February 13th Market Overview

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Market Overview

Executive Summary

• Markets advance despite wholesale inflation running hotter than expected at 0.4%

• President Trump signs reciprocal tariff study while delaying immediate implementation

• Casino stocks rip after $MGM beats earnings expectations

• Defense sector weakens on potential military spending cuts

Key Market Drivers

1. Inflation Data Remains Mixed: January PPI rose 0.4%, exceeding the 0.3% forecast, while core PPI matched expectations at 0.3%

2. Trade Policy Developments: Trump initiates reciprocal tariff study while holding off on immediate implementation

3. Tech Sector Leadership: AI-related stocks drive gains with $NVDA shipping new Blackwell chips

4. Defense Sector Pressure: Military spending reduction proposals impact major contractors

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Stock Spotlight

• $MGM ▲ 17.57%: Surpassed Q4 estimates with $4.35B revenue, boosted by China recovery and strong 2025 demand outlook

• $ARM ▲ 5.66%: Plans first in-house chip launch by summer 2025, secures $META as potential customer

• $HOOD ▲ 11%: Q4 revenue hits $1.01B vs $944.6M expected, showing digital trading platform strength

• $WST ▼ 34%: Guidance shock with FY25 EPS forecast of $6.00-$6.20 vs $7.45 expected

• $HBI ▼ 18%: CEO departure announcement compounds Q4 revenue miss of $888.5M vs $899.2M expected

Big Name Updates

• $NVDA advances on HPE's first Blackwell chip system shipment

• $TSLA gains despite hovering near three-month lows

• Defense titans $LMT, $NOC, $GD each shed approximately 1.5% on spending cut concerns

• New ELON ETF debuts, offering 2x leveraged $TSLA exposure paired with an $F short position

Other Notable Company News

• SailPoint returns to public markets, trading around IPO price of $23

• Bank of America downgrades $KHC to underperform, citing revenue challenges

• Casino operators $CZR ▲ 8% and $LVS ▲ 1% rise in sympathy with $MGM's results

Sector Watch

Bond Market

Treasury yields declined, with the 10-year rate dropping more than 10 basis points to 4.531%. Market participants genrally view 4.5% as a crucial technical level that could signal a shift in the upward trend present since September 2024.

Policy Watch

• Trump signs presidential memorandum examining reciprocal tariffs without immediate implementation

• India trade relations in focus as Modi visits Washington amid tariff discussions

• Potential defense spending reductions surface in policy discussions

• Fed rate cut expectations shift toward September following recent inflation data

What to Watch

1. Modi-Trump Meeting Outcomes: Prime Minister Modi's White House visit could influence trade policy implementation and tariff negotiations

2. Defense Sector Developments: Monitor legislative response to proposed military spending cuts

3. PCE Data Release: Given mixed January inflation readings, the Fed's preferred gauge takes on heightened importance

4. Tech Earnings Ahead: $AMAT, $PANW, $DDOG report after hours, potentially impacting tech sentiment

Note: This newsletter is intended for informational purposes only.