Index and Treasury Performance
US equities ended Tuesday without a clear direction. The S&P 500 fell 0.33% and the Nasdaq 100 declined 0.56%, while the Dow Jones rose 0.10% and reached a new all-time high. In futures trading, March E-mini S&P futures slipped 0.30% and March E-mini Nasdaq futures fell 0.50%. The 10-year US Treasury yield dropped 6.1 bp to 4.141%, after touching 4.133% during the session, the lowest level in about 3.5 weeks. Treasuries also drew support from solid demand at the $58 billion 3-year note auction, with a 2.62 bid-to-cover ratio.
Macro Data: Retail Sales and Labor Costs
Weaker-than-expected economic reports early in the day helped push yields lower and reinforced the argument for a more accommodative policy outlook. The Q4 Employment Cost Index rose 0.7% q/q, below the 0.8% consensus and marking the smallest increase in roughly 4.5 years. US December retail sales were flat m/m versus expectations for a 0.4% gain, and retail sales excluding autos were also unchanged, missing forecasts for a 0.4% rise. The data raised concerns that Q4 GDP could face a downward revision.
Fed Signals and Rate-Cut Pricing
Market sentiment cooled later in the session after hawkish comments from Federal Reserve officials reduced expectations for imminent rate cuts. Cleveland Fed President Beth Hammack said she would prefer to “err on the side of patience” while assessing the impact of recent rate reductions and monitoring economic performance, suggesting the Fed could remain on hold for an extended period. Dallas Fed President Lorie Logan added that it would take “material” weakness in the US labor market for her to support additional rate cuts. Markets were pricing a 23% chance of a 25-bp cut at the March 17–18 policy meeting.
Week Ahead: Jobs, Inflation, and Earnings
Attention remains on corporate results and a busy economic calendar. Wednesday’s report is expected to show January nonfarm payrolls rising by 68,000, with the unemployment rate unchanged at 4.4% and average hourly earnings up 0.3% m/m and 3.7% y/y. Thursday’s focus includes initial jobless claims, projected to fall to 224,000, and existing home sales, expected to decline 4.3% m/m to 4.16 million. Friday’s January CPI is forecast at 2.5% y/y, with core CPI also seen at 2.5% y/y. Earnings season is in full swing: more than half of S&P 500 companies have reported, with 78% of the 319 reporters beating expectations. Bloomberg Intelligence projects S&P 500 earnings growth of 8.4% y/y in Q4, and 4.6% excluding the largest megacap technology names.
Sector Moves and Single-Stock Drivers
AI-infrastructure and semiconductor names weighed on the broader market. Western Digital dropped more than 7%, while Seagate and Intel fell more than 6% and Micron declined more than 2%. AMD, ASML, Broadcom, and Lam Research also ended lower. Wealth-management stocks sold off after Altruist unveiled an AI tool aimed at helping advisers personalize strategies and generate client documents, raising concerns about disruption to the advisory model. Raymond James and LPL Financial sank more than 8%, Charles Schwab fell more than 7%, and Stifel slid more than 4%. In contrast, homebuilders and building suppliers advanced as lower Treasury yields eased mortgage-rate pressure. Toll Brothers rose more than 6%, D.R. Horton and KB Home gained more than 5%, Lennar climbed more than 4%, and PulteGroup and Builders FirstSource added more than 3%.
Company earnings and guidance also drove outsized moves. Goodyear fell more than 14% after reporting adjusted EPS below expectations, and Amentum dropped more than 12% on revenue that missed estimates. S&P Global slid more than 9% after issuing a full-year adjusted EPS outlook below consensus. On the upside, Ichor surged more than 34% on a stronger-than-expected EPS forecast, Spotify jumped more than 17% after reporting a record rise in monthly active users, and Datadog gained more than 15% after posting revenue above estimates. Credo Technology rose more than 10% on upbeat preliminary revenue guidance, while Masco and Marriott advanced on stronger outlooks. Shopify climbed after an analyst upgrade.
US equities ended Tuesday without a clear direction. The S&P 500 fell 0.33% and the Nasdaq 100 declined 0.56%, while the Dow Jones rose 0.10% and reached a new all-time high. In futures trading, March E-mini S&P futures slipped 0.30% and March E-mini Nasdaq futures fell 0.50%. The 10-year US Treasury yield dropped 6.1 bp to 4.141%, after touching 4.133% during the session, the lowest level in about 3.5 weeks. Treasuries also drew support from solid demand at the $58 billion 3-year note auction, with a 2.62 bid-to-cover ratio.
Macro Data: Retail Sales and Labor Costs
Weaker-than-expected economic reports early in the day helped push yields lower and reinforced the argument for a more accommodative policy outlook. The Q4 Employment Cost Index rose 0.7% q/q, below the 0.8% consensus and marking the smallest increase in roughly 4.5 years. US December retail sales were flat m/m versus expectations for a 0.4% gain, and retail sales excluding autos were also unchanged, missing forecasts for a 0.4% rise. The data raised concerns that Q4 GDP could face a downward revision.
Fed Signals and Rate-Cut Pricing
Market sentiment cooled later in the session after hawkish comments from Federal Reserve officials reduced expectations for imminent rate cuts. Cleveland Fed President Beth Hammack said she would prefer to “err on the side of patience” while assessing the impact of recent rate reductions and monitoring economic performance, suggesting the Fed could remain on hold for an extended period. Dallas Fed President Lorie Logan added that it would take “material” weakness in the US labor market for her to support additional rate cuts. Markets were pricing a 23% chance of a 25-bp cut at the March 17–18 policy meeting.
Week Ahead: Jobs, Inflation, and Earnings
Attention remains on corporate results and a busy economic calendar. Wednesday’s report is expected to show January nonfarm payrolls rising by 68,000, with the unemployment rate unchanged at 4.4% and average hourly earnings up 0.3% m/m and 3.7% y/y. Thursday’s focus includes initial jobless claims, projected to fall to 224,000, and existing home sales, expected to decline 4.3% m/m to 4.16 million. Friday’s January CPI is forecast at 2.5% y/y, with core CPI also seen at 2.5% y/y. Earnings season is in full swing: more than half of S&P 500 companies have reported, with 78% of the 319 reporters beating expectations. Bloomberg Intelligence projects S&P 500 earnings growth of 8.4% y/y in Q4, and 4.6% excluding the largest megacap technology names.
Sector Moves and Single-Stock Drivers
AI-infrastructure and semiconductor names weighed on the broader market. Western Digital dropped more than 7%, while Seagate and Intel fell more than 6% and Micron declined more than 2%. AMD, ASML, Broadcom, and Lam Research also ended lower. Wealth-management stocks sold off after Altruist unveiled an AI tool aimed at helping advisers personalize strategies and generate client documents, raising concerns about disruption to the advisory model. Raymond James and LPL Financial sank more than 8%, Charles Schwab fell more than 7%, and Stifel slid more than 4%. In contrast, homebuilders and building suppliers advanced as lower Treasury yields eased mortgage-rate pressure. Toll Brothers rose more than 6%, D.R. Horton and KB Home gained more than 5%, Lennar climbed more than 4%, and PulteGroup and Builders FirstSource added more than 3%.
Company earnings and guidance also drove outsized moves. Goodyear fell more than 14% after reporting adjusted EPS below expectations, and Amentum dropped more than 12% on revenue that missed estimates. S&P Global slid more than 9% after issuing a full-year adjusted EPS outlook below consensus. On the upside, Ichor surged more than 34% on a stronger-than-expected EPS forecast, Spotify jumped more than 17% after reporting a record rise in monthly active users, and Datadog gained more than 15% after posting revenue above estimates. Credo Technology rose more than 10% on upbeat preliminary revenue guidance, while Masco and Marriott advanced on stronger outlooks. Shopify climbed after an analyst upgrade.
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Twitter: @BigStakeTrades
Twitter: @BigStakeTrades