Daily Markets: Fed Minutes, Continued Geopolitical Tension in Focus

Today’s Big Picture

Asian markets closed today’s trading mixed as India’s Sensex declined 0.25% while China’s Shanghai Composite gained 0.57%, Hong Kong’s Hang Seng rose 1.49%, Taiwan’s TAIEX closed up 1.56%, South Korea’s KOSPI traded ahead 1.99% and Japan’s Nikkei closed up 2.22% on the day. By mid-day trading, Major European equity indices are up and U.S. futures point to a muted market open later this morning.

Following yesterday’s hefty move higher for stocks, investors are revisiting Russia’s claims that troops are being withdrawn amid reports its troops remain in a “threatening position.” Adding to those concerns, NATO Secretary General Jens Stoltenberg commented that Russia is continuing its military buildup. As if that renewed uncertainty wasn’t enough, yesterday’s hotter-than-expected January Producer Price Index report also renewed questions over how fast the Fed will raise interest rates and shrink its bond-buying program. As such, we expect today’s release of the January Fed FOMC meeting minutes will be reviewed with a fine-toothed comb when published at 2 PM ET. 

Before markets open, we’ll get the January reports for Retail Sales report and Industrial Production. While the Retail Sales report will set the bar for retailer earnings, investors will dig into the Industrial Production one to determine how much manufacturing activity improved vs. December.

Data Download

International Economy

Last night China released January YoY CPI (0.90%) and PPI (9.10%) with both coming in lower than the previous release of 1.50% and 10.30%, respectively, and under consensus estimates.

Today saw the UK release their January YoY CPI (5.50%) and PPI (9.90%) figures with both coming in higher than the previous figures of 5.40% and 9.40%, respectively as well as exceeding estimates. January YoY UK Core CPI posted at 4.40%, also higher than the previous print of 4.20% and exceeding estimates by 0.15%.

EU YoY Industrial Production for December was published and surprised by showing growth of 1.60% as compared to the previous 1.40% contraction as well as estimates for the continued decline of 0.70%.

Domestic Economy

Later this morning we will see several releases covering Retail Sales (including ex-autos and ex-auto fuel), Import & Export Prices, Capacity Utilization, Industrial Production, NAHB Housing Market, and, at 2:00 PM ET, minutes from the latest Fed meeting. Investors will be poring through these minutes to gain any insight on the Fed’s rationale and positioning in what the Fed describes as a “Statement on Longer Run Goals and Monetary Policy Strategy Principles for Reducing the Size of the Federal Reserve’s Balance Sheet.” While a mouthful, it does get to the point.

Markets

Yesterday, equities rebounded following reports Russia pulled back some troops from its border with Ukraine, while shrugging off the January Producer Price Index report. The S&P 500 rallied 1.6%, the Nasdaq Composite climbed 2.5% and the Russell 2000 added 2.8% while the Dow Jones Industrial Average gained 1.2%. From a sector perspective, nine of the 11 S&P sectors finished higher on the day led by the 2.7% gain in information technology and the 2.1% move in consumer discretionary. Factoring yesterday’s gains, here are how the major market indicators stack up on a year-to-date basis:

• Dow Jones Industrial Average: -3.7%
• S&P 500: -6.2%
• Nasdaq Composite: -9.6%
• Russell 2000: -7.5%
• Bitcoin (BTC-USD): -3.5%
• Ethereum (ETH-USD): -13.3%

Stocks to Watch

Before trading kicks off, AMC Networks (AMCX), Cedar Fair (FUN), Crocs (CROX), Garmin (GRMN), Hilton (H), Nu Skin (NUS), Shopify (SHOP) and The Trade Desk (TTD) will be among those reporting their quarterly results. 

Airbnb (ABNB) shares rallied in aftermarket trading following the company reporting better than expected December quarter results and offered guidance that it expects to achieve its first positive EBITDA quarter in the current quarter. For the December quarter, gross booking value jumped 91% YoY to $11.3 billion. For the current quarter, Airbnb issued upside guidance with $1.41-1.48 billion in revenue vs. the $1.22 billion consensus and sees its gross booking value in the quarter reaching another record. 

While Akamai (AKAM) delivered consensus beating top and bottom-line results for its December quarter, it also issued softer than expected guidance for the current quarter with EPS of $1.39-1.43 vs. the $1.45 consensus. Digging into its December quarter results, Security Technology Group revenue rose 23% YoY to $365 million and its Edge Technology Group revenue slipped 2% to $541 million. Akamai also announced it would acquire infrastructure as a service company Linode. 

Shares of Roblox (RBLX) came under pressure last night after the social-gaming company reported quarterly results that came up short of Wall Street's expectations. For the quarter, the company reported a $0.25 per share loss and total bookings of $770.1 million vs. the expected -$0.07 per share loss and total bookings of $772 million. Average Daily Active Users (DAUs) for the company rose by 33% YoY in the quarter to 49.5 million, while total hours of engagement climbed to 10.8 billion, up 28% YoY. The company also shared several January metrics including bookings between $220-$223 million, and DAUs reaching 54.7 million.

ViacomCBS (VIAC,VIACA) is rebranding the company to Paramount Global - a doubling down on its content strategy and streaming focus going forward.

Cedar Fair (FUN), the owner of Kings Island and Cedar Point, has officially turned down SeaWorld Entertainment’s (SEAS) purchase bid.

IPOs

There are no IPO offerings expected to price this week. Readers looking to dig more into the upcoming IPO calendar should visit Nasdaq’s Latest & Upcoming IPOs page.

After Today’s Market Close

American Water Works (AWK), Applied Materials (AMAT), Boston Beer (SAM), Cheesecake Factory (CAKE), Cisco (CSCO), DoorDash (DASH), Equinix (EQIX), Fastly (FAST), Hyatt Hotels (H), Nvidia (NVDA), and TripAdvisor (TRIP) will be among those companies reporting their latest quarterly results. Those looking for more on which companies are reporting when, head on over to Nasdaq’s Earnings Calendar. 

On the Horizon

Thursday, Feb. 17

• Weekly Initial & Continuing Jobless Claims
• Housing Starts & Building Permits – January
• Philadelphia Fed Index – February
• Weekly EIA Natural Gas Inventories 

Friday, Feb. 18

• Japan: CPI - January
• UK: Retail Sales – January
• Eurozone: Consumer Confidence (Preliminary) - February
• US: Existing Home Sales – January 
• US: Leading Indicators – January 

Thought for the Day

“You’ll never be criticized by someone who is doing more than you. You’ll always be criticized by someone doing less. Remember that.” ~ Denzel Washington

Disclosures

• Akami (AKAM), Fastly (FAST), Cisco (CSCO), Shopify (SHOP) are constituents of the Tematica BITA Digital Infrastructure & Connectivity Index

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

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