Market Overview: US Indices Continue Upward Momentum
The S&P 500 Index ($SPX) (SPY) has seen an uptick of +0.36% today, while the Dow Jones Industrial Average ($DOWI) (DIA) recorded a gain of +0.47%.
The Nasdaq 100 Index ($IUXX) (QQQ) also climbed by +0.40%. Moreover, March E-mini S&P futures (ESH26) rose by +0.30%, and March E-mini Nasdaq futures (NQH26) advanced by +0.35%.
The ascent of stock indices is largely attributed to encouraging economic indicators from the US. Recent reports on December’s capital goods new orders, housing starts, building permits, and January’s manufacturing production surpassed expectations, instilling optimism in equity investors.
Compounding this positive sentiment, apprehensions surrounding artificial intelligence have momentarily subsided, providing a boost to technology hardware and software sectors.
However, after a protracted phase of growth driven by AI enthusiasm, there remains a palpable caution regarding potential returns on extensive technological investments, particularly concerning their disruptive impacts across various industries, including finance and logistics.
Mortgage Applications and Economic Data
In the week concluding February 13, US MBA mortgage applications increased by +2.8%. The purchase mortgage sub-index, however, saw a decline of -2.7%, while refinancing applications gained ±7.1%. The average rate for a 30-year fixed mortgage dipped by 4 basis points, falling to 6.17% from 6.21% the previous week.
December’s new orders for capital goods, excluding defense-related aircraft, witnessed a rise of +0.6% month-over-month, outperforming expectations of +0.3%. Furthermore, housing starts surged by +6.2% month-over-month, reaching a five-month peak at 1.404 million—well above the anticipated 1.304 million.
Building permits, another forward-looking indicator, increased by +4.2% month-over-month, achieving a nine-month high of 1.448 million, exceeding projections of 1.400 million.
Additionally, manufacturing production in January experienced a +0.6% uptick month-over-month, exceeding expectations of +0.4% and marking the most significant growth seen in the last eleven months.
Market Focus and Upcoming Economic Indicators
This week, the spotlight is on corporate earnings results and crucial economic updates. The minutes from the FOMC meeting held on January 27-28 are scheduled for release today. On Thursday, initial claims for unemployment are projected to decrease by 2,000 to a total of 225,000.
The Philadelphia Fed’s business outlook survey for February is expected to contract by -5.3 to a reading of 7.3, with the trade deficit for December anticipated to widen to -$86.0 billion. Furthermore, January pending home sales are expected to rise by +2.0% month-over-month.
Looking ahead to Friday, Q4 GDP is projected to expand by +3.0% (quarter-over-quarter annualized), with the core price index expected to see an ascent of +2.6%. Personal spending and income for December are anticipated to grow by +0.4% and +0.3%, respectively.
The December core PCE price index, the Federal Reserve’s preferred inflation metric, is expected to rise by +0.3% month-over-month and +2.9% year-over-year.
The manufacturing PMI for February is forecasted to remain steady at 52.4, and data on new home sales for December will also be disclosed. Lastly, the University of Michigan’s consumer sentiment index for February is expected to remain unchanged at 57.3.
Corporate Earnings Trends
As the Q4 earnings season approaches its conclusion, over three-quarters of S&P 500 companies have disseminated their results. So far, earnings have positively influenced stock prices, with 75% of the 379 companies surpassing forecasts.
In accordance with Bloomberg Intelligence, S&P earnings growth is projected to reach +8.4% for Q4, marking the tenth consecutive quarter of year-over-year growth. Additionally, excluding the so-called “Magnificent Seven” megacap technology firms, Q4 earnings are poised for a +4.6% increase.
Interest Rate Predictions
The markets are currently pricing in a 6% likelihood of a -25 basis points rate reduction at the upcoming policy meeting scheduled for March 17-18.
International Market Movements
Global markets are experiencing upward trends today, with the Euro Stoxx 50 up +0.69%. China’s Shanghai Composite is closed for the week-long Lunar New Year celebrations, while Japan’s Nikkei Stock 225 concluded trading with an increase of +1.02%.
Interest Rate Developments
March 10-year T-notes (ZNH6) are down by -6 ticks today. The yield on the 10-year T-note has risen by +1.9 basis points to 4.077%. This downward pressure on T-notes comes amid a buoyant equity market, which has diminished the demand for government debt as a safe-haven asset.
Additionally, the stronger-than-anticipated US economic indicators concerning capital goods orders, housing starts, and manufacturing production are weighing heavily on T-note valuations.
Compounding these pressures, supply-related factors arise from an impending auction of $16 billion in 20-year T-bonds later today.
European government bond yields are displaying a mixed performance today, with the 10-year German Bund yield climbing by +0.6 basis points to 2.743%, while the yield on the 10-year UK gilt has slightly decreased by -0.1 basis points to 4.375%.
The UK’s January CPI witnessed a +3.0% annual increase, aligning with expectations and marking the slowest rate of growth observed in ten months. The core CPI for January rose by +3.1% year-over-year, surpassing expectations of +3.0%.
Market swaps are currently estimating a 3% probability of a -25 basis points rate cut by the European Central Bank at its forthcoming meeting on March 19.
US Stock Performers
Silver and gold mining stocks are experiencing notable gains today as precious metal prices rebound significantly following Tuesday’s sell-off. Hecla Mining (HL) has surged more than +9%, while Coeur Mining (CDE) is up over +3%.
Additionally, Barrick Mining (B), Newmont Corp (NEM), and Freeport McMoRan (FCX) have all ascended by more than +2%, and Anglogold Ashanti (AU) has increased by over +1%.
Garmin Ltd (GRMN) leads the S&P 500 with a remarkable gain of over +15% after posting Q4 revenue of $2.12 billion, exceeding consensus expectations of $2.00 billion, along with an optimistic forecast for full-year revenue of $7.90 billion, surpassing the consensus of $7.61 billion.
Global-e Online Ltd (GLBE) has experienced an increase of over +11% following its forecast of full-year revenue between $1.21 billion and $1.27 billion, notably higher than consensus expectations of $1.19 billion.
Global Payments (GPN) also surged by over +11% after projecting full-year adjusted EPS, inclusive of SBC, ranging from $13.80 to $14.00, exceeding consensus estimates of $13.59.
Caesars Entertainment (CZR) has increased by over +11% post-reporting Q4 same-store adjusted EBITDA of $901.0 million, surpassing the consensus of $900.1 million.
Similarly, Pitney Bowes (PBI) gained more than +9% after reporting Q4 adjusted EPS of 45 cents, beating the consensus of 38 cents, along with a robust forecast for 2026 adjusted EPS of $1.40 to $1.60, ahead of the consensus of $1.38.
Insulet (PODD) rose by more than +8% following Q4 revenue of $783.8 million, also exceeding expectations of $768.6 million.
Cadence Design Systems (CDNS) enjoyed a +7% increment, marking it as a top gainer in the Nasdaq 100 following Q4 adjusted EPS of $1.99, surpassing the consensus of $1.91, along with a promising forecast for full-year adjusted EPS of $8.05 to $8.15, above the consensus of $8.03.
Verisk Analytics (VRSK) increased by over +6% after reporting Q4 adjusted EPS of $1.82, bettering the consensus of $1.61. Analog Devices (ADI) also improved by more than +2% after reporting Q1 adjusted EPS of $2.46, which exceeded the consensus of $2.31.
Conversely, Axcelis Technologies (ACLS) experienced a significant decline of over -10% following a disappointing Q1 adjusted EPS forecast of 71 cents, substantially below the consensus of 99 cents.
Applied Digital (APLD) fell by more than -7% as Nvidia exited its equity position in the company. Palo Alto Networks (PANW) led the bearish trend, down over -8% in the S&P 500 and Nasdaq 100, with a forecast for full-year adjusted EPS of $3.65 to $3.70, below the consensus of $3.87.
Other notable decliners include Datadog (DDOG) and Zscaler (ZS), both down more than -4%, while Fortinet (FTNT) and CrowdStrike Holdings (CRWD) decreased by more than -2% and -1%, respectively.
Genuine Parts Co (GPC) declined by more than -4%, adding to Tuesday’s -14% plunge after reporting Q4 net sales of $6.01 billion, below the expected $6.06 billion.
Charles River Laboratories International (CRL) saw a decline of more than -3% after providing a 2026 adjusted EPS forecast of $10.70 to $11.20, with the midpoint falling short of the consensus of $11.04.
Figure Technology Solutions (FIGR) plummeted over -3% following the announcement of a secondary public offering of 4.23 million shares of its common stock. Knife River Corp (KNF) closed more than -1% lower after Wells Fargo Securities downgraded the stock to underweight from equal weight, establishing a price target of $81.
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