Daily Market Report February 19th, 2025
In a really peculiar session, instead of starting out strongly higher as the various stock index futures were indicating, things sold off right at the opening, then went sharply lower in mid-afternoon and then rose right on the close to end at a record high in the S&P and close to one in the Dow and Nasdaq.
For instance, after a nominally higher start, the Dow collapsed to a 227 point loss in the early afternoon before working its way back and right on the close, it jumped to a 10 point final situation at 44,556 as it led on the upside by GS, HON and NKE, of all things while on the downside it was hurt by selling in SHW, MCD and UNH.
The S&P followed the same pattern, with a fast higher start which turned into a 15 point loss right after 2pm and this one also turned around into the close very late with a 15 point gain to a new record at 6129. It was helped by gains in PLTR at a new high, LLY, ORCL in a surprise move higher, INTC on its merger possibilities, BKNG ahead of its earnings later this week, GEV and SMCI. Gains in financial and energy stocks also helped.
The Nasdaq started out really strong with a fast 70 point gain which then collapsed to a 116 point loss right after 2pm as well before it also made a very late spurt higher to end with a 14 point gain to 20,041 led by ORCL, INTC, BKNG and so on. It was restrained by finally a loss in META after 20 straight advances, and declines in NFLX after its own recent high, plus AMZN and AAPL.
The Russell 2000 Index U.S. stocks was able to maintain its nominal strength all session and ended with a gain of 10 to 2290 mainly on strength in financial stocks.
There was pressure from CAG which lowered its forecasts for upcoming profit and other financial measures. The food company said supply issues have hurt two of its product lines: frozen meals containing chicken and frozen vegetables. It also said shifting values of foreign currencies are hurting its results as well.
Hanging over everything has been the threat of a global trade war following the President’s announcements of tariffs. But investors have been taking such actions increasingly in stride, believing they are merely tools for negotiations and that they will ultimately prove to be less painful for markets and the economy than they may seem initially.
Such optimism has global fund managers feeling so confident that they are piling into stocks and holding only 3.5% of their portfolios in the safety of cash, according to a survey.
Helping to support the fervor has been strong profit reports from ETR and other businesses. Companies in the S&P are on track to deliver nearly 17% growth in their earnings per share for the final three months of 2024, compared with a year earlier. That would be the best growth since 2021, according to FactSet.
Still, threats continue to hang over the stock market. Last week, both the C.P.I. and P.P.I. showed that inflation came in higher and such a pattern may force a halt to the Federal Reserve’s cuts to interest rates, which began in September in order to take pressure off the economy and help the job market.
Traders have been paring their expectations for possible cuts to rates through 2025, with a notable number saying they foresee zero. That in turn has pushed up yields in the bond market, which typically push downward on prices for stocks.
Treasury yields rose again yesterday, with the yield on the 10-year Treasury rising to 4.55% from 4.48% late Friday.
Stocks in Hong Kong jumped 1.6% for one of the world’s bigger gains after Chinese President Xi Jinping met with entrepreneurs Monday, including BABA founder Jack Ma, in a signal of assurance following a crackdown on the technology industry in recent years.
Fourth-quarter earnings season is winding down with the following reports this week: yesterday – WGS and ETR higher and CAG lower; today – CVNA, GRMN, ADI higher and DVN, OXY, TOL, ANET, CDNS, FOUR, ANET, BMBL, TOL, OXY, CE, CSGP, ETSY lower; tonight - CAKE, TOST, WING; Thursday – Dow component WMT, BABA, XYZ, BKNG, RIVN, SHAK, U, DBX, TXRW.
Economic reports will see: yesterday – February Empire NY Manufacturing Survey rose to 5.7, January housing market NAHB index fell to a five-month low of 42; today – January housing starts were down by 9.8% off by 0.7% year over year, and building permits were little changed, 2pm minutes of last F.O.M.C meeting; Thursday – weekly jobless claims, January Philly Fed Index, January L.E.I. index; Friday – U. of Michigan final February Consumer Sentiment Survey.
By Don Selkin