February 4th Market Overview

Happy Tuesday.

Trade tensions and tech earnings drive the narrative today. China's quick tariff response shook the markets. But, $PLTR's huge earnings and Trump's month-long tariff pause for Mexico and Canada boosted U.S. tech. This keeps the bulls in control.

Watching for google earnings after the bell.

 
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Let's dig in...

Executive Summary

• Chinese markets rally with Hong Kong's Hang Seng up ▲ 2.83% despite implementing retaliatory tariffs
  

• Bank of America's Cabana sees 25% tariffs potentially “impacting S&P 500 earnings by 2%, bilateral tariffs by 8%”
  

• Record highs achieved by 19 S&P 500 stocks today, including $GOOG, $NFLX, $AMZN, and $IBM
  

• Infrastructure Capital Advisors maintains bullish S&P 500 year-end target of 7,000, citing dollar strength offsetting tariff impact
  

Market Overview

Key Market Drivers

1. Strategic Trade Shifts: Trump accelerates talks with President Xi to "next 24 hours" versus original week-end timeline. China's response targets specific sectors - energy, agriculture, and automotive - while avoiding broader technology and consumer goods, suggesting room for strategic negotiations.
   

2. Tech Sector Momentum: The technology-heavy Nasdaq leads gains, with $NVDA advancing on sympathy moves from $PLTR's AI-driven results. Major tech firms reaching fresh highs signal sustained institutional confidence despite trade tensions.
   

3. Global Market Response: European markets demonstrate stability with Stoxx 600 gaining ▲ 0.22%, while emerging markets process trade implications. Dollar index drops ▼ 0.9% as trade war concerns moderate, creating potential tailwinds for multinational earnings.
   

Stock Spotlight

• $PLTR ▲ 24.14%: Q4 revenue reached $828 million versus $776 million forecast. U.S. commercial revenue up 70% year-over-year. $400 million Army contract secured. Trading volume: 1.5 million shares.
  

• $GOOG ▲ 2.68%: Hit $208.07 before Q4 earnings. China launches antitrust probe. DA Davidson holds "buy" rating on cloud performance.
  

• $SPOT ▲ 9.0%: Reports first profitable year. Stock up 150% over 12 months. Q4 subscribers exceed targets. Price increases hold with minimal user loss.
  

• $MRCK ▼ 8.0%: 2025 revenue guidance: $64.1-65.6 billion vs $65.8 billion consensus. Company cites R&D costs and drug segment competition.
  

• $FOXA ▲ 4.36%: Hits record since 2019 Disney spin-off. Plans streaming service with $70 million digital investment.

Corporate Developments

• $AAPL Analysis: Ships 67 million iPhones to U.S. yearly under tariff threat. India production at 13% capacity. Morgan Stanley projects 3% price increase to protect margins.
  

• $DIS Q1 Outlook: Revenue target $24.57 billion vs $22.08 billion prior year. Parks face $220 million hurricane/cruise impact. Projects 6-8% yearly growth.

Notable Sector Moves

• Healthcare: Vaccine stocks decline on RFK Jr.'s 14-13 committee advance. $MRNA ▼ 6.17%, $BNTX ▼ 2.0%, $PFE ▼ 2.0%.
  

• Prison Operators: $GEO ▼ 8.0%, $CXW ▼ 4.0% on El Salvador prison proposal impact.
  

• Fintech: $HOOD ▲ 1.17% after CFTC halts Super Bowl contracts. Core trading remains stable.
  

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Sector Watch

Bond Market

Treasury market movements paint a clear picture:

• 10-year yield: ▼ 3 basis points to 4.513%

• 2-year yield: ▼ 2 basis points to 4.218%

• 30-year yield: ▼ 4 basis points to 4.726%

Volume indicators show institutional positioning:

• Primary dealer net positions increase 12%

• Foreign central bank activity up 8% week-over-week

• Corporate bond spreads narrow 5 basis points

Policy Watch

White House Economic Team Expansion:

• Council of Economic Advisers adds two key members to work with chair nominee Stephen Miran

• Pierre Yared (Columbia): Specializes in monetary policy impact on fiscal outcomes

• Kim Ruhl (Wisconsin-Madison): Focus on international trade data modeling

Fed Policy Implications:

• Oxford Economics removes March rate cut from baseline forecast

• Capital Economics sees "labor market stabilized at healthy level"

• Bank of America estimates 2% S&P 500 earnings impact from 25% Canada/Mexico tariffs

• Verdence Capital projects H1 2025 volatility from inflation/Fed policy uncertainty
  

What to Watch

1. Trump-Xi Trade Summit:

• Meeting scheduled for 9:00 AM EST Wednesday

• Chinese imports under 10% tariff total $48.2 billion

• Trade deficit with China at $28.3 billion monthly average

• Key focus: LNG exports facing new 15% duty

• Agricultural sector exposure: $12.4 billion under tariff threat

2. $DIS Q1 Earnings (Pre-Market):

• Revenue forecast: $24.57B vs $22.08B (Q1 2024)

• Parks segment: $9.30B target amid $220M weather/pre-launch impact

• Streaming metrics:

  • Direct-to-consumer profit target: $875M

  • Subscriber forecast: -1.41M vs -600K prior year

  • ESPN+ standalone launch progress

• Studio revenue: "Wish" box office performance

3. Economic Data Releases:

• ADP Employment (8:30 AM EST): 175K consensus vs 164K prior

• Factory Orders (10:00 AM EST): -0.2% estimate

• December Durable Goods: 0.5% forecast

• ISM Services Index: 52.0 expected

• Impact on March FOMC meeting probability: Currently 32%