Man, what a run it’s been. The S & P 500 is closing out the first quarter on an epic win streak: The index is up 10% year to date and an amazing 25% in the past five months. A run of 25% in any five-month period is a very rare event. Since 1950, there have only been seven other periods that have done better: S & P 500’s epic monthly win streaks Through March 2024 up 24.6% (current five-month streak) Aug. 31, 2020 up 35.4% (five-month streak) Aug. 31, 2009 up 27.9% (six-month streak) Jan. 31, 1999 up 33.6% (five-month streak) March 31, 1986 up 25.8% (six-month streak) Dec. 31, 1982 up 31.3% (six-month streak) May 31, 1975 up 32.9% (six-month streak) Feb. 28, 1975 up 28.4% (five-month streak) An imminent pullback? Maybe, but momentum is very powerful Naturally, with a run like this, everyone is now in the pullback prediction business. “This can’t continue,” is the refrain everywhere. “We’re going to pull back 10%. We have to, right?” Not necessarily. Momentum has been very strong. Noting that the S & P 500 is currently trading roughly 12% above its 200-day moving average (indicating very strong momentum), Todd Sohn from Strategas notes that, “While mean reversion is a threat, forward six-month returns tend to skew above historical averages.” His point: Even after these epic runs (with the S & P 500 up 25% or more in a five-month period), six months down the road, the market is higher most of the time: Epic five-month streaks (five months ended) Aug. 31, 2020 up 35.4% (up 8.9% six months later) Aug. 31, 2009 up 27.9% (up 8.2% six months later) Jan. 31, 1999 up 33.6% (up 3.8% six months later) March 31, 1986 up 25.8% (down 3.1% six months later) Dec. 31, 1982 up 31.3% (up 19.5% six months later) May 31, 1975 up 32.9% (up 0.1% six months later) Feb. 28, 1975 up 28.4% (up 6.5% six months later) Only one time out of seven, in 1986, has the S & P 500 been lower six months later after similar runs. It’s not just big cap tech: Market breadth has been expanding Another chestnut — “It’s all the Magnificent Seven!” — is just plain wrong. Tech is still lifting the market higher in the quarter, but its influence has waned in March, and other sectors have also seen strong advances. Select S & P 500 sectors YTD Communication Services up 15% Technology up 12% Energy up 11% Financials up 11% Industrials up 10% Health Care up 8% The only sector down this quarter is real estate, off by 3% in the period. And it’s not just a few big cap stocks advancing: Market breadth has been expanding. About 70% of the S & P 500 is in the green this year. The S & P 500 advance/decline has been on a tear since the middle of January, with far more stocks advancing on a daily basis than declining. So is the Russell 1000 , an even broader gauge of the market. That broader market strength is critical to a market advance. “Divergences and concentration can also be seen along the way in major bull markets, and thus they are critical only when the trend loses strength with bad breadth, meaning that most stocks are not participating,” veteran market watcher Ned Davis said in a recent note to clients. “We saw persistent strength with the S & P 500 up every month from November through February, and this has nearly always been followed by more months of strength,” he said. “Even if that new high in breadth was a cyclical peak, the hypothetical record shows it has historically come some 39 weeks, on average, before a market peak, so I conclude that the cyclical bull is still alive and kicking,” Davis said. What’s this all mean? Some kind of fall after such epic gains seems to make sense. What might not make sense, given market history, is to think you know when to time those declines or to try figuring out whether any pullback could be short and shallow. Given the kind of advances we have seen and the market breadth, “It’s much more profitable to stick around than try to time the markets,” Alec Young, chief investment strategist at MAPsignals.com, told me. “Markets tend to do much better than normal when we have had big moves like this,” he said. “You’re probably much better off just sitting on your gains.”
Ted Pick, CEO Morgan Stanley, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 18th, 2024.
Adam Galici | CNBC
Morgan Stanley topped analysts’ estimates for third quarter profit as its wealth management, trading and investment banking operations generated more revenue than expected.
Here’s what the company reported:
Earnings:$1.88 a share vs $1.58 LSEG estimate
Revenue: $15.38 billion vs. $14.41 billion estimate
Morgan Stanley had several tailwinds in its favor. The bank’s massive wealth management business was helped by high stock market values in the quarter, which inflates the management fees the bank collects.
Investment banking has rebounded after a dismal 2023, a trend that may continue as easing rates will encourage more financing and merger activity.
Finally, its Wall Street rivals have posted better-than-expected trading results, making it unlikely that the firm missed out on elevated activity.
Chinese e-commerce company Alibaba has invested heavily in its fast-growing international business as growth slows for its China-focused Taobao and Tmall business.
Nurphoto | Nurphoto | Getty Images
BEIJING — Chinese e-commerce giant Alibaba‘s international arm on Wednesday launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
Alibaba’s fast-growing international unit released the AI translation product as an update to one unveiled about a year ago, which it says already has 500,000 merchant users. Sellers based in one country can use the translation tool to create product pages in the language of the target market.
The new version is based only on large language models, allowing it to draw on contextual clues such as culture or industry-specific terms, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC in an interview Tuesday.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” he said.
Large language models power artificial intelligence applications such as OpenAI’s ChatGPT, which can also translate text. The models, trained on massive amounts of data, can generate humanlike responses to user prompts.
Alibaba’s translation tool is based on its own model called Qwen. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.
Zhang said he expects “substantial demand” for the tool from Europe and the Americas. He also expects emerging markets to be a significant area of use.
When users of Alibaba.com — a site for suppliers to sell to businesses — are categorized by country, developing countries account for about half of the top 20 active AI tool users, Zhang said.
Chinese companies have increasingly looked abroad for growth opportunities, especially e-commerce merchants. PDD Holdings‘ Temu, fast fashion seller Shein and ByteDance’s TikTok are among the recent global market entrants. Many China-based merchants also sell on Amazon.com.
Zhang declined to share how much the updated version would cost. He said it was included in some service bundles for merchants wanting simple exposure to overseas users.
His thinking is that contextual translation makes it much more likely that consumers decide to buy. He shared an example in which a colloquial Chinese description for a slipper would have turned off English-speaking consumers if it was only translated literally, without getting at the implied meaning.
“The updated translation engine is going to make Double 11 a better experience for consumers because of more authentic expression,” Zhang said, in reference to the Alibaba-led shopping festival that centers on Nov. 11 each year.
Alibaba’s international business includes platforms such as AliExpress and Lazada, which primarily targets Southeast Asia. The international unit reported sales growth of 32% to $4.03 billion in the quarter ended June from a year ago.
That’s in contrast to a 1% year-on-year drop in sales to $15.6 billion for Alibaba’s main Taobao and Tmall e-commerce business, which has focused on China.
Nomura analysts expect that Alibaba’s international revenue slowed slightly to 29% year-on-year growth in the quarter ended September, while operating losses narrowed, according to an Oct. 10 report. Alibaba has yet to announce when it will release quarterly earnings.
Check out the companies making headlines in midday trading: UnitedHealth — Shares plunged 7.2% after the health-care giant lowered its earnings guidance due to ongoing headwinds from a cyberattack earlier in the year. UnitedHealth cut the top end of its full-year earnings forecast, which is now $27.50 to $27.75 per share, compared to previous guidance of $27.50 to $28.00 per share. UnitedHealth still reported a top- and bottom-line beat in the third quarter. Walgreens Boots Alliance — The stock soared 11.9% following the drugstore chain’s fiscal fourth-quarter earnings and revenue beat. Walgreens also plans to close about 1,200 stores over the next three years, which will be “immediately accretive” to its adjusted earnings and cash flow, the company said. ASML — Shares dropped more than 16% after the Dutch semiconductor equipment maker released its earnings report early and offered a weaker-than-expected sales outlook for 2025. The company’s CEO also warned of a “more gradual” recovery ahead. Other chip stocks fell as well, with Nvidia , Advanced Micro Devices and Broadcom last down at least 4% each. Wolfspeed — Shares popped 23% on news that the North Carolina-based chipmaker will obtain up to $750 million in U.S. government grants for its new factories in North Carolina and New York. A group of investors including Apollo and Baupost will provide an additional $750 million in funding for its more than $6 billion plan. Bank of America — The lender saw shares gain 2% after it exceeded analysts’ estimates for third-quarter profit and revenue on better-than-expected trading results. Net interest income, one of the key ways that banks make money, fell 2.9% to $14.1 billion, edging out the $14.06 billion StreetAccount estimate. Enphase Energy — Shares slid 6.8% on the back of a downgrade to sector perform from outperform by RBC Capital Markets. The firm said Enphase should grow at a slower rate than the consensus forecast pencils in. Johnson & Johnson — The health-care conglomerate gained 1.6% after posting quarterly results that exceeded expectations on the back of strong sales of oncology drugs. Johnson & Johnson reported adjusted earnings per share of $2.42 and $22.47 billion in revenue. Meanwhile, analysts surveyed by LSEG had forecast $2.21 in earnings per share on $22.16 billion in revenue. The firm also raised guidance for its 2024 profit and sales. Energy stocks — Energy stocks declined as oil prices dropped about 5% , with the sector last down more than 2%. APA was the biggest laggard, tumbling 6%. Diamondback Energy tanked 4.3%, while Occidental Petroleum , Valero Energy and Halliburton lost more than 3% each. Coty — The CoverGirl parent plunged 11% after trimming its fiscal first-quarter guidance and warning of slower growth trends in the U.S. Citigroup — Shares lost about 4% despite stronger-than-expected third-quarter earnings . The bank posted earnings per share of $1.51 on $20.32 billion in revenue. Analysts polled by LSEG had anticipated earnings of $1.31 per share on revenue of $19.48 billion. Charles Schwab — Shares of the brokerage company rallied more than 8% as third-quarter results topped analysts’ expectations. The company posted earnings of 77 cents, excluding one-time items, on $4.85 billion in revenue. PNC Financial — The Pittsburgh-based regional bank rose more than 3% on a better-than-expected earnings report. Earnings came in at $3.49, topping an LSEG estimate of $3.30 per share. The company reported $5.43 billion in revenue, topping a forecast of $5.39 billion. Boeing — Shares added about 2.1% after the aircraft manufacturer said it could raise up to $25 billion in debt and shares to increase liquidity. — CNBC’s Yun Li, Alex Harring, Hakyung Kim, Michelle Fox, Pia Singh, Sarah Min contributed reporting.