Market Insights January 2023

2023 MARKET INSIGHTS

Monthly Market Roundup | U.S. Equities

Big Movers In January 2023

january-warner

Warner Bros. Discovery (WBD): Investors and analysts saw turnaround potential after the media company lost more than half its value in 2022.

northrop-january2023

Northrop Grumman (NOC): Expectations of reduced government spending weighed on the defense contractor.

tesla-january2023

Tesla (TSLA): The electric-car maker rebounded from its biggest monthly drop ever after reporting strong orders and saying production could reach 2 million units this year.

enphase-january2023

Enphase Energy (ENPH): Investors took profits in the solar-energy stock after a 45% rally last year. There were also uncertainties about the strength of residential demand.

western-digital-january2023

Western Digital (WDC): The data-storage company rose on reports of a potential merger. It additionally benefited from strong results at rival Seagate Technology (STX).

nrg-january2023

NRG Energy (NRG): The drug maker fell as investors shunned health-care stocks and looked for Covid products to weaken.

Key Economic Events Last Month

TSG - Green icon

Jobs report shows potential for soft landing

Job growth was higher than expected in December and unemployment was lower than projected. Wages still rose less than feared, which suggests inflation may be cooling without a recession. (6/1)

TSG - Green icon

Housing at a crossroads?

December’s consumer price index (CPI) fell 0.1%, versus estimates for an unchanged reading. It was the third straight month below estimates and the biggest drop since August 2020. (12/1)

TSG - Green icon

Consumers brighter as prices ease

January’s consumer sentiment index rose more than expected to a nine-month high. Assessments of the labor market and inflation expectations improved. (13/1)

TSG - Grey icon

GDP Strong Amid Signs of Weakening

Gross domestic product rose 2.9% in the fourth quarter, beating the 2.6% forecast. Some economists said higher inventories and lower consumer spending may indicate a slowdown. (26/1)

Key Futures Contracts

Product Name Current Month Expiration Next Month 1-Mon%
S&P 500 E-Mini (@ES) ESH23(March) 17 Mar 2023 ESH23(June) +5.9%
S&P 500 E-Mini Micro (@MES) MESH23 (March) 17 Mar 2023 MESH23 (June) +5.9%
Nasdaq-100 E-Mini (@NQ) NQH23 (March) 17 Mar 2023 NQH23 (June) +10%
Nasdaq-100 E-Mini Micro (@MNQ) MNQH23 (March) 17 Mar 2023 MNQH23 (June) +10%
Dow Jones E-Mini (@YM) YMH23 (March) 17 Mar 2023 YMH23 (June) +2.6%
Dow Jones E-Mini (@MYM) MYMH23 (March) 17 Mar 2023 MYMM23 (June) +2.6%

* Micro contracts are one-tenth the size of standard e-minis.

Events to Watch This Month

Date Event WhattoWatch
Wed, 1-Feb Federal Reserve meeting & press conference Rates are expected to rise 25 basis points. What will Jerome Powell signal about future policy?
Fri, 3-Feb Non-farm payrolls Will unemployment and wage growth give the Fed reason to pause rate hikes?
Thu, 14-Feb Inflation report The consumer price index one hour before U.S. markets open could shape rate expectations.
Wed, 15-Feb Retail sales, housing index Separate reports show retail sales growth in January and homebuilder sentiment in February.
Wed, 22-Feb Fed minutes Minutes from the central bank’s 1 Feb. meeting could provide clues on future policy.

Sector Watch

consumer-discretionnary-jan2023
communications-jan2023
realestate-jan2023
technology-december
materials-jan2023
financials-jan2023
SP-jan2023
industrials-jan2023
energy-jan2023
consumerstaples-jan2023
healthcare-jan2023
utilities-december

Consumer discretionaries rebounded as investors returned to growth stocks like Tesla and travel companies like Carnival.

Communication stocks rallied as investors value-hunted traditional media stocks and Netflix’s subscriber growth surprised to the upside.

Noteworthy Calls & Predictions

6-January:

Apollo Global Management Chief Economist Torsten Slok thinks a soft landing is underway. He cited declining inflation and continued strength in the labor market. The result could be profits declining less than feared, potentially lifting stocks.

Stocks
7-January:

Bloomberg reports that strategists are getting more optimistic. The article quoted David Kelly of JPMorgan Asset Management and Ed Yardeni of Yardeni Research, who see rate hikes ending as inflation slows. They also cited extreme levels of pessimism.

Stocks
9-January:

Professor Campbell Harvey, who discovered the link between the yield curve and recessions, said the indicator could be wrong now. “All models are simplifications of reality,” he said, noting other data don’t confirm a hard landing. He added the Fed could trigger a recession by continuing to “overshoot” with rate hikes.

Economy
11-January:

The PC market could improve in late 2023, Reuters reported, citing IDC and Canalys. The researchers cited businesses upgrades and the looming end of Windows 10 support. PC makers and semiconductor companies could potentially benefit, they said.

Technology
19-January:

Stocks may climb despite lower earnings, said LPL Chief Equity Strategy Jeffrey Buchbinder. He noted that indexes typically drop before profits decline because the market is forward looking. The same can be true as prices bottom, Buchbinder said, forecasting a “solidly positive year.”

Stocks

Disclosure

Monthly Market Roundup brings you ideas about potential trading opportunities, key economic events and education that is designed to help you become a better self-directed investor. No offer or solicitation to buy or sell securities, securities derivatives or futures products of any kind, or any type of trading or investment advice, recommendation, or strategy, is made, given or in any manner endorsed by any TradeStation affiliate. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. Investments and trading involve risks, including possible loss of principal. You should, therefore, carefully consider whether such trading is suitable for your financial condition.

The material is provided by TradeStation International Ltd, authorized and regulated by the FCA (554431) in the UK and acting as an introducing broker to affiliated and non-affiliated brokers such as TradeStation Securities, Inc., and Interactive Brokers (U.K.) Ltd. The firm does not provide investment advice or trading recommendations.