The S&P 500 Index ($SPX) (SPY) on Friday fell -0.01%, the Dow Jones Industrials Index ($DOWI) (DIA) fell -0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +0.38%. March E-mini S&P futures (ESH25) rose +0.01%, and March E-mini Nasdaq futures (NQH25) rose +0.43%.
Stocks were undercut by Friday’s weaker-than-expected US Jan retail sales report, which fell by -0.9%, weaker than expectations of -0.2%. Excluding autos, Jan retail sales fell by -0.4%, weaker than expectations of +0.3%. Jan “control group” retail sales, which excludes volatile sectors, fell by -0.8%, weaker than expectations of +0.3%. However, the importance of the retail sales report was undercut to some extent by the wildfires in California and severe weather in various areas of the country.
Stock indexes Friday were also undercut as the Chernobyl nuclear plant in Ukraine was struck and damaged by a drone attack Thursday night, which raised the stakes in the Ukraine-Russian war.
Stocks Friday were also undercut by ongoing concern about the Trump administration’s tariff plans. President Trump on Friday said that new auto import tariffs will be coming around April 2. The markets were pleased that the reciprocal tariffs announced Thursday were delayed until April 1, but the administration said that the tariff calculations would take everything into account, including VAT taxes and non-tariff barriers, which means that tariffs could be substantial on US imports from many countries.
On the positive side for stocks, the 10-year T-note yield Friday fell -5 bp, adding to Thursday’s sharp decline of -9 bp.
In other US economic news, US Jan industrial production rose +0.5% m/m, stronger than expectations of +0.3%. The headline industrial production figure was boosted by higher utility output tied to cold weather. However, Jan manufacturing production fell by -0.1%m/m, weaker than expectations of +0.1% m/m.
US Jan import prices rose by +0.3% m/m and +1.9% y/y, which was close to expectations of +0.4% m/m and +1.9% y/y. Excluding petroleum, US Jan import prices rose by +0.1% m/m, weaker than expectations of +0.2%.
Q4 earnings season is starting to wind down. According to Bloomberg, more than 330 stocks in the S&P 500 have reported earnings, with 77.6% beating earnings estimates, just below the 3-year average of 78.4%.
The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets Friday were mixed. The Euro Stoxx 50 fell -0.13% after earlier edging to a new 25-year high. China’s Shanghai Composite Index closed up +0.43%. Japan’s Nikkei Stock 225 closed down -0.79%.
Interest Rates
March 10-year T-notes (ZNH25) Friday rose +10 ticks. The 10-year T-note yield fell -5.1 bp to 4.478%, adding to Thursday’s large decline of -9.4 bp. March T-note prices rallied on Friday’s weak US retail sales report, which may indicate that US consumers are pulling back from spending due to inflation and high debt.
European government bond yields Friday were mixed. The 10-year German bund yield rose +1.3 bp to 2.431%, reversing part of Thursday’s decline of -5.9 bp. The 10-year UK gilt yield is up +0.9 bp to 4.500%, following Thursday’s decline of -5.2 bp.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
Airbnb (ABNB) was at the top of the Nasdaq 100 leaderboard with a gain of more than +14% after reporting better-than-expected Q4 results and delivering positive guidance.
Chip stocks were also on the Nasdaq 100 leaderboard, with Micron Technology (MU) rising more than +4%. Marvell Technology (MRVL), Nvidia (NVDA), Microchip Technology (MCHP), NXP Semiconductors (NXPI), and Analog Devices (ADI) rose more than +2%.
Chinese stocks listed in the US saw support Friday on news that Chinese political leaders may meet with Alibaba co-founder Jack Ma, which suggested that China’s government may be seeking a less hostile relationship with the private sector. Alibaba (BABA) rallied more than +4%, and PDD (PDD) rallied more than +2%.
The Magnificent Seven were mixed. Nvidia (NVDA), Apple (AAPL), and Meta Platforms (META) closed higher. However, Tesla (TSLA), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOG) closed lower.
Roku (ROKU) closed up more than +15% after reporting positive Q4 earnings and sales.
Wynn Resorts (WYNN) closed up more than +10% after better-than-expected earnings and positive data from Macau and Las Vegas.
Twilio (TWLO) fell more than -14% after disappointing management guidance, although there is underlying support for the company based on AI expectations.
Applied Materials (AMAT) fell more than -7% after the company issued negative guidance, tied in part to Chinese restrictions that are negative for the company’s sales outlook.
Earnings Reports (2/18/2025)
Expeditors International (EXPD), Vulcan Materials Co (VMC), Genuine Parts Co (GPC), Entergy Corp (ETR), Allegion plc (ALLE), Medtronic PLC (MDT), EQT Corp (EQT), Celanese Corp (CE), Devon Energy Corp (DVN), Occidental Petroleum Corp (OXY), Cadence Design Systems Inc (CDNS), International Flavors & Fragra (IFF), Arista Networks Inc (ANET), CoStar Group Inc (CSGP).
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