged from meeting with President Biden at the White House.

House Speaker Mike Johnson (R., La.) said the hour-and-20-minute sit down was "productive" while reiterating Republicans' demand that changing border law was a condition for further funding Kyiv, which is one piece of a stalled $110.5 billion foreign-aid package championed by Biden.

Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings:

Blackline Safety 4Q

Economic Calendar (ET):

Nothing scheduled

Stocks to Watch:

Simply Solventless Acquires Recreational Cannabis Brand Lamplighter

Expected Major Events for Thursday

00:01/UK: Dec RICS Residential Market Survey

04:30/JPN: Nov Revised Industrial Production

09:00/FRA: Jan IEA Oil Market Report

09:30/UK: 4Q Bank of England Credit Conditions Survey

09:30/UK: 4Q Bank of England's Bank Liabilities Survey

10:00/ITA: Nov Balance of Payments

11:00/FRA: Nov OECD Harmonised Unemployment Rates

11:00/FRA: 3Q OECD Quarterly Labour Market Situation

13:00/RUS: Weekly International Reserves

13:30/US: Dec New Residential Construction - Housing Starts and Building Permits

13:30/US: Jan Philadelphia Fed Business Outlook Survey

13:30/US: 01/13 Unemployment Insurance Weekly Claims Report - Initial Claims

15:30/US: 01/12 EIA Weekly Natural Gas Storage Report

16:00/US: 01/12 EIA Weekly Petroleum Status Report

21:30/US: Federal Discount Window Borrowings

21:30/US: Foreign Central Bank Holdings

23:30/JPN: Dec CPI (Nation), CPI ex-food (Nation)

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Thursday

1st Source Corp (SRCE) is expected to report $1.15 for 4Q.

American National Bankshares Inc (AMNB) is expected to report $0.69 for 4Q.

Ames National Corp (ATLO) is expected to report for 4Q.

Bank OZK (OZK) is expected to report $1.46 for 4Q.

Banner Corp (BANR) is expected to report $1.30 for 4Q.

Capstar Financial Holdings (CSTR) is expected to report $0.26 for 4Q.

Chino Commercial Bancorp (CCBC) is expected to report for 4Q.

Commerce Bancshares Inc (CBSH) is expected to report $0.82 for 4Q.

Concentrix Corp (CNXC) is expected to report for 4Q.

EBET Inc (EBET) is expected to report for 4Q.

FNB Corp (FNB) is expected to report $0.32 for 4Q.

Fastenal Co (FAST) is expected to report $0.45 for 4Q.

Fastenal Co (FAST) is expected to report.

First Horizon Corp (FHN) is expected to report $0.27 for 4Q.

Five Point Holdings LLC (FPH) is expected to report for 4Q.

Greene County Bancorp (GCBC) is expected to report for 2Q.

Home BancShares Inc (HOMB) is expected to report $0.44 for 4Q.

Independent Bank Corp (INDB) is expected to report $1.24 for 4Q.

Insteel Industries (IIIN) is expected to report $0.05 for 1Q.

J.B. Hunt Transport Services Inc (JBHT) is expected to report $1.77 for 4Q.

KeyCorp (KEY) is expected to report $0.04 for 4Q.

M&T Bank Corp (MTB) is expected to report $3.10 for 4Q.

Metropolitan Bank Holding Corp (MCB) is expected to report $1.48 for 4Q.

Northern Trust Corp (NTRS) is expected to report $0.85 for 4Q.

Oak Valley Bancorp (OVLY) is expected to report for 4Q.

OceanFirst Financial Corp (OCFC) is expected to report $0.42 for 4Q.

OrganiGram Holdings Inc (OGI,OGI.T) is expected to report for 1Q.

PPG Industries Inc (PPG) is expected to report $1.48 for 4Q.

Platinum Group Metals Ltd (PLG,PTM.T) is expected to report for 1Q.

Quantum Corp (QMCO) is expected to report $-0.09 for 2Q.

RF Industries (RFIL) is expected to report $-0.10 for 4Q.

RVL Pharmaceuticals PLC (RVLPQ) is expected to report for 3Q.

Richelieu Hardware (RCH.T) is expected to report $0.52 for 4Q.

Technical Communications Corp (TCCO) is expected to report for 4Q.

Texas Capital Bancshares Inc (TCBI) is expected to report $0.57 for 4Q.

Truist Financial Corp (TFC) is expected to report for 4Q.

WNS (Holdings) Ltd - ADR (WNS) is expected to report $0.72 for 3Q.

Westamerica Bancorp (WABC) is expected to report $1.46 for 4Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

Allakos Cut to Hold From Buy by Jefferies

American Axle Cut to Sell From Neutral by UBS

Ansys Cut to Neutral From Buy by Rosenblatt

Ansys Cut to Peer Perform From Outperform by Wolfe Research

Automatic Data Raised to Neutral From Underperform by B of A Securities

Axonics Cut to Hold From Buy by Needham

Bally's Cut to Neutral From Outperform by Macquarie

Burlington Stores Raised to Overweight From Neutral by Piper Sandler

Carrols Restaurant Cut to Hold From Buy by Craig-Hallum

Century Casinos Cut to Neutral From Outperform by Macquarie

CrowdStrike Holdings Cut to Hold From Buy by WestPark Capital

Definitive Healthcare Cut to Hold From Buy by Needham

DXC Technology Cut to Sell From Neutral by Citigroup

ExlService Raised to Buy From Neutral by Citigroup

FB Financial Cut to Market Perform From Outperform by Hovde Group

Fisker Cut to Market Perform From Outperform by TD Cowen

Ford Motor Cut to Neutral From Buy by UBS

Fortinet Cut to Equal-Weight From Overweight by Capital One

Full House Resorts Cut to Neutral From Outperform by Macquarie

Hertz Global Raised to Overweight From Equal-Weight by Morgan Stanley

Inspired Entertainment Cut to Neutral From Outperform by Macquarie

Luminar Technologies Cut to Hold From Buy by Deutsche Bank

Maplebear Raised to Outperform From Peer Perform by Wolfe Research

Marathon Digital Raised to Buy From Neutral by BTIG

Mattel Cut to Equal-Weight From Overweight by Morgan Stanley

Morgan Stanley Cut to Market Perform From Outperform by Keefe, Bruyette & Woods

Morgan Stanley Cut to Neutral From Overweight by JP Morgan

Nutanix Raised to Outperform From Market Perform by William Blair

OneMain Holdings Cut to Market Perform From Outperform by Northland Capital Markets

Polaris Raised to Overweight From Equal-Weight by Morgan Stanley

Red Rock Resorts Raised to Outperform From Neutral by Macquarie

Rent the Runway Cut to Neutral From Overweight by Piper Sandler

Revolve Group Raised to Overweight From Neutral by Piper Sandler

Rivian Automotive Cut to Hold From Buy by Deutsche Bank

Spirit Airlines Cut to Negative From Neutral by Susquehanna

Spirit Airlines Cut to Neutral From Buy by Seaport Global

Twist Bioscience Raised to Buy From Neutral by Goldman Sachs

Visteon Raised to Buy From Neutral by UBS

Wynn Resorts Raised to Outperform From Neutral by Macquarie

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

January 18, 2024 06:16 ET (11:16 GMT)

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