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🤔 What If Treasury Yields Don’t Come Down?
If yields don't drop, Piper Sandler says these stocks could drop.
Happy Monday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.
🟨 | US stocks were mixed on Monday. The Dow jumped to a new record, but the S&P 500 and Nasdaq were flat and lower, respectively.
📈 | One Notable Gainer: ContextLogic (WISH) shares spiked 39% today after the company planned to sell substantially all of its operating assets and liabilities related to its Wish ecommerce platform for about $173 million.
📉 | One Notable Decliner: Monday shares dropped 10% on the back of mixed full-year guidance.
🍪 | Tomorrow's Trade: What If Treasury Yields Don’t Come Down? Scroll down for more.
Plus, find out how this company plans to lead the electrification revolution.
YESTERDAY’S POLL RESULTS
🟩🟩🟩🟩🟩🟩 🐂 Bullish
🟨⬜️⬜️⬜️⬜️⬜️ 🐻 Bearish
S&P 500 Heatmap. Credit: Finviz
All stocks on US exchanges. Credit: Finviz
Global ADR snapshot. Credit: Finviz
MARKET MOVERS
NYCB: Shares of New York Community Bancorp rose over 3% but then ultimately ended in the red after an influx of insider buying.
FANG: Diamondback Energy shares jumped 9% after announcing its purchase of Endeavor Energy.
VFC: Shares of the clothing company, VF Corp, popped 14% after a Reuters report said “a member of the founding family … is backing activist investor Engaged Capital's push for board seats and faster change at the struggling owner of the North Face, Vans and Timberland brands.”
RKLB: Rocket Lab’s stock jumped 9% after Citi initiated coverage and gave the company a buy rating.
LOW: Lowe's stock price jumped over 3% after JPMorgan upgraded it to "overweight" from "neutral," citing potential benefits from falling mortgage rates.
PRESENTED BY FOREMOST LITHIUM
As energy transitions away from fossil fuels, there presently lacks suitable alternatives for lithium, a crucial component in the production of batteries, and a key element of the advancement of clean energy technology. The demand for lithium-powered energy sources are expected to increasingly grow this decade as today’s governments attempt to meet clean energy goals. The current climate in the lithium market may seem uncertain, but energy transition is gaining global momentum.
Pricing volatility in today’s lithium market in part can be attributed to China, which dominates the lithium-ion battery industry, enjoying government subsidies and incentives. The Canadian Natural Resource Minister announced in February 2024, plans are underway to make massive investments to meet the growing demand of the clean tech revolution as well as reduce regulatory approval and review processes in half.
Foremost Lithium Resource & Technology Ltd (NASDAQ: FMST, CSE: FAT) is a hard-rock lithium exploration company located in Manitoba, Canada drilling for future lithium feedstock.
Click here to learn more on how Foremost plans to lead the electrification revolution.
OVERHEARD ON THE STREET
YF: Thousands of drivers for ride-sharing platforms Uber, Lyft, and food delivery app DoorDash will strike across the United States on Valentine's Day seeking fair pay, drivers' groups said on Monday.
BBG: Germany’s economy probably failed to grow again at the start of the year, according to a Bloomberg poll.
CNBC: Credit card delinquencies surged more than 50% in 2023 as total consumer debt swelled to $17.5 trillion, the New York Fed reported.
The Verge: Stellantis, parent company to storied brands like Chrysler, Jeep, Ram, and Dodge, said it will adopt Tesla’s electric vehicle charging plug for its future EVs — becoming the last major car company to do so.
Reuters: U.S. regulators have asked Citigroup for urgent changes to the way it measures default risk of its trading partners, according to Reuters.
TOMORROW’S TRADE IDEA, TODAY
Holding the Line
At its January meeting, the Fed elected to leave rates unchanged instead of cutting them. Now Treasury yields are creeping back up as investors fear fewer rate cuts than they expected.
At the start of the year, markets were priced for a 68% chance of rate cuts in March. Now that number is down to 19.5%. The 10-year yield crept back up to 4.176% today.
According to Piper Sandler, that could mean bad news for certain stocks.
The Danger Zone
The firm combed the Russell 1000 for stocks with both a high correlation to the 10-year yield and poor earnings revisions.
Financial companies make up a big portion of the list. Piper Sandler predicts that Bank of America (BAC), East West Bancorp (EWBC), and Charles Schwab (SCHW) could be affected.
Other stocks on the list include Deere & Co (DE), Alaska Air Group (ALK), Marathon Oil (MRO) and Bristol-Myers Squibb (BMY).
Important Context
Being included on the list doesn’t necessarily mean that analysts are bearish. It could mean quite the opposite.
Bank of America has an earnings per share revision ratio of -0.365. But 57% of analysts covering BofA still have it listed as either “buy” or “strong buy.”
When it comes to Marathon Oil, analysts are still bullish, predicting a 37.3% upside.
The Fed is still expected to cut rates in 2024. The timing, however, could dictate the short-term movement of certain stocks.
Do you think the Fed will announce rate cuts at its March meeting? |
PRESENTED BY FOREMOST LITHIUM
As energy transitions away from fossil fuels, there presently lacks suitable alternatives for lithium, a crucial component in the production of batteries, and a key element of the advancement of clean energy technology. The demand for lithium-powered energy sources are expected to increasingly grow this decade as today’s governments attempt to meet clean energy goals. The current climate in the lithium market may seem uncertain, but energy transition is gaining global momentum.
Pricing volatility in today’s lithium market in part can be attributed to China, which dominates the lithium-ion battery industry, enjoying government subsidies and incentives. The Canadian Natural Resource Minister announced in February 2024, plans are underway to make massive investments to meet the growing demand of the clean tech revolution as well as reduce regulatory approval and review processes in half.
Foremost Lithium Resource & Technology Ltd (NASDAQ: FMST, CSE: FAT) is a hard-rock lithium exploration company located in Manitoba, Canada drilling for future lithium feedstock.
Click here to learn more on how Foremost plans to lead the electrification revolution.
ON OUR RADAR
CNBC: Jeff Bezos will save over $600 million in taxes by moving to Miami.
NPR: The cost of Cocoa has been grinding upward for over two years. In the past year, it has more than doubled. This month, it broke the all-time record from 1977, the year before Hershey introduced Reese's Pieces.
FB: 44% of Generation Z and 46% of millennials say they are "obsessed with the idea of being rich," compared to 27% of all Americans.
CBO: According to Congressional Budget Office projections, the unemployment rate will rise to 4.4 percent by the fourth quarter of 2024, reflecting the slowdown in economic growth.
MW: Growth stocks are outperforming value stocks by the widest margin on record.
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