ECB Holds Steady, U.S. Jobless Claims Rise, Healthcare Sector Volatility | MarketReader Minute

January 25, 2024

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Below are AI-generated insights on today’s premarket moves, powered by MarketReader technology.

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Thursday, January 25, 2024

The overall market is currently experiencing normal macro volatility.

Some of the largest moves in the market today include:  Ethereum has experienced a large move of -1.5%.

The European Central Bank (ECB) held interest rates steady at record highs, aiming to curb inflation despite recession fears.

Meanwhile, U.S. jobless claims unexpectedly rose by 25,000 to 214,000 and continuing claims increased as well—indicating a potential cooling in the labor market which could affect Federal Reserve policy decisions ahead of their meeting next week.

In Germany, business sentiment deteriorated further with the Ifo Business Climate index dropping to its lowest since May 2020 due to growing pessimism about future expectations and current conditions.

These developments have heightened investor anticipation around central bank actions on both sides of the Atlantic while contributing volatility across global financial markets; traders are now weighing these mixed signals against previous expectations that there may be no change in Fed interest rates come March followed by possible rate cuts later this year if inflation eases as anticipated.

AI-generated summaries of notable premarket ETF moves:

ISHARES RUSSELL 2000 ETF | IWM $196.80 +1.2%
The iShares Russell 2000 ETF ($IWM) has seen a positive price movement of +1.2% since the previous close, potentially influenced by significant macro events such as United States Jobless Claims and Initial Jobless Claims which historically have caused volatility in its price. Technical analysis using pivot points also suggests that breaking above a certain level could indicate bullish sentiment for this small-cap stock index representing US companies.

In market context, other correlated securities like the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) have also experienced positive returns (+0.44%), indicating some relationship between their movements (correlation coefficient: 0.78).

Overall, these factors suggest potential optimism and increased buying interest in small-cap stocks represented by IWM despite concerns about Treasury auctions and uncertainties regarding future rally sustainability.

CONSUMER DISCRETIONARY SELECT SECTOR SPDR FUND | XLY $171.19 -1.0%
The Consumer Discretionary Select Sector SPDR Fund’s price has moved -1.1% since the previous close. This decline could be influenced by negative returns from correlated assets such as ORLY, AMZN, and TSLA, which have contributed to the ETF’s performance. In particular, there is news regarding Amazon-owned Ring’s decision to restrict police access to doorbell camera footage due to privacy concerns. Additionally, market-related updates including BofA Securities’ stock selection opportunities in 2024 and Uber Technologies’ involvement in federal marijuana lobbying may also impact sentiment towards consumer discretionary stocks like those included in this fund.

AI-generated summaries of notable premarket stock moves:

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(Even if you don’t have an account, you can still see real-time summaries of the top 6 most unusual asset moves at the moment)

International Business Machines Corp | IBM $186.30 +7.1%
Information Technology, IT Consulting & Other Services
International Business Machines Corp’s stock price increased by 6.0% since the previous close, driven by several positive factors. Firstly, IBM reported better-than-expected Q4 earnings with higher revenues and EPS growth of 8%. CEO Arvind Krishna highlighted the accelerating demand for AI solutions. Additionally, JPMorgan raised their price target for IBM. The company also unveiled AI Stories with Watsonx to enhance digital fan experiences for the GRAMMY Awards®. Overall, these developments have contributed to International Business Machines Corp outperforming its sector peers and leading in strength within the sector.

Humana Inc | HUM $352.98 -12.4%
Health Care, Managed Health Care
Humana Inc’s stock experienced a significant decline of -13.0% since the previous close due to disappointing fourth-quarter numbers and a dismal outlook. The company reported an adjusted loss per share for Q4, missing estimates by 120%. However, quarterly sales beat expectations. Humana also expects higher Medicare Advantage medical costs from Q4 to persist throughout 2024 in its guidance statement and announced growth in individual Medicare Advantage membership for FY2024. This negative sentiment surrounding earnings performance and future projections has caused the price drop.

Resmed Inc | RMD $188.41 +9.7%
Health Care, Health Care Equipment
ResMed Inc’s stock has risen by 9.7% since the previous close, driven primarily by strong fiscal Q2 earnings and revenue growth that exceeded analysts’ expectations. The company reported higher-than-expected earnings per share of $1.88 and revenues of $1.2 billion, beating estimates significantly.

Furthermore, positive sentiment was reinforced as ASX-listed shares reached near a six-month high following the release of ResMed’s impressive Q2 results. Needham maintained its Buy rating on ResMed and even raised its price target from $180 to $215.

Additionally, investors were likely encouraged by the declaration of a fourth-quarter dividend which contributed to an upward trajectory in share prices for Resmed Inc. These positive developments have allowed Resmed Inc’s stock to outperform its sector peers since the previous close.

Northrop Grumman Corp | NOC $446.20 -3.7%
Industrials, Aerospace & Defense
Northrop Grumman Corp’s price has moved down significantly since the previous close. This could be attributed to their Q4 earnings report, which showed higher-than-expected earnings per share (EPS) and revenues. However, despite surpassing revenue expectations for Q4 23, Northrop Grumman provided lower guidance for FY 2024 compared to analyst estimates. The company expects a range of adjusted EPS below market expectations as well. This news may have contributed to the downward movement in Northrop Grumman Corp’s stock price relative to its sector peers and weakness in the broader sector overall.

UnitedHealth Group Inc | UNH $491.51 -3.9%
Health Care, Managed Health Care
UnitedHealth Group Inc’s price has declined by -3.8% since the previous close. This movement may be influenced by its correlation with Humana Inc, which experienced a larger decline of -13.02%. The two companies have a correlation coefficient of 0.78, indicating some similarity in their price movements.

Factors affecting both UnitedHealth Group and Humana include higher-than-expected inpatient utilization and Medicare Advantage medical costs that are expected to persist throughout 2024. Disappointing fourth-quarter numbers and guidance for future profits falling significantly below expectations have also contributed to the decline in shares for both companies.

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