Dow jumps more than 200 points for ninth winning day, S&P 500 nears record: Live updates

Fortinet’s recent underperformance creates a buying opportunity, according to Bank of America.

Analyst Tal Liani reiterated a buy rating on the cybersecurity stock, saying Fortinet is trading “at the highest valuation discount” to its peers. Fortinet may be up roughly 17% in 2023, but its competitors CrowdStrike, Palo Alto and Zscaler have all more than doubled this year.

Fortinet will continue to face some weakness in the next two quarters, said Liani, who lowered his 2024 estimates on the company. But the analyst expects a rebound for Fortinet is in sight next year.

“We believe that the stock will recover once the company passes through the current negative growth cycle and begins to show signs of growth reacceleration,” Liani wrote. “We reiterate our Buy rating and $65 PO and highlight it as one of key stock picks for 2024.”

The $65 price objective is roughly 15% above where shares closed Monday. The stock was up 2% in afternoon trading.

— Sarah Min, Michael Bloom

Oil prices on Tuesday rose more than 1% as traders worry about disruption to shipping through the Red Sea as militants based in Yemen attack vessels.

The West Texas Intermediate contract for January rose 97 cents, or 1.34%, to settle at $73.44 a barrel. The Brent contract for February gained $1.28, or 1.64%, to settle at $79.23 a barrel.

BP announced on Monday that it was pausing shipping through the Suez Canal over safety concerns as Houthi militants attack vessels. The U.S. is expanding a multinational maritime force to protect vessels from attack.

— Spencer Kimball

After notching a record high last week, the Dow Jones Industrial Average is on pace to close higher for its 9th straight session.

This would mark the longest win streak for the index since July, and just the 10th positive streak of 9 or more sessions since 1990. During its current streak, the Dow has so far risen more than 1,400 points, or around 4%.

Six of the index’s 30 stocks have risen more than 10% during the streak, while just four stocks are down.

Goldman Sachs and Caterpillar, respectively up 11.5% and 13.6%, have led the Dow’s current rally. Together, the two stocks have made up more than one-third of the index’s gains.

On the other hand, UnitedHealth‘s 4.5% decline has contributed to it being the biggest loser for the price-weighted index, since the insurance company is currently the Dow’s highest-priced stock.

— Lisa Kailai Han, Robert Hum

The top 10 largest stocks made up nearly 70% of the S&P 500 as of Dec. 15, which would make this the second-highest total after a positive year in more than three decades, according to Strategas.

ETF strategist Todd Sohn said in a note to clients on Tuesday that the 10 largest stocks account for 69.5% of the S&P 500. Since 1991, the only comparable year that ended with a higher concentration was 2007, at nearly 79%.

That year is sure to be an alarm bell for some investors, but the good news is that the concentration has been diluted in recent weeks as the market rally appears to be broadening out.

“As equity markets rally, the contribution of the 10 largest S&P 500 weights to YTD returns has dropped to under 70%. That’s still historically elevated, but a significant decline from heavy skews a few months ago,” the note said.

— Jesse Pound

Check out the companies making headlines in midday trading.

• Chewy — Shares popped 7.8% after Jefferies initiated coverage of the pet e-commerce company with a buy rating. Jefferies said Chewy should benefit from increasing pet e-commerce penetration and premiumization of pet products.
• Affirm — Affirm’s stock jumped 15% after the company announced an expansion of its “buy now, pay later” partnership with Walmart to over 4,500 of the retailer’s self-checkout kiosks.
• Nikola — Shares of the electric vehicle company rebounded on Tuesday, jumping 6.8% a day after the company’s founder Trevor Milton was sentenced to four years in prison for wire and securities fraud. The stock had fallen more than 9% on Monday.
• Kenvue — Shares of consumer health company Kenvue, which was spun from Johnson & Johnson earlier this year, gained 3.5% a day after it received a favorable court ruling in a product-liability case related to Tylenol. JPMorgan wrote in a Tuesday note that the ruling “effectively collapses the plaintiffs’ case,” and that shares would trade up and potentially re-rate after the ruling.

For the full list, read here.

— Pia Singh

Small cap stocks outperformed Tuesday as traders bet the assets can rebound next year after their underperformance this year. The Russell 2000 is up by 1.5%, and up by more than 11% this month. It’s advanced 14% this year.

By comparison, the S&P 500 has gained 4% in December, and is higher by more than 23% this year.

— Sarah Min

The massive amount of cash moving in to the SPDR S&P 500 Trust (SPY) could be a signal the investor behavior is changing, according to BTIG technical strategist Jonathan Krinsky.

The ETF reported inflows of more than $20 billion on Monday, according to FactSet, and some data sources suggest it will report another sizeable investment for Tuesday. Krinsky said in a note to clients that there may be a connection between the stock market flirting with new record highs and the moves.

“While we can’t say there is a clear correlation between significant inflows and performance, that size is notable and perhaps speaks to a ‘get me in’ mentality?,” the note said.

Not all stock index funds are seeing the same demand, however. For example, the iShares Core S&P 500 ETF (IVV) reported nearly $9 billion in outflows on Monday.

— Jesse Pound

Mega-cap tech names such as Meta Platforms and Amazon were among the 38 S&P 500 stocks reaching fresh highs on Tuesday. Shares of Meta Platforms was trading at levels not seen since September 2021, while shares of Amazon was at levels not seen since April 2022.

Dow components American Express and Salesforce also reached new 52-week highs.

Here are some of the names.

— Sarah Min, Chris Hayes

The KPOP and Korean Entertainment ETF (KPOP) outperformed Tuesday, rising 2% after record label conglomerate JYP Entertainment announced a new boy band NEXZ.

JYP Entertainment shares gained about 8%, on pace for its best day since July 25, 2023 when the stock gained 9.38%.

— Sarah Min, Gina Francolla

Shares of Affirm Holdings popped 14.8% after the buy-now-pay-later services provider expanded its partnership with Walmart on Tuesday. Affirm said it’s bringing its pay-over-time options to self-checkout kiosks at more than 4,500 Walmart stores in the U.S, and that consumers can also pay with Affirm online and in the Walmart app.

Shares climbed to $50.40. The stock has gained about 420% this year, but is trading significantly lower than highs reached in November 2021.

Buy-now-pay-later services have soared in popularity this year, with the number of online purchases using the plan in the week heading into Black Friday rising 72% from the same period last year, according to Adobe Analytics. That increased enthusiasm helped drive Affirm Holdings to new highs this quarter, a reversal from its plunge last year.

– Pia Singh

U.S.-listed shares of UBS shares popped nearly 4% on Tuesday after an activist investor announced an investment in the Swiss bank.

Cevian Capital confirmed it built out a stake of 1.2 billion euros in the bank. That amounts to approximately 1.3% in ownership for the activist investor.

The investment was reported earlier by the Financial Times.

— Alex Harring

Solar stocks outperformed Tuesday as the outlook for renewable energy companies brightened after the Federal Reserve signaled three rate cuts next year. The Invesco Solar ETF (TAN) popped nearly 4% in midday trading, even as the ETF has lost more than 27% year to date.

Enphase Energy and First Solar were the greatest advancers in the S&P 500, up by about 6% and 5%, respectively.

Shares of Sunrun and Sunnova surged 13% and 7%, respectively, after Piper Sandler upgraded the two solar companies to overweight from neutral. The Wall Street firm said the two solar companies can get a boost from a likely easing from the Federal Reserve next year.

— Sarah Min

The S&P 500 has a higher likelihood of rallying than retreating if it reaches an all-time high, according to Sam Stovall, chief investment strategist at CFRA Research.

Stovall said the broad index is more likely to gain another 5% than pull back by the same amount if it can hit a new high. His hypothesis comes as traders have watched the benchmark index rise near levels last seen in early 2022.

“Essentially, we have seen every move above that prior bear market level to be positive,” he said on CNBC’s “Squawk on the Street.” “It’s not as if we then just turned right around immediately and ended up selling off.”

The S&P 500 is on track to end 2023 nearly 24% higher. Stovall expects the index to end 2024 at 4,940, which implies a 4.2% gain from Monday’s closing level.

That target was set with the fact that 5,000 tends to be a level of resistance, he said. Headwinds on the market also restrained his expectations.

— Alex Harring

The semiconductor recovery is looking more encouraging, according to KeyBanc Capital Markets.

“While aggregative inventories remain elevated, we believe the progress in inventory destocking puts us on pace to normalize in 1H24,” John Vinh wrote in a Monday note.

“We continue to see a ‘soft landing’ outcome for semiconductors more broadly and see favorable risk/reward for our coverage universe,” Vinh added.

Semiconductor stocks that are exposed to the growth in artificial intelligence such as Nvidia, Marvell Technology and Micron Technology would be key plays for investors.

— Sarah Min, Michael Bloom

Investors are the most optimistic they’ve been in more than a year in anticipation of a soft landing in 2024, Bank of America said.

“December FMS investor sentiment improved to its least bearish level since Jan’22,” read a Tuesday note from the firm’s Michael Hartnett.

The Wall Street firm found in a recent survey more than half of fund managers expect weaker global growth ahead. But more than seven out of 10 investors anticipate a “goldilocks” scenario.

Accordingly, investors are changing up their asset allocations. They remain exposed to the Magnificent Seven, but traders have the lowest overweight to cash since April 2021, the survey found. They’re also increasingly pivoting into banks and small-caps.

— Sarah Min, Michael Bloom

A massive move of cash into a popular passive fund could be a sign that investors are buying into the latest stock rally.

The SPDR S&P 500 ETF Trust (SPY) reported a net inflow of $20.8 billion on Monday, according to FactSet. It is unclear how many different sources contributed to that amount.

The move is a change from what had been relatively tepid demand for large passive funds this year, as money market funds and active ETFs have garnered unusually large amounts of cash. Monday’s influx more than doubled SPY’s net inflows for the year, according to FactSet.

To be sure, large one-day flows into an ETF can sometimes prove to be anomalies, especially at the end of financial quarters and in funds that are used in model portfolios, like SPY.

For example, SPY had an inflow of more than $7 billion on one day in late September, but then over the next two weeks suffered net outflows.

— Jesse Pound

Housing starts rose to a seasonally adjusted annual rate of 1.56 million units in November, more than the 1.36 million anticipated by economists polled by Dow Jones. It was also the highest number since May when there were 1.583 million starts.

Building permits came in at 1.46 million, slightly lower than the consensus estimate of 1.48 million.

— Sarah Min, Gina Francolla

These are the stocks moving the most in premarket trading:

• Amgen — The stock added 1.4% after BMO Capital Markets upgraded the biopharma firm to an outperform rating.
• Sunnova — Shares of the residential and commercial solar company jumped 5.1% after Piper Sandler upgraded the solar name to overweight from neutral, saying Sunnova could benefit from the Federal Reserve’s “pivot” towards rate cuts.
• Arvinas — The pharmaceutical company added more than 5% following an upgrade to overweight from Wells Fargo.

Read the full list of stocks moving here.

— Lisa Kailai Han

Ark Invest’s Cathie Wood scooped up shares of Pinterest Monday despite a 55% rally this year already.

Wood snapped up 161,110 shares of social media platform for her flagship ARK Innovation ETF, as well as 33,523 shares for ARK Next Generation Internet ETF and another 11,784 shares for Ark Fintech Innovation ETF, according to Ark Invest’s daily trade updates.

Those purchases, combined, were worth $7.8 million, based on Pinterest’s Monday closing price of $37.7.

— Yun Li

Stocks are doing well right now, as the major averages ride a seven-week winning streak. But Marko Kolanovic of JPMorgan sees trouble ahead.

“We remain cautious on risky assets and the broader macro outlook due to the interest rate shock (over the past 18 months) that should negatively impact economic activity, fading consumer strength,” Kolanovic, the bank’s co-head of global research, wrote Monday.

“It has become consensus that a recession will be avoided, while equity multiples appear rich, credit spreads are tight, and volatility is unusually low,” he added. “Thus, even in an optimistic scenario, we believe upside is limited for risky assets, favoring cash and bonds over equities from a risk-reward standpoint.”

— Fred Imbert

Japan’s central bank left its ultra-loose monetary policy unchanged at its final policy meeting this year in light of “extremely high uncertainties,” setting the stage for any long-awaited unwinding in the new year.

The Bank of Japan voted unanimously to hold interest rates at -0.1%, and stuck to its yield curve policy that references the 1% upper bound for 10-year Japanese government bonds as its limit.

The Japanese yen reversed gains after the BOJ decision and traded at about 143.5 against the greenback in midday trade. Yields on the 10-year Japanese government bonds were largely unchanged.

Central bank governor Kazuo Ueda is due to meet the press in Tokyo later Tuesday, where he may offer forward guidance on the BOJ’s future path of action.

For more, please read the full story.

— Clement Tan

Japan’s Nippon Steel fell 5.8% to 3,052 yen in the first hour of trading after it agreed to buy U.S. Steel for $14.9 billion in cash late Monday.

Nippon Steel is buying U.S. Steel for $55 per share, representing a nearly 40% premium from U.S. Steel’s last closing price of $39.33 on Friday.

The acquisition of U.S. Steel will allow Nippon Steel to move toward 100 million metric tons of global crude steel capacity.

The Nikkei 225 index was flat, while the broader Topix was 0.3% lower as investors awaited the Bank of Japan’s decision on interest rates later in the day.

— Shreyashi Sanyal

The Japanese yen strengthened against the dollar, trading within the 142 range. It is up for a third straight day.

Investors are gearing up for the Bank of Japan’s final rate decision of the year, where the central bank is expected to stick with its negative interest rate policy, according to a Reuters poll of economists.

The BOJ’s stance on its yield curve control policy will also be closely watched.

“There is no immediate urgency for the Bank of Japan (BOJ) to change its accommodative stance, but our base‑case scenario is that it will terminate the current negative interest rate policy in April 2024 to coincide with the annual wage negotiations,” Aadish Kumar, international economist at T. Rowe Price wrote in a client note.

“The other key decision facing the Bank of Japan is when—and how—to remove its yield curve control (YCC) policy. While this could happen as early as December this year, the YCC policy has already been gradually winding down, with the parameters of the 10-year yield cap being loosened toward the point of becoming irrelevant,” Kumar added.

Japan’s Nikkei 225 was headed for a flat open, with the futures contract in Chicago at 32,810 and its counterpart in Osaka at 32,740 against the index’s last close of 32,758.98.

— Shreyashi Sanyal

Here’s where the major averages stand as 2023 near a close:

Dow Jones Industrial Average:

• Up 3.8% for December
• Hit a new high during Monday’s session
• Up 12.6% for the year

S&P 500:

• Up 3.8% in December
• Up 23.5% in 2023

Nasdaq Composite:

• Up 4.8% for the month
• Up 42.4% for the year and on pace for best yearly performance since 2020

— Samantha Subin, Chris Hayes