The S&P 500 Index ($SPX) (SPY) today is up +0.10%, the Dow Jones Industrials Index ($DOWI) (DIA) is unchanged, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.05%. March E-mini S&P futures (ESH25) are unchanged, and March E-mini Nasdaq futures (NQH25) are down -0.04%.
Stocks were undercut by today’s weaker-than-expected US Jan retail sales report, which fell by -0.9%, weaker than expectations of -0.2%. Excluding autos, Jan retail sales fell by -0.4%, weaker than expectations of +0.3%. Jan “control group” retail sales, which excludes volatile sectors, fell by -0.8%, weaker than expectations of +0.3%. However, the retail sales report was undercut to some extent by the wildfires in California and severe weather in various areas of the country.
Stocks indexes today are being undercut as the Chernobyl nuclear plant in Ukraine was struck and damaged by a drone attack overnight, which raised the stakes in the Ukraine-Russian war. Stocks are also being undercut by ongoing concern about the Trump administration’s tariff plans. The markets were pleased that the reciprocal tariffs announced yesterday were delayed until April 1, but the administration said that the tariff calculations will take everything into account, including VAT taxes and non-tariff barriers, which means that tariffs could be substantial on US imports from many countries.
On the positive side for stocks, the 10-year T-note yield today is down -5 bp, adding to yesterday’s sharp decline of -9 bp.
In other US economic news, US Jan industrial production rose +0.5% m/m, stronger than expectations of +0.3%. However, Jan manufacturing production fell by -0.1%m/m, weaker than expectations of +0.1% m/m.
US Jan import prices rose by +0.3% m/m and +1.9% y/y, which was close to expectations of +0.4% m/m and +1.9% y/y. Excluding petroleum, US Jan import prices rose by +0.1% m/m slightly weaker than expectations of +0.2%.
Q4 earnings season is starting to wind down. According to Bloomberg, more than 330 stocks in the S&P 500 have reported earnings, with 77.6% beating earnings estimates, just below the 3-year average of 78.4%.
The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.18% and edged to a new 25-year high. China’s Shanghai Composite Index closed up +0.43%. Japan’s Nikkei Stock 225 closed down -0.79%.
Interest Rates
March 10-year T-notes (ZNH25) today are up +11 ticks. The 10-year T-note yield is down -5.3 bp at 4.476%, adding to Thursday’s large decline of -9.4 bp. March T-note prices today are higher on the weak US retail sales report, which may indicate that US consumers are pulling back from spending due to inflation and high debt.
European government bond yields today are lower. The 10-year German bund yield is down -0.4 bp at 2.414%, adding to Thursday’s decline of -5.9 bp. The 10-year UK gilt yield is down -0.5 bp to 4.485%, adding to Thursday’s decline of -5.2 bp.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
Airbnb (ABNB) is up more than +12% after reporting better-than-expected Q4 results and delivering positive guidance.
Applied Materials (AMAT) is down more than -5% after the company issued negative guidance, tied in part to Chinese restrictions that are negative for the company’s sales outlook.
Chinese stocks listed in the US are trading higher on news that Chinese political leaders may meet with Alibaba co-founder Jack Ma, which suggested that China’s government may be seeking a less hostile relationship with the private sector. Alibaba (BABA) is up more than +3%, Baidu (BIDU) is up more than +2%, and PDD (PDD) is up more than +1%.
Roku (ROKU) is up more than +13% after reporting positive Q4 earnings and sales.
Twilio (TWLO) is down more than -16% after a disappointment on management guidance, although there is underlying support for the company based on AI expectations.
Wynn Resorts (WYNN) is up more than +9% after better-than-expected earnings and positive data from Macau and Las Vegas.
Earnings Reports (2/14/2025)
Crown Castle Inc (CCI), Globant SA (GLOB), Ingram Micro Holding Corp (INGM), Moderna Inc (MRNA), and Standardaero Inc (SARO).
