Aurelia Butler

(Reuters) – U.S. chip stocks added to a string of losses on Wednesday, with Wall Street’s main semiconductor benchmark tumbling from record highs following its strongest year since 2009, when the sector bounced back after the financial crisis.Drops of over 2% in Advanced Micro Devices (NASDAQ:AMD), Qualcomm (NASDAQ:QCOM) and Broadcom (NASDAQ:AVGO) weighed most on the PHLX semiconductor index, which was down 2.1%. The chip index has now declined almost 7% since reaching a record high close on Dec. 27.This week’s drop in semiconductor stocks has tracked a broad Wall Street decline as investors await the Federal Reserve’s December meeting minutes due later on Wednesday for clues on its interest rate path.Fueled by optimism about artificial intelligence and more recently by expectations the Fed will cut interest rates this year, the PHLX surged 65% in 2023, its strongest performance since 2009. That compares to annual gains of 43% and 24%, respectively, for the Nasdaq and S&P 500.Chip stocks have also benefited from bets that a downturn in global demand last year that saw memory chip makers cut production has largely bottomed out. Nvidia (NASDAQ:NVDA), viewed as the top provider of AI-related chips, saw its stock market value more than triple in 2023 to $1.2 trillion, making it Wall Street’s fifth most valuable company. It dipped almost 1% on Wednesday.In a client note, BofA Global Research analyst Vivek Arya recommended exposure to cloud computing and cars through stocks including Nvidia, Marvell (NASDAQ:MRVL) Technology, NXP Semiconductors (NASDAQ:NXPI) and ON Semiconductor (NASDAQ:ON). Arya also recommended stocks including KLA Corp and Arm Holdings (NASDAQ:ARM) for exposure to the increasing complexity of chip designs.In another note, Wells Fargo analyst Joe Quatrochi said he expects a muted recovery for chip equipment sellers in 2024, and pointed to KLA and Applied Materials (NASDAQ:AMAT) as top picks in that industry. More

The loss will be covered by the insurance, the company said.The company is currently assessing the impact of the loss of the aircraft on the consolidated financial performance forecast ending March 2024. JAL also said it will disclose any necessary information immediately as they arise.All 379 people aboard the JAL airliner managed to evacuate the burning plane after the collision with the Coast Guard aircraft at Tokyo’s Haneda airport. Five of six crew on the smaller aircraft were killed in the crash.($1 = 143.1100 yen) More

(Reuters) – U.S. corporate borrowers are raising nearly $16 billion in high-grade rated bonds on Wednesday, adding to a $29 billion issuance binge on Tuesday, as companies looked to grab strong investor demand ahead of economic data releases.Among the issuers was Berkshire Hathaway-owned utility Pacificorp, which raised $3.8 billion in bonds that will be used to repay debt and fund settlement claims related to wildfires in Oregon and Northern California.Other Wednesday deals include $2.5 billion in notes sold by French bank Credit Agricole (OTC:CRARY) and another $2.5 billion by the financing arm of automaker Hyundai (OTC:HYMTF).”Companies are taking advantage of the ‘January effect’ as investors start to deploy fresh investment capital in the new year after the seasonally quiet back half of December,” said Scott Schulte, head of the investment-grade debt syndicate desk at Barclays.”The push to get deals done early in the week is also motivated by the notion that the meaningful year-end decline in Treasury yields was arguably overdone and key economic data releases later this week risk showing an inflationary surprise,” he added.Wednesday’s primary issuance follows a strong Tuesday performance. Sixteen borrowers sold $29.3 billion in bonds, the most since Labor Day last September and the second-best start to a year behind 2023, according to a Wednesday report by BMO Capital Markets.So far, investor demand has been strong for the new bonds. On Tuesday, the bonds sold were 2.83 times oversubscribed, according to Informa Global Markets. The busy start to the New Year comes even as high-grade bond spreads widened slightly this week, according to the ICE BofA U.S. Corporate Option-Adjusted Spread Index.Analysts and investors have mixed outlooks for the U.S. economy. Expected Federal Reserve interest rate cuts have some optimistic the economy is set for a “Goldilocks” soft landing, while others see a mild recession in the cards.Regardless, investors are buying high-grade bonds in earnest, aiming to lock in yields that may not be available if the Federal Reserve starts to cut U.S. rates later this year.”What is not a possibility but rather a certainty, in our view, is that yields at multi-decade highs leads to buying of HG credit day in and day out,” JPMorgan analysts wrote in their 2024 outlook last month.This week has seen $45.2 billion in high-grade corporate bond issuance so far, which BMO said could go higher as borrowers previously on the sidelines weigh coming to the market now. More

“This agreement reflects changed economic circumstances on an industry-wide scale and repositions an already mature project to continue development in anticipation of new offtake opportunities,” Equinor said in a statement on Wednesday, in an apparent reference to a new offshore wind solicitation launched by New York in November.The solicitation allows companies to exit old contracts and re-offer projects at higher prices. The winners of an expedited solicitation for offshore wind will be announced in February.An Equinor spokesperson declined to comment on the bid strategy for the 1,260-megawatt (MW) Empire Wind 2 project, but said it was “carefully assessing” the solicitation and was “encouraged by the state’s commitment to offshore wind.” The power sale agreement for the 816-MW Empire Wind 1 remains in place, the spokesperson added. One megawatt of offshore wind can power around 500 U.S. homes.The offshore wind industry is expected to play a major role in helping U.S. President Joe Biden and several states, including New York, meet their goals to decarbonize the power grid and combat climate change.But progress slowed in 2023 after offshore developers canceled contracts to sell power in Massachusetts, Connecticut and New Jersey, and threatened to cancel agreements in other states, as soaring inflation, interest rate hikes and supply chain problems increased project costs.New York accelerated its solicitation in October after several developers, including Orsted (CSE:ORSTED), the world’s biggest offshore wind company, BP and Equinor, threatened to cancel contracts to sell power that were awarded in 2019 and 2021 before the Federal Reserve started hiking interest rates in March 2022 to fight soaring inflation.”Empire Wind 2 has been ‘at risk’ since the project developers made clear in their June 2023 petition that they would not move forward under the current contract,” said Timothy Fox, managing director at ClearView Energy Partners.New York’s first offshore wind farm, Orsted’s 132-MW South Fork, provided its first power in December.In Massachusetts, Avangrid (NYSE:AGR) and Copenhagen Infrastructure Partners said on Wednesday their 806-MW Vineyard Wind 1 project produced first power for the New England grid.Avangrid is majority-owned by Spanish energy company Iberdrola (OTC:IBDRY). More

The early 2024 shake out continued on Wall Street, after having spilled over into Asian trade on Wednesday, and marks a potential headwind for Japanese shares when they reopen on Thursday. The Nikkei rose 28% in 2023, biggest yearly gain in a decade, ending it less than 1.0% shy of a 33-year high set in November. Tokyo markets have been shut for a public holiday and will reopen Thursday. But other Asian stock markets extended a global sell-off on Wednesday, while their currencies mainly fell against the dollar. MSCI’s broadest index of Asia-Pacific shares outside Japan was down almost 1.5% after a 1.0% drop on Tuesday in a sluggish start to 2024. The index rose 4.6% in 2023.Data wise, there is nothing big on the docket until Friday’s U.S. payrolls number. Wednesday’s U.S. release of the minutes from the December Federal Open Market Committee meeting barely moved the markets. It looks unlikely to have any spill over into Thursday’s trade, confirming that policymakers were on the cusp of easing this year, and saw the battle against runaway inflation as all but won. “While acknowledging inflation pressures have diminished, they still have to move more carefully to ensure orchestrate the soft-landing that everyone has bought into,” Charlie Ripley, Senior Investment Strategist for Allianz (ETR:ALVG) Investment Management in Minneapolis, said in a client note. CPI data next week will show whether they are on base. But for percolating market incentives, the mid-month start of U.S. Q4 earnings release period could help determine whether the S&P 500 takes a run at setting a record high it fell just short of marking last week. Fourth quarter S&P 500 earnings are forecast to rise 5.2%, which is lower than the 11% growth estimate from Oct. 1, according to LSEG data. For 2024 year-over-year earnings are expected to rise 11.1%.The S&P 500 was down 0.6% in late afternoon trade and the Nasdaq was off more than 1.0%, with big tech and chip stocks leading the way. The dollar rose to a two-week high against the yen and ended up about 0.9%. Versus the yuan, it rose to its highest price since Dec. 13. Here are key developments that could provide more direction to markets on Thursday:- US ADP National Employment (December) More

Total bankruptcy filings – encompassing commercial and personal insolvencies – rose to 445,186 last year from 378,390 in 2022, according to data from bankruptcy data provider Epiq AACER.Commercial Chapter 11 business reorganization filings shot up by 72% to 6,569 from 3,819 the year before, the report said. Consumer filings rose 18% to 419,55 from 356,911 in 2022.For the final month of the year, total filings dipped to 34,447 from 37,860 in November, though they were up 16% from a year earlier.Bankruptcy case counts are expected to keep climbing in 2024, though there is still some distance to go to top the 757,816 bankruptcies filed in 2019, the year before the pandemic struck.”As anticipated, we saw new filings in 2023 increase momentum over 2022 with a significant number of commercial filers leading the expected increase and normalization back to pre-pandemic bankruptcy volumes,” said Michael Hunter, vice president of Epiq AACER. “We expect the increase in number of consumer and commercial filers seeking bankruptcy protection to continue in 2024 given the runoff of pandemic stimulus, increased cost of funds, higher interest rates, rising delinquency rates, and near historic levels of household debt.”Household debt did, in fact, stand at a record high $17.3 trillion at the end of the third quarter, according to data from the New York Federal Reserve. Delinquency rates are also edging higher, that data showed, but they also remain below rates from just before the pandemic.Financial conditions for businesses and households have tightened significantly over the last two years thanks to the Fed’s aggressive interest rate hikes to contain inflation. Rates on mortgage loans, for instance, in the second half of last year shot to their highest since the start of the century.That said, borrowing costs and overall finiancial conditions eased over the course of the fourth quarter of 2023 after the Fed signaled it was coming to the end of its rate-hike cycle, and last month Fed officials themselves indicated they expect to be cutting rates this year. More

Most Federal Reserve officials wanted to keep borrowing costs high “for some time”, according to minutes of their meeting in December, adding to doubts that the US central bank is poised to begin cutting interest rates as early as March. While officials expressed optimism that the Fed was quelling inflation, they were also careful not to commit to any immediate loosening of monetary policy, according to a record of the meeting published on Wednesday. Rate-setters “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the [Federal Open Market] Committee’s objective”, the minutes showed. Rate-setters surprised markets in December by indicating they expected the bank to make three quarter-point cuts over the course of 2024. While officials still viewed rates as “as likely at or near [their] peak”, they also saw “an unusually elevated degree of uncertainty” in this year’s economic outlook.The account highlights the challenges facing the Fed as it tries to call time on a campaign of aggressive rate rises, without renouncing its commitment to keeping price pressures under control and risking damage to its inflation-fighting credentials. “They’re not willing to say ‘we’ve won’,” said David Kelly, chief global strategist at JPMorgan Asset Management, referring to the Fed’s battle against inflation. The central bank’s officials appeared from the minutes to be a “rather gloomy, worried bunch”, he added. Jeremy Schwartz, economist at Nomura, said the minutes showed “a lack of conviction” among Fed officials that they had conquered inflation. “That seems out of line with the early and rapid pace of cuts the market is currently pricing in.”Despite their caution, policymakers acknowledged the outlook for inflation was “moving toward greater balance”. An earlier reference from previous minutes to inflation remaining “unacceptably high” was removed. Investors appeared unsurprised by the account in the Federal Open Market Committee minutes. Yields on the US government’s benchmark 10-year bond were 0.04 percentage points lower at 3.91 per cent on Wednesday afternoon in New York, while the policy-sensitive two-year yield was flat at 4.32 per cent. Bond yields rise as their prices fall.In equity markets, the S&P 500 maintained an earlier decline to trade 0.6 per cent lower on the day. The technology-heavy Nasdaq Composite index was down 1 per cent.Futures markets continued to price in roughly six interest rate cuts for 2024 as a whole, despite the Fed’s official “dot plot” projections indicating just three cuts.The publication of the minutes comes as Fed watchers continue to debate when the bank will begin lowering borrowing costs in 2024 and how deeply it will cut rates through the year. “So long as the economy remains strong, or solid, they will, I think, remain on the sidelines,” said Kelly. “A first cut in June is my reading of their summary of economic projections.”The dovish tone of the December meeting and chair Jay Powell’s comments immediately after it led many investors to bet that cuts could start as soon as the vote in mid-March. FOMC officials have warned since the meeting that a move to slash rates was far from a done deal, however. “The pushback from Fed officials has been somewhat tepid. Nobody has come out and said ‘we won’t cut in March’. But the suggestion that the market pricing is a little bit aggressive is out there,” said Andrew Hollenhorst, economist at Citi. “And that’s consistent with what we’ve seen in the minutes today.” On Wednesday, Richmond Fed president Thomas Barkin, a voting member of the FOMC this year, warned that the quest to beat back inflation was not complete, saying that some companies did not yet “want to back down from raising prices until their customers or competitors force their hands”. “If that’s the case, I fear more will have to happen on the demand side, whether organically or through Fed action, to convince price-setters that the inflation era is over,” he said, adding that a soft landing was “increasingly conceivable” but “in no way inevitable”. Barkin’s comments pushed yields on 10-year Treasuries above 4 per cent for the first time since the December meeting, although the move had largely reversed by midday in New York. Bond prices have started 2024 on the back foot following a strong year-end rally that pushed the benchmark 10-year yield as low as 3.78 per cent last week, spurred by the Fed’s unexpectedly dovish tone at the meeting.On Wednesday, federal data showing that job openings in November fell to the lowest level in more than two years offered some evidence of cooling in the labour market, bolstering expectations of rate cuts. December’s decision from the central bank left the federal funds rate at 5.25 per cent to 5.5 per cent — a 22-year high. The return of double-digit inflation to the US for the first time in decades dented the Fed’s reputation, prompting policymakers to resort to a series of four successive 75 basis point rises in interest rates. In total, the Fed raised rates by 525 basis points over 2022 and 2023. However, price pressures declined sharply during the second half of last year and the Fed has not raised rates since July. The resilience of the US economy last year, as inflation fell despite strong growth and low unemployment, has raised hopes of a soft landing. The FOMC’s December projections showed most officials expected rates would end 2024 between 4.5 per cent and 4.75 per cent. Most officials expect rates to fall farther in 2025, ending the year between 3.5 per cent and 3.75 per cent. Those dot-plot projections are built on the core Personal Consumption Expenditures index falling to 2.4 per cent this year and 2.2 per cent in 2025, before hitting the central bank’s 2 per cent goal in 2026. Unemployment is expected to tick up only slightly, from 3.8 per cent now to 4.1 per cent. Additional reporting by Jennifer Hughes in New York More