Here are five things you need to know this morning:
Taking stock: Shall we take stock of the first trading week of the year? The best-performing sectors on the S&P 500 are health care and utilities. The worst-performing sector is tech stocks. It is a near perfect inverse of the performance we saw in 2023. On the TSX, a similar theme is taking hold. Telecoms are neck and neck for first place with energy stocks in 2024 while our tech stocks are now the worst performing sector. This week features the international Consumer Electronics Show in Las Vegas, and we will watch for how that moves tech stocks. Generally, this week is a slow build to a busy finish. We get U.S. inflation Thursday and U.S. bank earnings Friday with JP Morgan, Citi, Wells Fargo and Bank of America all out in the morning. This morning, futures are firmer except for the Dow (more on that below).
The new guy: Shares of Dow component Boeing are under big pressure, presenting an immediate challenge for the CEO early in the new year. On Friday, passengers on an Alaska Airlines had to make an emergency landing after a panel on the Boeing 737 Max 9 ripped off 16,000 feet in the air. Accounts of what happened from passengers are terrifying. Stories of a shirt being ripped off a passenger from the forceful exit of air when the door blew off. Miraculously, everyone survived and the plane returned to the airport within 30 minutes of this happening. The recovery for Boeing is unlikely to be so swift. As of now, regulators have grounded 171 Boeing jets. It is not just a Boeing problem. Part supplier Spirit AeroSystems has also plunged pre-market. Airline stocks are generally holding in, with the exception of Alaska Airlines, which is down about four per cent. Boeing, of course, is still haunted by the two fatal 737 Max crashes in 2019 and 2018. Now, Boeing CEO Dave Calhoun is tasked with shoring up confidence once again. While the stock went on to hit all-time highs following the two crashes, it has not reclaimed those levels since the pandemic sell-off.
Triple threat: Shares of Lululemon, Abercrombie & Fitch and Crocs are in focus after all three boosted their financial forecasts. Now Lululemon is actually down a little in the pre-market, as the boosted forecast is basically where analysts were already. Abercrombie is riding that that 90s fashion comeback, boosting its sales outlook for the quarter and the year. Investors are yawning at that one too, even as its women’s business is poised to deliver record fourth-quarter results. And then there is Crocs. A shoe that has always mystified me, apparently others can’t get enough of it. The stock is rallying after its better-than-expected holiday sales season.
Upgrades: Today’s upgrades feature one for Barrick Gold and one for Algonquin Power. Bernstein is upgrading Barrick to outperform, saying it could do well as rates plateau in the U.S. and eventually move lower. Falling rates are supportive of gold prices, says the analyst. Algonquin Power is being touted at BMO in an upgrade that says the downside is limited. The analyst is confident the company can monetize its renewables portfolio. It’s doubling down on its call, putting Algonquin on its Top 5 Best Idea Roster.
Downgrades: The Canadian rails could limit upside this morning after TD downgraded both Canadian National and Canadian Pacific Kansas City. The analyst says the first half of the year is going to be challenged and that stocks are fully valued here.
This article includes a correction. A previous version inaccurately said Boeing's CEO was five days into the job.