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January 3 Market Report: Executive Mosaic’s GovCon Index and Wall Street Flash Red, Santa Claus Rally Fizzles Out

January 3 Market Report: Executive Mosaic’s GovCon Index and Wall Street Flash Red, Santa Claus Rally Fizzles Out

Executive Mosaic’s GovCon Index fell sharply to $4,584.88 after losing 1.43%. The first two trading days of January should have been part of the Santa Claus Rally, but red flashed all over Wall Street. Instead, the Nasdaq Composite (-1.18%), S&P 500 (-80%), and the Dow Jones Industrial Average (-0.76%) lost ground and posted negative returns.

Only five GovCon Index constituents, led by BAE Systems and Northrop Grumman (NYSE: NOC), gained amid the broad market selloff. Mercury Systems (Nasdaq: MRCY), Maximus (NYSE: MMS), and Kratos (Nasdaq: KTOS) lost between 6.3% and 8.3% to lead 25 decliners.  

On Wednesday, the U.S Special Operations Command awarded L3Harris Technologies (NYSE: LHX) a single award, indefinite-delivery/indefinite-quantity, firm-fixed-price contract with seven one-year ordering periods, and a potential maximum value of $479M. The contract is for procuring next-gen tactical communications radios and associated sustainment and support services.

Also, mid-week, the Federal Reserve released the Federal Open Market Committee meeting minutes on December 12-13, 2023. Besides agreeing to keep the benchmark rate range between 5.25% and 5.5%, the policymakers discussed rate cuts due to the substantial progress in bringing down inflation.

Still, despite the significant drop to 3.14% on November 2023, some officials expressed worry about upside risks to inflation during the meeting. Some members said the policy rate must remain elevated if inflation doesn’t cooperate. Others were open to additional rate hikes depending on evolving conditions.

Investment bank Goldman Sachs (NYSE: GS) expects rate cuts to begin in March, while JPMorgan (NYSE: JPM) sees five quarter-point cuts in 2024 beginning in June. The summary of the Feds’ economic projections contained in the minutes of the FOMC meeting shows three rate cuts this year. 

Market Summary

INDEX PRICE NET CHANGE % CHANGE
GovCon Index Daily Total 4,584.88 -65.50 -1.43%
Dow Jones Industrial Average 37,430.19 -284.85 -0.76%
S&P 500 4,704.81 -38.02 -0.80%
NASDAQ 14,592.21 -173.73 -1.18%

Top 5 GovCon Index Daily Percentage Performers

SYMBOL PRICE NET CHANGE % CHANGE
BAESY 58.55 1.29 2.26%
NOC 474.88 4.79 1.02%
LMT 459.12 3.00 0.66%
RTX 85.61 0.39 0.46%
LHX 209.82 0.04 0.02%

Top 5 GovCon Index Daily Net Performers

SYMBOL PRICE NET CHANGE % CHANGE
NOC 474.88 4.79 1.02%
LMT 459.12 3.00 0.66%
BAESY 58.55 1.29 2.26%
RTX 85.61 0.39 0.46%
LHX 209.82 0.04 0.02%

Top 5 GovCon Index Daily Percentage Decliners

SYMBOL PRICE NET CHANGE % CHANGE
MRCY 32.98 -3.07 -8.52%
MMS 77.32 -6.10 -7.31%
KTOS 18.5 -1.26 -6.38%
CACI 315.55 -10.74 -3.29%
BA 243.91 -7.85 -3.12%