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February 20, 2025
Dow: 44,193
S&P: 6,092
Nasdaq: 19,836
10-YR T-Note: 4.51%
Bitcoin: 97,721
VIX: 15.6
Gold: 2,947
Crude Oil: 72.5
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.
In a pattern that has repeated itself for the past few days, the major indices turned sharp intraday declines into late rallies to get positive, and bring on new record highs in the S&P and this situation repeated itself yesterday as well.
As an example, The Dow had declined by 348 points at 1pm but then made a recovery to end higher by 71 to 44,627 led by MSFT, which has been asleep for most of this year, in addition to UNH, MRK and JNJ, two decliners in the lagging health-care group.
The S&P repeated the same pattern with an early 18 point decline which then turned around late as well to end with a new record-high close with 14 points added to 6144, and the gains were also led by MSFT and some other technology stocks in addition to energy components.
The Nasdaq also ended higher after a lower start to a gain of 15 to 20,056 also led by TSLA for a change, MSFT and NFLIX while the Russell 2000 Index of small stocks ended down by 8 to 2282 while the VIX dropped a bit to 15.27.
As mentioned above, MSFT, of all things, made a nice gain for a change after saying it had developed what it calls the world’s first “quantum processing unit,” which could lead to the development of much more powerful computers.
A 10% rally in ADI also helped push the market higher. The semiconductor company reported stronger profit for the latest quarter than analysts expected, despite what its C.E.O. called a “challenging macro and geopolitical backdrop.”
Another recent poor performer, TSLA climbed after another electric-vehicle company, Nikola, plunged 39% following its filing for Chapter 11 bankruptcy protection. The electric truck maker said it will try to sell off its assets and wind down its business.
They helped offset a tumble for CE, which dropped even though the chemical company reported profit for the end of 2024 that topped analysts’ expectations. The C.E.O. warned that it saw “demand deterioration that gave no sign of easing” during the last three months of the year, and the company expects weakness to continue for such core markets as automotive, construction and paints.
TOL fell after the homebuilder reported a weaker profit for the latest quarter than analysts expected. It said that this spring selling season has seen healthy demand so far for homes at the higher end of the price spectrum, but “affordability constraints” are hurting sales at the lower end.
The January housing starts number fell by 9.8% and 0.7% for the year. Higher mortgage rates are making it difficult for some potential homebuyers to afford a house, even though the Federal Reserve started to cut its main interest rate in September in order to make things easier for the economy.
Mortgage rates have followed the trend of longer-term yields, which have remained relatively high in part because the U.S. economy has remained remarkably solid and because inflation hasn’t eased as much as hoped. Tariffs threatened by the President, along with other policies that could put upward pressure on inflation, have also caused some sharp swings for yields in the bond market.
The yield on the 10-year Treasury eased a bit on Wednesday and edged down to 4.53% from 4.55% late Tuesday. It was below 3.70% as recently as September and approached 4.80% within the past few weeks.
Both the bond and the stock markets have increasingly been taking Trump’s tariffs in stride, after earlier showing much more volatility. The hope on Wall Street is that he is using such threats just as a method to drive negotiations, and the ultimate effects won’t be as bad as they initially appeared.
The Federal Reserve has already signaled it may make fewer cuts this year than earlier expected, in part because of worries that inflation will remain stubbornly above its 2% target.
The release of the minutes for the Fed’s last policy meeting in January showed that officials discussed how Trump’s proposed tariffs and mass deportations of migrants, as well as strong consumer spending, could push inflation higher this year.
Fourth-quarter earnings season is winding down with the following reports this week: yesterday – GRMN, ADI higher and DVN, OXY, TOL, ANET, CDNS, FOUR, ANET, BMBL, TOL, OXY, CE, CSGP, ETSY, WING, PHG lower; today – Dow component WMT, in addition to CVNA, TOST, KVYO lower and CAKE, BABA higher; tonight - XYZ, BKNG, RIVN, SHAK, U, DBX, TXRW.
Economic reports will see: yesterday – January housing starts were down by 9.8% off by 0.7% year over year, and building permits were little changed, 2pm minutes of last F.O.M.C meeting (see above); today - weekly jobless claims rose to 219,000, January Philly Fed Index rose to 18.1 with prices higher, January L.E.I. index; Friday – U. of Michigan final February Consumer Sentiment Survey.
