After the S&P 500 broke a nine-week win streak, The Daily Breakdown refocuses on this week’s key events: A Bitcoin ETF, inflation and earnings.
Monday’s TLDR
- Investors are watching for Bitcoin ETF approval this week.
- The CPI report is due up on Thursday.
- FAA grounds Boeing’s 737 Max 9 aircraft.
What’s happening?
The S&P 500 snapped a four-day losing streak when it eked out a 0.2% gain on Friday. It wasn’t the strongest showing by the bulls. But the recent pullback isn’t completely out of left field after stocks rode a nine-week win streak into 2024.
Let’s keep some perspective.
The S&P 500 has enjoyed a 16.2% rally off the October low to the recent high, and has now pulled back 2%. While the dips always feel sudden and severe, we have to remember how far the markets have come in a short amount of time.
We have a busy week on tap, too.
The SEC’s Bitcoin ETF decision could come later this week, the monthly inflation report is due out on Thursday morning, and a handful of US banks report earnings on Friday morning.
The setup — XLV ETF
Just four sessions into 2024 and it feels a little too early to look at year-to-date performances. Still, healthcare has had an impressive start, with the XLV ETF — a well-known fund of healthcare stocks — up 2% so far this year.
In fact, the recent rally in the XLV was enough to trigger a breakout over the $135 to $136 area, a zone that had been resistance since December 2022.
The ETF tagged $140 — a one-year high — and pulled back a bit. Will it pull back to the $135 to $136 breakout area?
I don’t know. But if it does dip to that zone and if this area acts as support, it could be an opportunity for bulls who think healthcare stocks can outperform down the stretch.
For what it’s worth, the XLV is currently riding an eight-week win streak. Its top holdings include UnitedHealth Group, Eli Lilly, Johnson & Johnson, Merck, and AbbVie.
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What Wall Street is watching
Bitcoin: Investment firms and the SEC discussed final amendments to filings for spot Bitcoin ETFs on Friday. Firms are now submitting their S-1s this morning, with a final decision that could come as soon as this week.
BA: Following a mid-flight incident where a panel blew off an Alaska Airlines plane, the FAA has grounded over 170 Boeing 737 Max 9 aircraft for inspections. Alaska Airlines, Turkish Airlines and United Airlines have also grounded their fleets of this aircraft model.
TSLA: Tesla is initiating a recall of over 1.6 million vehicles in China due to concerns with its Autopilot feature and locks. Meanwhile, an article published by the WSJ on Saturday alleges illegal drug use by Tesla CEO Elon Musk. Investors face uncertainty about how this news might impact Tesla’s stock performance as trading resumes.
DASH: Shares of DoorDash are on the move Monday morning, rallying about 3.5% on reports from the Financial Times that the firm is looking for opportunities outside of restaurant delivery. According to CEO Tony Xu, the company is also looking for opportunities outside the US.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.