Daily Markets: Fresh Inflation Data Comes Ahead of Long Weekend

Today’s Big Picture

Asia-Pacific equity market indexes finished the day higher except for Taiwan’s TAIEX which fell 0.20%. India’s SENSEX rose 0.52%, Australia’s ASX All Ordinaries gained 0.69%, Japan’s Nikkei added 0.86%, and South Korea’s KOSPI advanced 1.34%. Hong Kong’s Hang Seng closed 2.48% higher in a broad rally led by Health Technology, and Health Services names. China’s markets are still closed as the country continues celebrating the Lunar New Year. Chinese markets will be open for trading on Monday, February 19th. European markets are up across the board in midday trading and U.S. equity futures are pointing to a mixed open as Dow futures are coming under some pressure.

At 8:30 am this morning, the January Producer Price Index (PPI) report was released, and it showed that wholesale prices have risen more than expected. Economists were expecting a rise of 0.1%; instead, it rose by 0.3%. Excluding the more volatile food and energy, it rose 0.5% against expectations of a 0.1% gain. U.S. Treasury Yields spiked to above 4.3% in the aftermath of the report. The report comes a few days after the Consumer Price Index also rose more than expected, complicating the inflation picture and likely recalibrating expectations of the number of rate cuts we could see this year.

A reminder that we will not be publishing on Monday due to the President’s Day holiday.

Data Download

International Economy

Retail sales volumes in the United Kingdom rebounded by 0.7% year-on-year in January, following a sharp fall of 2.4% in December and surprising market expectations of a 1.4% decline.

Domestic Economy

In addition to the January PPI report, this morning also brings the January data for Housing Starts & Building Permits and the preliminary February reading for the University of Michigan Consumer Sentiment Index.

Markets

Energy was the clear leader yesterday, gaining 2.79% followed somewhat closely by Consumer Discretionary which rose 2.40% after Tesla (TSLA) figured out what the pedal on the right does as shares jumped 6.22%, contributing to just over 70% of the sector’s result. In fact, all sectors had a fairly strong day except for Technology which fell 0.21% as Adobe (ADBE), Nvidia (NVDA), and Microsoft (MSFT) combined to contribute to just over 160% of the sector return, eclipsing the 12.07% gain from Zebra Technologies (ZBRA) and the 8.29% rise in Epam Systems (EPAM).

Broad indexes all ended higher the Nasdaq Composite adding 0.30%, the S&P 500 rising 0.58%, the Dow gaining 0.91% while the Russell 2000 led, closing 2.45% higher. Here’s how the major market indicators stack up year-to-date:

• Dow Jones Industrial Average: 2.88%
• S&P 500: 5.45%
• Nasdaq Composite: 5.96%
• Russell 2000: 1.70%
• Bitcoin (BTC-USD): 23.74%
• Ether (ETH-USD): 23.07%

Stocks to Watch

American Axle (AXL), Cinemark (CNK), TreeHouse Foods (THS), US Cellular (USM), and Vulcan Materials (VMC) are expected to release quarterly earnings before equities begin trading later this morning. Pre-market breadth is healthy today as 243 names in the S&P 500 have traded hands so far this morning with 161 gainers and 82 decliners. Applied Materials (AMAT) is the lone standout as it is on track to open close to 13% higher (more below). Republic Services (RSG) and Digital Realty Trust (DLR) are coming under pressure following disappointing earnings.

Applied Materials (AMAT) reported better-than-expected quarterly earnings, beating estimates by $0.23, and provided an upbeat outlook. For the current quarter, the semiconductor equipment maker expects adjusted EPS between $1.79-$2.15 versus the consensus of $1.80 and sees revenue between $6.1-$6.9 billion compared to the consensus of $6.34 billion.

Coinbase (COIN) shares are moving higher in pre-market trading following the company reporting December quarter results that crushed consensus expectations. EPS for the quarter came in at $1.04 compared to the $0.02 consensus forecast, while revenue soared, up 51.6% YoY, to $953.8 million versus the $826.1 million consensus. Coinbase shared is adopting a new accounting treatment for crypto assets and will begin measuring crypto assets at fair value starting in Q1.

Better than-expected guidance calling for at least $478 million in revenue, well ahead of the $452.3 million consensus, overshadowed mixed December quarter results from Trade Desk (TTD). During its earnings conference call, the company shared that connected TV continues to be the fastest-growing channel for its business.

Shares of Roku (ROKU) were hit in aftermarket trading last night despite quarterly results that came in better than Wall Street forecasts and showed double-digit gains in accounts and hours streamed. The company ended 2023 with 80.0 million active accounts compared to 70 million exiting 2022. Average Revenue Per User in the quarter came in at $39.92, down 4% YoY.

Nike (NKE) plans to reduce its workforce by about 2%, or more than 1,600 people as part of its effort to shed $2 billion in costs over the next three years.

IPOs

Readers who want to dig deeper into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

We’re on the cusp of concluding another trading week and that means no companies are expected to report quarterly results after equities stop trading today. Those looking for more on upcoming quarterly earnings reports should head on over to Nasdaq’s Earnings Calendar.

On the Horizon

Tuesday, February 20

• China: Loan Prime Rates

Wednesday, February 21

• Eurozone: ECB Non-Monetary Policy Meeting
• Eurozone: Consumer Confidence (Flash) - February
• US: Weekly MBA Mortgage Applications
• US: Weekly EIA Crude Oil Inventories
• US: FOMC Meeting Minutes

Thursday, February 22

• Japan: Jibun Bank Flash Manufacturing & Services PMIs - February
• Eurozone: HCOB Flash Manufacturing & Services PMIs - February
• US: S&P Global Flash Manufacturing & Services PMIs – February
• Eurozone: Inflation Rate (Final) - January
• US: Weekly Initial & Continuing Jobless Claims
• US: S&P Global Flash Manufacturing & Services PMIs - February
• US: Existing Home Sales – January
• US: Weekly EIA Natural Gas Inventories

Thought for the Day

“Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day - if you live long enough-like most people, you will get out of life what you deserve.” - Charlie Munger

Disclosures

• Digital Realty Trust (DLR), Nvidia (NVDA) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index
• Microsoft (MSFT) is a constituent of the Tematica Research Thematic Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks Economy Earnings Central Banks