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Happy Wednesday.
Today’s inflation data today came in hotter then my sunburn.
Inflation data pushed the 10-year yield to fresh highs. The consumer price push prompted Fed Chair Powell to reaffirm his cautious stance on rate cuts during the 2nd day of his Congressional testimony.
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Let's dig in...
Market Overview
Index | Price | Change | % Change |
|---|---|---|---|
Dow Jones | 44,331.78 | -261.87 | ▼ 0.59% |
S&P 500 | 6,050.16 | -18.34 | ▼ 0.30% |
Nasdaq | 19,653.60 | +9.75 | ▲ 0.05% |
Gold | 2,924.10 | -8.50 | ▼ 0.29% |
Crude Oil | 71.32 | -2.00 | ▼ 2.73% |
10-Yr Treasury | 4.635 | +0.098 | ▲ 2.16% |
VIX | 15.89 | -0.13 | ▼ 0.81% |
Executive Summary
January CPI jumped 0.5% monthly and 3.0% annually, exceeding economist expectations of 0.3% and 2.9%
Core inflation rose 0.4% monthly and 3.3% annually, challenging Fed rate cut timeline
Treasury yields up, with the 10-year reaching 4.65%, up 11 basis points
Healthcare sector outperformed as $CVS ripped 15.57% on strong earnings
Key Market Drivers
Inflation Concerns Mount: January's CPI report showed broad-based price pressures, with shelter costs up 0.4% and used car prices jumping 2.2%
Fed Policy Shift: Markets now price just one rate cut for 2025, down from previous expectations of multiple cuts
Tariff Developments: White House signals potential reciprocal exemptions on pharmaceuticals and automobiles
Earnings Mixed Bag: Healthcare and tech names mostly beat estimates, while consumer staples disappoint
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Stock Spotlight
$CVS ▲ 15.57%: Crushed Q4 expectations with $1.19 EPS vs $0.93 estimate. Healthcare benefits segment showed resilience despite Medicare headwinds
$INTC ▲ 6.00%: Extended rally on domestic chip manufacturing optimism and positive comments from VP Vance
$KHC ▼ 4.00%: Hit 52-week low after warning of flat to negative organic sales growth in 2025
$SMCI ▲ 4.00%: Maintained confidence in meeting February 25 audit deadline despite revenue guidance cut
Big Name Updates
$TSLA ▲ 4.10%: Led tech sector recovery amid broader market weakness
$BABA ▲ 4.81%: Surged on reports of potential AI collaboration with Apple
$HOOD: Touched three-year high ahead of earnings
Jeremy Siegel warns of Magnificent Seven valuations, favors broader market exposure
Other Notable Company News
NYSE announces Texas exchange conversion from Chicago operation
$SCHW expands 24/5 trading to all clients for S&P 500 and Nasdaq 100 stocks
$Z ▼ 10.00%: Tumbled on weak Q1 guidance amid housing market concerns
$AVBG ▼ 8.00%: Posted $2 billion Q4 net loss, revenue missed estimates
Sector Watch
Sector | Symbol | % Change |
|---|---|---|
Communication Services | $XLC | ▲ 0.02% |
Consumer Discretionary | $XLY | ▲ 0.11% |
Consumer Staples | $XLP | ▲ 0.08% |
Energy | $XLE | ▼ 2.55% |
Financials | $XLF | ▼ 0.63% |
Healthcare | $XLV | ▼ 0.03% |
Industrials | $XLI | ▼ 0.64% |
Materials | $XLB | ▼ 0.68% |
Real Estate | $XLRE | ▼ 0.72% |
Technology | $XLK | ▼ 0.12% |
Utilities | $XLU | ▼ 0.35% |
Bond Market
Treasury yields up big following the inflation data, with the 10-year yield jumping 11 basis points to 4.64%. The move marked the largest single-day increase since December 2024, reflecting growing uncertainty about the Fed's rate cut timeline. Short-term yields showed particular sensitivity, with the 2-year Treasury climbing 9 basis points.
Policy Watch
Fed Chair Powell emphasized policy must remain restrictive, citing January's inflation data as evidence of incomplete progress
White House signals potential tariff exemptions announcement before Thursday's meeting with India's Prime Minister
House Speaker indicates openness to reciprocal trade agreements in pharmaceuticals and automotive sectors
What to Watch Tomorrow
Reddit Earnings Debut: First quarterly report since IPO amid high growth expectations
Key metrics: Monthly Active Users (MAUs) and advertising revenue growth
Wall Street consensus projects $0.21 EPS on revenue of $712.9M
Housing Market Data: January existing home sales and inventory levels
Impact of mortgage rates crossing 7% threshold
First reading on 2025 housing market momentum
Retail Sales Report:
Consumer spending resilience amid inflation pressures
Category-level trends in discretionary vs. staples
Cisco Earnings:
Enterprise tech spending outlook
AI infrastructure investment plans
China exposure impact
Thanks for reading 🙂
- John
Note: This newsletter is intended for informational purposes only.