Daily Live Updates for Market Investors: February 14

The release of higher-than-expected US CPI data led to a hawkish repricing of Fed interest rate expectations, boosting US Treasury yields and the US dollar. Yields are reaching new highs, posing a challenge for stocks to maintain stability, potentially leading to a significant correction shortly.

Rob Swanke, Senior Equity Strategist for Commonwealth Financial Network says, “CPI came in hotter than anticipated. This is certainly not the news that the Fed will be looking for to begin cutting rates. The market has now essentially priced out the possibility of a rate cut in March and given less than a 50% chance of a cut at their May meeting, so we may be on hold for several more months. 10-year yields also moved up on the report.”

Sam Millette, Director of Fixed Income for Commonwealth Financial Network says, “Consumer prices increased by more than expected in January, in a sign that the Federal Reserve still has real work to do to get inflation back on track. Headline and core consumer prices both rose by more than expected on a year-over-year basis in January, driven by stubbornly high service price growth to start the year. The rise in service prices was in turn primarily driven by a rise in shelter costs during the month. Equity futures sold off while short- and long-term bond rates surged immediately following the release, as odds for rate cuts at either of the Fed’s meetings in March or May fell.”

Larry Tentarelli, Chief Technical Strategist, Blue Chip Daily Trend Report says, “While markets are focused on when the first rate cut will be, we believe that any delay until May/June would indicate that both the jobs market and the economy are holding up very well. The Fed wants to avoid any uptick in inflation and cutting rates too early could raise that risk. If the jobs market and/or economy start to slow markedly, the Fed has an ample amount to work with, with the Fed Funds rate currently at 525-550, but for now, with a higher CPI read, strong economy and inflation above target, their most likely course of action is to wait at least until May/June.”

José Torres, Senior Economist at Interactive Brokers says, “The Dow Jones Industrial, Nasdaq Composite and S&P 500 benchmarks closed down over 1.35%. Animal spirits in markets that are generating fierce rallies impede the Fed’s inflation battle to the extent that they propel demand and prices.

Markets are getting slammed today after this morning’s release of a hotter-than-expected Consumer Price Index (CPI). The report is a bitter pill for a disinflation narrative that is losing steam against the backdrop of the third consecutive month of accelerating price pressures.

January’s price jump, furthermore, can’t be blamed on gasoline, with services responsible for driving the CPI higher. Yields are soaring and equities are losing momentum as market players sharply reevaluate the path for rate cuts. Indeed, a market that once expected seven cuts starting in March is now penciling in three or four beginning in June.”

Meanwhile, Interactive Brokers announced 25 most active and most traded stocks and options on the IBKR Platform:

Steve Sosnick, Interactive Brokers’ Chief Strategist, says, “The dominance of all things AI, and especially anything related to NVDA, is apparent from this week’s Most Active List. NVDA remains in first place, having passed TSLA, the former perennial leader, several days ago; and the presence of ARM, PLTR, AMD, SMCI and BMR confirm the premise. ARM, PLTR and SMCI are beneficiaries of what I have been calling “Weaponized FOMO,” where investors aggressively pile into winning stocks after earnings or other catalysts. (Interestingly, we saw net selling in PLTR, perhaps because that stock is not yet at all-time highs despite its recent rally.) And BMR shows the halo effect of NVDA. Yesterday it announced a collaboration with NVDA on video formatting, which caused the previously little-known Israeli company to rise sixfold on over 400X its average daily volume. Those customers who stayed long are being rewarded by the stock doubling yet again today.”

Daily Live Updates for Market Investors: February 13

Following the S&P 500 index’s historic closing in the previous session, US equities finished neutral on Monday as investors got ready for the first significant inflation update of the year and the upcoming round of earnings releases.

The S&P 500 (^GSPC) closed just below the flat line after a record-setting week that saw the benchmark end above 5,000 for the first time. In regular trading on Monday, the Dow rose 0.33%, while the S&P 500 and Nasdaq Composite lost 0.1% and 0.3%, respectively. The utilities, energy and materials sectors outperformed the market, while technology, real estate and consumer discretionary stocks were the biggest laggards.

Nvidia’s (NVDA) stock increased 2% on Monday to set a new milestone before retreating from the gains. Additionally, Arm (ARM), a British semiconductor designer, soared to a new high, continuing its recent upward trend.

However, the market rally will have a new test this week, as the January Consumer Price Index report is due today. The CPI report will provide investors with their first look at how cool inflation will be in 2024, as well as an update on consumer spending, and will set expectations for the timing and speed of Federal Reserve interest rate cuts this year.

US stock futures slipped on Tuesday as investors geared up for a key inflation reading that could guide the outlook for interest rates.

In extended trading, JetBlue Airways jumped 17% after activist investor Carl Icahn revealed a nearly 10% stake in the company, while Avis Budget Group fell 2.6% after missing revenue forecasts.

Investors now look ahead to the January consumer price index report as the Federal Reserve continues to weigh the path forward for monetary policy. Earnings are also set to come on Tuesday from Coca-Cola, Hasbro, Marriott International, MGM Resorts and DaVita, among others.

Daily Live Updates for Market Investors: February 12

For the first time, the S&P 500 Index surpassed the 5,000-point barrier to achieve a huge milestone in market valuation. US stock futures held steady on Monday as investors look forward to another set of key economic releases and earnings reports this week. On Friday, the S&P 500 rose 0.57% and closed above the 5,000 level for the first time, while the Nasdaq Composite jumped 1.25%.

Meanwhile, the Dow fell 0.14%. Those moves came as BLS data showed that CPI increased 0.2% month-over-month in December, less than 0.3% initially reported. All three benchmarks ended the week higher, led by a rally in the technology, consumer discretionary and communication services sectors.

Investors now look ahead to US inflation data this week, as well as retail sales and consumer confidence figures. On the corporate front, earnings are set to come from Shopify, DraftKings, Arista Networks, Coinbase and Datadog, among others.

“This achievement, however, was characterized by a narrow advance, indicating that the rally was led by a select group of stocks rather than a broad-based participation. The disparity between the market-weighted and equally weighted versions of the index highlighted this concentration of gains. The market’s momentum was further influenced by a successful $42 billion U.S. Treasury note auction, which alleviated some concerns about rising borrowing costs potentially impacting the Federal Reserve’s ability to adjust interest rates to stimulate the economy,” says Bas Kooijman, the CEO and Asset Manager of DHF Capital S.A.

The yield on the US 10-year Treasury note hovered around 4.15%, little changed from last week’s levels, with traders eagerly awaiting the US CPI report due Tuesday. Inflation is expected to continue to slow, reinforcing bets the Fed is set to cut interest rates this year. Investors have mostly given up on a March rate cut, with the odds currently standing around 17%, while a May easing stands around 90%. Meanwhile, market participants are also awaiting appearances by various Fed officials, hoping for insights into the timing of the Fed’s monetary easing.

The dollar index was subdued around 104 on Monday as investors cautiously awaited US consumer inflation data on Tuesday for clues on the potential trajectory of interest rates. On Friday, the greenback came under pressure as revised US figures revealed a smaller increase in the CPI for December. According to the BLS, the CPI rose by 0.2% month-over-month, slightly lower than the initial report of 0.3%. However, the core CPI remained unchanged at 0.3%. These figures confirmed a disinflationary trend in the past year and bolstered dovish bets on Federal Reserve monetary policy. Markets still see a small chance for a Fed rate cut in March, but are pricing in a move in May.