February 6th Market Overview

Happy Thursday.

Markets are steady. Eight sectors are trading higher. Yet, weakness in semiconductors is dragging down tech. Retail earnings show strong consumer spending. The Bank of England's rate cut shifts the global policy landscape ahead of tomorrow's U.S. jobs report.


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Executive Summary

• Bank of England's 25bps rate cut kicks off potential global easing cycle, with Governor Bailey signaling more cuts ahead as "disinflation trend is in place"
  

• Retail strength emerges through earnings: $PM ▲ 10% on smoke-free growth, $TPR ▲ 16% on raised guidance, $RL ▲ 13% on luxury demand
  

• Tech sector faces pressure points: $SWKS ▼ 24% on lost Apple exclusivity, $RBLX ▼ 11% on missed bookings, setting cautious tone for $AMZN earnings after bell
  

• Labor market shows controlled cooling ahead of tomorrow's jobs report, with January layoffs down 40% YoY despite tech sector cuts rising 128% MoM to 7,488 positions
  

Market Overview

Key Market Drivers

1. Global monetary policy shift accelerates with BOE's Bailey signaling further rate cuts ahead, stating "disinflation trend is in place"
   

2. UBS raises gold target to $3,000/oz within 3 months, citing Trump tariffs and geopolitical risks
   

3. U.S. employers announced 49,795 job cuts in January, up 28% MoM but down 40% YoY, with tech sector leading at 7,488 layoffs
   

4. Wells Fargo expects economic benefits from deregulation and tax cuts to outweigh negative tariff consequences
   

Stock Spotlight

• $PM ▲ 10%: Smoke-free revenue climbs with Zyn shipments surging 42% YoY to 165M cans in Q4. Company expects 2025 shipments to rise 34-41% to 820M cans

• $TPR ▲ 16%: Raises FY25 EPS guidance to $4.85-$4.90 vs $4.66 consensus after strong Coach brand performance

• $HON ▼ 5%: Announces split into three companies spanning aerospace, automation, and advanced materials divisions

• $RBLX ▼ 11%: Misses Q4 bookings estimates with daily active users below expectations at 85.3M vs 88.2M forecast

Big Name Updates

• $F ▼ 7%: Projects difficult 2025, notes current guidance only factors initial weeks of potential tariff impact

• $LLY ▲ 3%: JPMorgan views FY25 revenue outlook of $58-61B as "highly achievable"

• $SWKS ▼ 24%: Confirms 20-25% content decline in Apple business starting Q4 FY25

• $QCOM ▼ 4%: Despite earnings beat, shares decline amid broader semiconductor weakness

Other Notable Company News

• $PTON ▲ 17%: Revenue exceeds expectations, raises EBITDA guidance to $300-350M from $240-290M

• $RL ▲ 13%: Hits all-time high after beating estimates, raises FY revenue growth forecast to 6-7%

• $KMX ▲ 3.5%: Evercore ISI upgrade cites improving comp sales and favorable industry backdrop

• $EA announces $1B accelerated share buyback program

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Sector Watch

Bond Market

Treasury yields fluctuate as markets digest the Bank of England's 25bps rate cut and rising U.S. jobless claims.

The BOE's move marks a significant shift in global monetary policy, with Governor Bailey explicitly stating "the disinflation trend is in place" and signaling more cuts ahead. Bank stocks rally on the Fed's less stringent stress test parameters, with $C ▲ 3% leading gains among major institutions. The central bank's new scenario suggests growing confidence in the financial sector's resilience while maintaining regulatory oversight.

Policy Watch

• Treasury Secretary Bessent confirms Trump administration's push for lower rates amid ongoing trade policy adjustments - tariffs remain at 10% for Chinese imports while Mexican and Canadian duties pause for 30 days
  

• Congress advances bipartisan legislation to restrict DeepSeek chatbot access on government devices, expanding recent AI security measures
  

• Department of Justice intervenes in Treasury system access dispute, temporarily suspending Musk's Department of Government Efficiency (DOGE) over federal privacy law concerns
  

• Russian senior lawmaker confirms "advanced level" preparations for potential Putin-Trump meeting, signaling shift in diplomatic engagement
  

What to Watch

1. January Jobs Report (Friday, 8:30 AM ET):

• Economists polled by Dow Jones forecast 169,000 jobs vs December's robust 256,000

• January U.S. corporate layoffs rose 28% MoM but remain down 40% YoY

• Tech sector leads January cuts with 7,488 positions eliminated, up 128% MoM

• Focus on average hourly earnings for Fed policy implications

2. Amazon Q4 Earnings After Bell:

• Wall Street eyes AWS performance after $GOOGL cloud revenue miss

• Holiday quarter historically strongest - analysts watch retail margins

• AI initiatives and cost-cutting progress under scrutiny

• Tariff impact assessment on supply chain and pricing strategy

3. Global Rate Decisions Impact:

• BOE signals further cuts after today's 25bps reduction

• BOJ's Tamura suggests rate hikes may accelerate beyond six-month intervals

• Market pricing three additional BOE cuts through 2025

• U.S. Treasury yields react to global central bank shifts

4. Semiconductor Sector Reset:

• $SWKS projects 20-25% Apple content decline starting Q4 FY25

• $QCOM beats estimates but shares slide 4% on sector concerns

• $ARM faces conflicting analyst views: Bernstein cautious at $100 PT while UBS bullish at $215

• Watch for supply chain realignment amid tariff adjustments

5. Corporate Restructuring Wave:

• $HON split follows industrial sector trend

• Focus on aerospace, automation, and materials divisions

• Implications for similar conglomerates

• Impact on sector valuations and M&A activity