Here are the most important updates for investors starting their trading day:
1. New Year, New Markets
The markets haven’t had a great start to the new year. On the second trading day of 2024, the Nasdaq Composite dropped by 1.18%, marking one of its worst performances in months. Investors seemed to be selling off tech stocks that did well last year, such as Apple, Nvidia, Tesla, and Meta, all of which experienced losses.
The S&P 500 and the Dow Jones Industrial Average also had slight declines. Additionally, on Wednesday, the 10-year Treasury yield briefly crossed the 4% mark.
2. Waiting on Economy to Evolve
The Federal Reserve has hinted that it’s not ready to reduce interest rates just yet. While they believe rate cuts might happen in 2024, the timing remains uncertain. The minutes from the latest meeting, where the Fed kept the benchmark rate steady between 5.25% and 5.5%, were released on Wednesday.
Members of the meeting anticipate three quarter-percentage-point cuts by the end of 2024, citing a decrease in inflation concerns.
However, the minutes expressed caution, with some members suggesting that rates might need to remain high if the right conditions aren’t met. The release on Wednesday emphasized a high level of uncertainty in the policy path and stated that future decisions would depend on how the economy progresses.
3. Kicking It Up a Gear
General Motors had its best year for selling vehicles since 2019. In 2023, the company sold 2.6 million vehicles, marking a 14.1% increase from 2022. This aligns with the industry’s overall expectations.
However, the sales of GM’s electric vehicles (EVs) were not as impressive. EVs accounted for only 2.9% of the company’s total sales last year, mostly from now-discontinued Chevrolet Bolt models. GM plans to increase its production of EVs in 2024 and is offering $7,500 in incentives for models that no longer qualify for the $7,500 federal tax credits.
4. Changes in Oil Prices
On Wednesday, oil prices went up by over 3% due to ongoing tensions in the Red Sea. The United States issued a warning to Houthi militants in Yemen, backed by Iran, urging them to cease attacks on vessels in the region.
To prevent potential conflict, carriers have redirected over $200 billion in trade away from the Red Sea. Additionally, protests in Libya, as reported by Reuters, led to the shutdown of the Sharara oilfield, which produces 300,000 barrels per day, contributing further to the fluctuations in oil prices.
5. Workforce Reduction at Xerox
Xerox is set to reduce its workforce by 15% in the current quarter. According to a previous SEC filing, the company currently employs 20,500 people, indicating that approximately 3,075 employees will be affected by the layoffs.
Xerox, a prominent digital printing and document management technology company, famous enough for its name to be used as a verb, also announced plans to introduce a new organizational structure and operating model. This includes restructuring its executive team and streamlining its product offerings. Following the announcement, Xerox stock experienced a decline of more than 12% on Wednesday.
The new year began with market challenges, including declines in major indices and heightened uncertainty. General Motors achieved record vehicle sales in 2023, but electric vehicle numbers fell short. Oil prices surged due to geopolitical tensions. Xerox plans a 15% workforce reduction to enhance operations and refocus on digital services.