Hot Inflation Data Cools Domestic Markets – Feb 16 Market Recap
Indices
- Dow 38,628, -43 or -0.11%.
- Nasdaq 15,776, -214 or -1.35%.
- MSCI EAFE 2257.21, +32.01 or +1.44%.
- S&P 5,005, -21 or -0.42%.
- USD10Y 4.295%, +10.8bp or +2.58%.
- WTI Crude $79.17/bbl, +$2.57 or +3.36%.
Hot Inflation Data Cools Domestic Markets
Higher than expected Consumer Price and Producer Price Indices paused market momentum and instigated profit taking last week. While the year-over year numbers for each of the four metrics (CPI, Core CPI, PPI, Core PPI) either decreased or remain unchanged, investors and the media were more focused on the month-over-month numbers as they fear the Fed will either delay or eliminate one of their expected three rate cuts this year due to the slowing rate of decline in the inflation data.
East coast manufacturing showed a huge improvement with the Philadelphia region recording a big upside surprise. The New York region, while improving substantially, is still experiencing contraction.
Earnings were a mixed bag with Airbnb (ABNB), Coca-Cola (KO), Robinhood (HOOD), Applied Materials (AMAT), and Coinbase (COIN) all reporting substantial improvements over expectations. However, DoorDash (DASH) lost more than expected, Kraft-Heinz (KHC) paused price increases and guided down, Cisco Systems (CSCO) missed their revenue number, guided down and announced a 5% workforce reduction, and Deere while reporting a great quarter, guided their full year earnings expectations lower.
The Week of Feb 16-20
Markets are closed on Monday in observance of President’s Day. The short week is light on both earnings and economic data. Nvidia (NVDA), Home Depot (HD), and Walmart (WMT) lead the earnings calendar. Economic data includes the minutes from the last FOMC meeting and February flash S&P manufacturing and services data.
Economic Calendar
- Monday – Markets Closed in Observance of President’s Day.
- Tuesday – N/A. Earnings: Home Depot (HD), Walmart (WMT), Palo Alto Networks (PANW).
- Wednesday – January FOMC Minutes Released. Earnings: Nvidia (NVDA), Rivian Automotive (RIVN).
- Thursday – Initial Jobless Claims, February Flash S&P Services and Manufacturing PMI. Earnings: N/A.
- Friday – N/A. Earnings: N/A.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Feb 16 Daily Trading Recap…
Monday – Dow +125 to 38,797 (record close), Nasdaq -48 to 15,942, S&P -5 to 5,021, USD10Y -1.5bp to 4.172%.
- Seven of eleven S&P sectors traded higher today, led by Utilities, Energy, and Materials.
- Bitcoin broke the $50,000 level for the first time since December 2021. The approval of 11 ETFs by the SEC in January, anticipated rate cuts, and improved sentiment have all helped fuel this surge. “On Friday alone, ETFs acquired 12,000 bitcoins, significantly outpacing the daily creation rate of approximately 900 new bitcoins.”
Tuesday – Dow -525 to 38,273, Nasdaq -287 to 15,656, S&P -69 to 4,953, USD10Y +14.5bp to 4.317%.
- All eleven S&P sectors traded down today, led lower by Consumer Discretionary, Real Estate, and Utilities.
- The January Consumer Price Index (CPI) was hotter than expected at +0.3% vs +0.2% expected and unchanged from last month’s +0.3% print. Although this was a disappointing result and sent yields higher and markets lower as investors were left to ponder when the Fed might ever start to cut rates, the January number still drove the year-over-year CPI number down to +3.1% vs +3.4% last month.
- The January Core CPI number was also higher than expected at +0.4% vs +0.3% expected and unchanged from last month. The year-over-year core CPI figure was unchanged from last month at +3.9%.
- Earnings: Airbnb (ABNB) beat revenues, raised guidance, and traded down 4% post close. Coca-Cola (KO) met earnings expectations and beat revenues as higher prices helped overcome lower volumes in North America. Robinhood (HOOD) beat earnings and revenue expectations and jumped +10.56% in after-hours trading.
Wednesday – Dow +151 to 38,424, Nasdaq +203 to 15,859, S&P +47 to 5,062 USD10Y -5.0bp to 4.267%.
- Nine of eleven S&P sectors traded higher today, led by Industrials, Communication Services., and Technology.
- Earnings: Kraft-Heinz (KHC) beat their earnings and revenue expectations but guided full year earnings guidance lower as their 15.2% price increases have dampened volumes. KHC is pausing further price hikes across most of their geographic locations. CSCO Systems (CSCO) beat earnings, missed on revenues, guided earnings lower, and announced a 5% headcount reduction.
Thursday – Dow +348 to 38,773, Nasdaq +47 to 15,906, S&P +29 to 5,029 (new record close), USD10Y -2.7bp to 4.24%.
- Ten of eleven S&P sectors traded higher today, led by Energy, Real Estate, and Materials.
- Jobless claims fell to 212,000, vs 219,000 forecast and vs. last week’s slightly revised higher print of 220,000 (originally 218,000).
- The February Empire State Manufacturing showed improvement at -2.4 vs -13.5 expected and vs last month’s -43.7 print.
- The Philadelphia Federal Manufacturing Index was even better at +5.2 vs -9 expected and vs last month’s -10.6 number.
- January Retail Sales fell to -0.8% vs -0.3% expected and vs last month’s +0.4% print.
- Earnings: Coinbase (COIN) beat both earnings and revenue estimates and traded up +14.26% post close. Applied Materials (AMAT) blew out their numbers and traded up +12.09 in after-hours trading. Deere (DE) blew out their earnings number and beat revenues but guided down full year earnings expectations; DE traded down -5.23%. DoorDash (DASH) beat revenues but reported a larger than expected loss and traded down -6.83% in the extended session.
Friday – Dow -145 to 38,628, Nasdaq -131 to 15,776, S&P -24 to 5,005, USD10Y +5.5bp to 4.295%.
- Eight of eleven S&P sectors traded down, led lower by Communication Services, Real Estate, and Technology.
- The January Producer Price Index (PPI) was hotter than hoped for at +0.3% vs +0.1% expected and +0.2% last month. The year-over-year figure dropped to +0.9% vs +1.0% last year.
- The January Core Producer Price Index (PPI) was also higher than expected at +0.6% vs +0.1% expected and vs last month’s +0.2% print. Year-over-year Core PPI was unchanged at +2.6%.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, AVGO, BITB, ETHE, GBTC, GOOGL.