February 20th Market Overview

Happy Thursday.

One more day until that sweet weekend air hits the nose. We have had a bumpy ride this week unless you have a massive concentration into china names.

Something caught my eye today: The Conference Board's leading economic indicator took another dip, falling 0.3% when expecting a 0.2% rise. Now, this index (which tracks 10 key economic signals) has been sliding for eleven straight months.

A personal ask from me - Check out today’s sponsor it buys me a sip of coffee. It's free, fast, and keeps these insights coming daily.

Also today’s sponsor is really cool for giving out fancy blankets.

Let's dig in...

Executive Summary

• Markets pulled back from record levels as forecast raises concerns about consumer spending
  

• The Conference Board’s Leading Economic Index fell 0.3% in January, missing expectations

• Defense sector faces pressure after Pentagon signals potential 40% budget cuts by 2030

• $MSFT unveils breakthrough quantum chip ‘Majorana 1’, targeting scalable quantum computing
  

Market Overview

Key Market Drivers

1. Retail Sector Concerns: $WMT projects fiscal year sales growth of 3-4%, below expectations, triggering sector-wide pressure

2. Economic Data: Leading Economic Index unexpectedly contracted in January, adding to growth concerns

3. Defense Budget: Pentagon’s potential 40% spending reduction by 2030 impacts defense stocks

4. Fed Commentary: St. Louis Fed President Musalem advocates maintaining restrictive rates until inflation convergence

Stock Spotlight

• $WMT ▼ 6.24% at $97.51: Fiscal 2026 guidance disappoints, warns of tariff impact on Mexican and Canadian imports

• $BABA ▲ 11%: Beat earnings with ¥280.15B revenue vs ¥277.37B expected, strong AI-driven cloud growth

• $PLTR ▼ 11.9%: Second consecutive day of significant decline amid defense budget concerns

• $SNOW ▲: BTIG upgrade to Buy with $220 target on improving demand environment

• $CARV ▼ 11.98% at $248.06: Despite strong Q4 results, potential stock dilution concerns weigh

Big Tech Updates

• $AAPL: Launches iPhone 16E featuring A18 chip, first in-house 5G modem (C1), and Apple Intelligence

• $GOOGL: Plans first international retail stores in New Delhi and Mumbai

• $TSLA: Targeting Q3 2025 India launch in Mumbai, Delhi, and Bangalore

• $MSFT: Introduces 8-qubit Majorana 1 quantum chip, aims for 1 million qubit scaling

• $NVDA: Oppenheimer reiterates outperform rating, cites DeepSeek integration benefits

Other Notable News

• $DAL: Offers $30,000 compensation to each passenger affected by Toronto incident

• $ROKU: Jefferies upgrades to Hold, raises target to $100 from $55 on platform growth

• $LLY: Warns of potential impact from new China trade restrictions

• $IONQ: DA Davidson maintains Buy rating, $50 target on quantum computing progress
  

Today’s Sponsors -

Fall in love with BILL, get a $200 Saranoni blanket

BILL + controllers = ❤️

We're sharing the love! Take a demo of BILL Spend & Expense and get a $200 gift card to Saranoni Luxury Blankets & Gifts.¹

"Switching to BILL for our credit cards has been such an amazing decision for us! After transitioning from a competitor to BILL Spend & Expense 6 months ago, we’ve already received over $10,000 in cash-back rewards—something our previous provider never came close to offering.” – Madolen Gossett, Controller @ Saranoni

Request a demo

¹Terms and Conditions apply. See offer page for details.
Card issued by Cross River Bank, Member FDIC, and is not a deposit product.

Sector Watch

Bond Market

• Treasury yields declined across the curve with the 10-year falling 3.4 basis points to 4.501%

• Bank stocks pressured by lower yields: $GS and $MS each down about 5%

• Trading volume increased after weak Leading Economic Index data

Policy Watch

Federal Reserve:

• St. Louis Fed President Musalem advocates "patient approach," keeping rates restrictive until inflation converges

• FOMC minutes suggest possible pause in balance sheet runoff until debt limit resolved

• Officials note difficulty interpreting early 2025 inflation data due to seasonal effects

Trade & International:

• Trump administration weighing 25% tariffs on lumber, potential expansion to autos and pharmaceuticals

• Bank of Japan signals possible rate hikes to 1.5% by FY 2026 end

• China's PBOC commits to real estate market stabilization

What to Watch Tomorrow

1. Nvidia Earnings: Scheduled after market close, focus on AI demand and guidance

• Street expectations: EPS $4.64, Revenue $20.4B

• Key metrics: Data Center revenue, AI chip demand

2. Economic Data: Initial Jobless Claims and Philadelphia Fed Manufacturing

• Previous week claims: 219,000

• Manufacturing index forecast: 13.2

3. Fed Speakers: Watch for additional commentary on rate path

• Multiple Fed officials scheduled to speak

• Focus on inflation assessment and rate guidance

4. Trade Policy Developments: Monitor potential expansion of tariffs

• Proposed 25% lumber tariffs

• Potential impact on US-China trade relations