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February 13, 2025
DOW: 44,503
S&P: 6,065
Nasdaq: 9,710
10-YR T-Note: 4.56%
Bitcoin: 96,139
VIX: 15.68
Gold: $2,936
Crude Oil: $70.40
Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.
If one watched the pre-market showings yesterday (courtesy of Newbridge Securities), right before their 8:30am release, they were nominally higher.
And then right after the release of the higher than expected numbers, they literally collapsed badly to the tune of several hundred points in the Dow and 65 in the S&P due to the negative implications as yields on interest rates jumped.
The Dow fell by an awful 489 points to start but then decided to recover a bit to end lower by “only” 225 to 44,368 hurt by selling in AZP, CAT, SHW and UNH. The S&P got clocked to the tune of 65 lower and it also came back nicely to end lower by 16 to 6052, In addition to negative readings in some technology stocks like AMZN, ORCL and others plus homebuilders on the higher rates, in addition to real estate and utilities, that is what caused the most downdrafts.
The Nasdaq had the nerve to end higher by 6 to 19,649 from a 228 point loss and this was due to AAPL with a large gain, in addition to META up for the 18th straight session and even beaten-down TSLA finally got its act together after a very large decline of 130 points.
The Russell 2000 Index of small stocks did nothing with a 20 point loss to 2256 while the VIX ended down slightly to 15.89 as the overwhelming majority of issues was still lower, go figure.
Helping to get things on the better side was a decline in the price of oil to below $72 a barrel after the President said he had agreed with Russia’s president to begin “negotiations” on ending the war in Ukraine.
Treasury yields also remained notably higher in the bond market, increasing the pressure on financial markets after the morning’s report said U.S. consumers had to pay higher prices for eggs, gasoline and other costs of living than economists expected.
Overall inflation was 3% for U.S. consumers in January. That was worse than the 2.9% inflation rate of December, which is what economists expected to see again.
The inflation report suggested not only that pressure on U.S. households’ budgets is amplifying but also that investors were correct to forecast that the Federal Reserve will deliver fewer cuts to rates this year.
But the Fed warned at the end of 2024 it may not cut rates by as much in 2025 because of worries about inflation remaining higher as its goal is to keep inflation at 2%, and lower rates can give inflation more fuel.
And January’s reading doesn’t account for any of the tariffs that Trump has recently announced, with possibly more on the way, which could raise prices for imports further.
Following January’s discouraging inflation data, traders are betting on a 29% chance the Fed will not cut rates at all this year, according to data from CME Group. That is up from a less than 20% chance seen the day before.
Such expectations sent the yield on the 10-year Treasury up to 4.62% from 4.54% late Tuesday, which is a notable move for the bond market.
One of the few ways companies have to counteract such downward pressure on their stock prices is to deliver stronger profits and GILD rose after the pharmaceutical company topped profit expectations for the latest quarter. It credited strength for its HIV products, among other things.
And how about CVS, which gained the most in 25 years after easily topping revenue and profit expectations for the latest quarter.
But topping profit forecasts isn’t always enough. Ride-hailing app LYFT fell despite reporting stronger earnings than expected. Its revenue for the final three months of 2024 fell just short of analysts’ forecasts.
Earnings this week for the 4Q are starting to wind down and we will see: yesterday – SHOP, LYFT, Z, KHC, VRT, BIIB are lower while GILD, DASH, SMCI, CVX are higher; today Dow component CSCO higher in addition to RH, MGM, APP, BROS, MCO higher while RDDT, TTD, DE are down; tonight - AMAT, COIN,
Economic reports will have: yesterday – January C.P.I. was awful at a gain of 0.5% which was the highest since June 2022 and year over year it was 3.3%; today - January P.P.I. also came in a little higher than expected at a gain of 0.4% and 0.3% excluding food and energy while year over year they were 3.5% and 3.6% respecitvely, weekly jobless claims came in at 213K; Friday – January retail sales, January industrial production and capacity utilization.
