Stocks Closed Mostly Higher On Friday, But Down For The Week, Last Week's Better-Than-Expected Employment And Inflation Reports Are Supportive For Stocks Stocks closed mostly higher on Friday with only the Nasdaq missing the cut, albeit barely. The small-cap Russell 2000 and mid-cap S&P 400 were the leaders, once again, gaining 1.18% and 0.89% respectively. YTD the market is off to a decent, but uneven start with the Dow up 2.99%; the S&P off -0.14%; the Nasdaq down -2.99%; but the small-cap Russell 2000 up 6.64%; and the mid-cap S&P 400 up 7.82%. Tech has seen its share of profit taking. And market rotation has benefited the small and mid-caps (which lagged larger-caps and big tech last year). But the broadening of the bull market will benefit all the indexes. And despite the volatility in big tech and AI names at the moment, I see that as very temporary, as the AI boom is still in its early stages with many more years to go as the transformational technology is adopted across all industries. Big week last week in terms of economic reports. Friday's Consumer Price Index (CPI – retail inflation), once again, showed inflation easing with the headline number at 0.2% m/m vs. last month's 0.3% and views for the same. The y/y rate came in at 2.4% vs. last month's 2.7% and estimates for 2.5%. The core rate (ex-food & energy), was up 0.3% vs. last month's 0.2% pace, but in line with forecasts. The y/y rate eased to 2.5% vs. last month's 2.6%, also in line with the consensus. While inflation is still too high, the continued decline gives the Fed breathing room to lower rates, when the time comes. Although, last Wednesday's better-than-expected Employment report also shows the Fed there's no rush to do so. Non-farm payrolls showed 130,000 new jobs being created in January (172,000 in the private sector and -42,000 in the public) vs. the consensus for 70,000 (75K private and -5K public). The unemployment rate eased to 4.3% vs. last month's 4.4% and views for the same, while the participation rate rose to 62.5% from 62.4%. As I mentioned last week, the only downside to the stronger report was calling into question the timing of the next rate cut. Although, even prior last week's jobs report, the odds favored a June cut rather than March or April. (Fed Chair Jerome Powell's term ends in in May. And the new nominee, Kevin Warsh, is expected to push for cuts in the first month he's at the helm.) In the meantime, Q4 earnings are coming in better than expected as well. And earnings season continues on this week with another 562 companies on deck to report. Earnings season, however, 'officially' comes to a close next week when NVIDIA reports on Wednesday, 2/25, after the close. They have shown 10 quarters in a row of at least double-digit growth rates (two and a half spectacular years of growth). (5 of those quarters were triple-digit growth rates, with one quarter showing quadruple-digit growth.) Another fantastic quarter could potentially reset the AI trade, putting it back on the right track and dispelling the notion that AI is in a bubble. Most of the major indexes are within striking distance of their all-time highs (some of which just made new ones last week). And it won't take much to send stocks back to those levels, on their way to making new all-time highs, as this historic bull market looks to begin its next leg up. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
Tidak ada komentar:
Posting Komentar