Stocks Recover Amid Mergers and Tech Surges, While Boeing Struggles

The market is recovering from last week and earnings season approaches. Meanwhile, investors await an SEC ruling on crypto ETFs.

• Biotech mergers and tech giants' resilience have propelled a rebound in the markets.
• Boeing faces challenges, while crypto markets await the SEC's bitcoin ETF decision's impact.
• Declines in interest rates are influencing the housing market. Earnings season and a CPI report loom.

Following significant market fluctuations, stocks have managed to recoup substantial losses incurred last week. The S&P 500 trails by less than 0.5% for the year, and the Nasdaq Composite has mitigated its decline to just 1%. This resurgence stems from a blend of last year's leading stocks and a flurry of biotech merger announcements shaping the beginning of 2024.

The biotech and pharmaceutical sectors witnessed increased merger activity in 2023, a trend that appears to be continuing this year. The trend includes Novartis' discussions to acquire Cytokinetics, the manufacturer of a promising cardiovascular drug, and GSK's $1.4 billion purchase of Aiolos Bio to fortify its respiratory care portfolio. Notably, the S&P 500 biotech exchange-traded fund has surged approximately 4.5% year-to-date.

In the tech realm, Nvidia (NVDA) remains on an upward trajectory in 2024, marking an 8% surge this week following a 6% gain on Monday and an additional 2% uptick yesterday. Amazon (AMZN) shares have surged by 9% since last Thursday, with a 1.5% rise yesterday. The company also announced a reduction of 500 jobs (about 35% of its Twitch streaming-service workforce), following 400 job cuts in 2023. Google ( GOOGL) experienced a 1.5% uptick yesterday, tallying a 4% increase since Friday, while Juniper Networks (JNPR) witnessed a staggering 22% surge after Hewlett Packard Enterprise unveiled its $13 billion acquisition deal.

Trouble in the air at Boeing

Boeing faced considerable pressure this year after a mid-air incident resulted in the detachment of part of a plane's fuselage, leading to the grounding of all 737 Max 9 planes in the U.S. for inspection. The scrutiny uncovered additional issues, causing prolonged grounding and resulting in a 13% decline in Boeing's stock value.

Meanwhile, today's spotlight shines on crypto products as the Securities and Exchange Commission (SEC) gears up to announce its decision on allowing a bitcoin exchange-traded fund (ETF). Yesterday's hacking incident involving the SEC's X account on Twitter initially claimed an ETF approval, causing bitcoin prices to soar to $48,000. SEC Chairman Gary Gensler's clarification caused a dip, with premarket trading showing a 3% decrease below $45,000.

Capitol Hill faces challenges despite a deal on 2024 spending, with specifics awaiting resolution before the Jan. 19 deadline. The likelihood of Congress passing a continuing resolution to extend the deadline persists, albeit met with some resistance in the House.

Interest rates keep going down

Interest rates, a pivotal theme in the past year, have steadily declined since October, leading to a notable drop in mortgage rates. Refinancing surged by 19% from last week and 30% from last year. The impact of falling rates on housing market dynamics and homeowners' tenure decisions poses a crucial question. Additionally, the earnings report from KB Homes (KBH) is on the horizon.

Earnings updates from Taiwan Semiconductor (TSM) signal an earnings beat, coupled with a mixed outlook for the year, maintaining relative stability in premarket trading.

Looking ahead, attention hones in on the impending decision on a bitcoin ETF, while tomorrow brings anticipation for the consumer price index report. Friday marks the inception of an active earnings season with JPMorgan Chase (JPM) and Blackrock (BLK) set to report. Amid these developments, maintaining a focus on investment plans and long-term objectives remains prudent.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan 

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.