On Thursday local time, the US stock market continued its weakness since the beginning of 2024. As of the close, the S&P 500 index fell 0.34% to 4688.68 points; The Nasdaq index fell 0.56% to 14510.3 points; The Dow Jones Industrial Average rose 0.03% to close at 37440.34 points.
Most star technology stocks fell, with Apple falling 1.27%, and this week's cumulative decline has exceeded 5.5%. Apple has lost over $160 billion in market value in the first three trading days of 2024. On the news front, Harsh Kumar, an analyst at Piper Sandler at PJ Investment, downgraded Apple's rating from "over spec" to "flat spec" on Thursday local time and emphasized concerns about iPhone sales growth. On Tuesday, Barclays analysts also downgraded Apple's stock rating to low allocation.
The performance of US stocks since 2024 is closely related to the market's recent cooling of bets on the Fed's rate cut this year. On Thursday local time, the US ADP private sector employment report, also known as "small non farm", once again suppressed market expectations for interest rate cuts. The minutes of the Federal Reserve meeting released on Wednesday also showed that the dovish tendencies of the Federal Reserve are far less strong than those revealed by Powell at the previous monetary policy press conference. After a series of data releases, the US dollar index and US bond yields rose in the short term, and the overnight 10-year US bond yield returned to the 4% mark.
In addition, regulatory documents disclosed by the US Securities and Exchange Commission (SEC) indicate that a wave of selling off of company stocks by tech executives is still ongoing. In the last two months of 2023, Meta CEO Mark Zuckerberg sold stocks every trading day, accumulating nearly 1.28 million shares and cashing out approximately $428 million.
The Nasdaq fell five times in a row, and Apple Inc. was downgraded by Wall Street
On January 4th local time, the three major stock indexes in the United States closed with mixed gains and losses. As of the close, the Dow Jones Industrial Average rose 0.03% to 37440.34 points, the S&P 500 Index fell 0.34% to 4688.68 points, and the Nasdaq fell 0.56% to 14510.3 points, marking the fifth consecutive day of decline.
Most star technology stocks fell, with Apple down 1.27%, Amazon down 2.63%, Netflix up 0.94%, Google down 1.82%, Facebook up 0.77%, and Microsoft down 0.72%. Among them, technology stocks represent Apple's cumulative decline of over 5.5% this week, and Apple's market value fell by over $160 billion in the first three trading days of 2024.
Analyst Harsh Kumar from Piper Sandler at PJ Investment downgraded Apple's rating from "over spec" to "average spec" on Thursday local time, emphasizing concerns about iPhone sales growth. Due to the weakening macro environment, Kumar predicts that Apple will face challenges. He also emphasized the impact of high interest rates on Apple's overall performance.
On Tuesday, Barclays analysts downgraded Apple's stock rating to low allocation, with a target price lowered from $161 to $160. Barclays believes that Apple's hardware sales are weak and the demand for the iPhone 15 is disappointing. On that day, Apple's stock price fell by 3.6%.
In addition, the Nasdaq China Golden Dragon Index fell 0.43%, Alibaba fell 2.52%, Baidu rose 0.54%, Pinduoduo fell 0.81%, JD.com fell 1.13%, NetEase fell 0.35%, NIO fell 2.71%, Ideal Automobile fell 1.76%, and Xiaopeng Automobile fell 3.09%.
Zuckerberg Continuously Sells Meta Stocks
Cash out over 400 million US dollars
Meta CEO Mark Zuckerberg sold approximately 1.28 million shares of Meta stock in the last two months of 2023.
Recently, regulatory documents disclosed by the SEC showed that the founder of Meta (formerly Facebook), Zuckerberg, sold approximately 1.28 million shares and cashed out approximately $428 million in the two months from November 1 last year to the end of the year. The largest sell-off was on December 28th, selling $17.1 million worth of stocks. At the same time, the 144 documents submitted by Zuckerberg to the SEC were also the process taken to continue selling stocks in the future.
According to regulatory documents, Zuckerberg sold a total of 41 times from November 1, 2023 to December 29, 2023. That is to say, in the last two months of 2023, Zuckerberg was selling stocks every trading day.
Under the influence of performance rebound and AI boom, Meta's stock price rebounded by about 194% from its low point at the end of 2022 in 2023, outperforming all major tech giants except Nvidia.
In the ten years since Meta went public, Zuckerberg has regularly sold Meta stocks, but 2022 is an exception. In 2022, the US stock market suffered a heavy decline, and Meta performed exceptionally poorly under the impact of catastrophic financial reports. Its stock price plummeted by 64% throughout the year, and Zuckerberg did not sell any stocks.
According to public data, 39 year old Zuckerberg currently holds approximately 13% of Meta's shares and has a net asset of approximately $125 billion, making him the seventh richest person in the world.
"Small non-agricultural" data suppresses expectations of interest rate cuts
In terms of macroeconomic data, on January 4th local time, the US ADP private sector employment report, known as "small non farm", showed that the number of ADP jobs increased by 164000 in December, a significant increase of 39000 compared to expectations. Last week, the number of first-time jobless claims in the United States exceeded expectations and decreased month on month.
In December, American companies increased their recruitment activities, indicating that demand for workers remains strong despite the cooling labor market. This growth is mainly led by the service industry, including leisure and hotel, education and medical services, and other fields. Despite signs of a slowdown in labor demand, companies are still recruiting employees at a steady pace, with unemployment rates remaining low and employee wage increases consistently higher than inflation rates.
Analysts point out that the latest released labor market data has not changed the game rules, but still poses a challenge to the more aggressive pricing of interest rate cuts. The ADP data was better than expected for the first time in five months, but the range was very small. It is not surprising that the treasury bond bond yield rose slightly after the data was released.
The minutes of the Federal Reserve's December 12-13 meeting, released on Wednesday this week, show that the dovish tendencies of the Federal Reserve are far from as strong as those revealed by Powell at the previous monetary policy press conference. But relying solely on the wording in the minutes, it may be difficult to support the market's fervent expectation of a 150 basis point rate cut by the Federal Reserve in 2024. After the release of the meeting minutes, US bond yields slightly increased.
After a series of data releases, the market's bets on the magnitude of the Federal Reserve's interest rate cut this year have cooled down. The swap contract shows that the Federal Reserve will cut interest rates by 140 basis points by the end of the year, compared to 145 basis points at the close of Wednesday.
The shortage of transportation capacity caused by the Red Sea crisis is still fermenting
The spot container freight rates on some routes have skyrocketed
The global shortage of cargo ship capacity caused by the Red Sea crisis is still fermenting this week, and spot container freight rates between Asia, Europe, and the United States are rising.
According to the Drewry World Container Index, as of the week ending January 4th, the weighted average shipping cost of a 40 foot container on major trans ocean trade routes increased by 61% from $1661 to $2670. This is the highest level since November 2022.
Freight booking and payment platform Freightos announced on Wednesday evening local time that spot freight rates for 40 foot container shipments from Asia to Northern Europe have exceeded $4000, an increase of 173% from mid month before the outbreak of the Red Sea crisis. Freightos stated that the cost of goods from Asia to the Mediterranean has increased to $5175, and some carriers have announced that starting from mid January, the shipping cost for this route will exceed $6000. The freight rate for a 40 foot container from Asia to the east coast of North America has increased by 55%, reaching $3900.
Clarkson, a shipping consulting firm, recently released the "Red Sea Situation - Impact Assessment on the Shipping Market (Third Edition)" on the impact of the Red Sea vessel attack on global shipping trade and various shipping segments. The report indicates that in recent weeks, Yemeni Husai militants have been escalating attacks on ships passing through the Red Sea and the Gulf of Aden. It is known that at least 22 ships (totaling 1.5 million tons) in the region have been attacked, an increase from the 16 ships (totaling 1.2 million tons) recorded on December 20, 2023.
The report states that the number of ships choosing to bypass the Red Sea is still increasing, and the container ship market is particularly affected. Starting from mid to late November 2023, a total of approximately 309 container ships (totaling 4 million TEUs) chose to sail around Cape of Good Hope, which is about twice the record of approximately 155 ships (totaling 1.9 million TEUs) recorded on December 21, 2023.
As of the end of December 2023, the spot freight rate on the Shanghai Nordic route has increased to $2694/TEU, which is three times higher than in early December; Meanwhile, the freight rates on the Shanghai East/West route have increased by approximately 50%. Excluding the extreme freight rates affected by the epidemic, the freight rates on the Shanghai Nordic route have reached a historical high.