Reply To: Traders Market Weekly: Geopolitics and Stormy Weather

#70054
Truman
Participant

Morning Market

Market Snapshot
Dow 37512.46 -198.56 (-0.53%)
Nasdaq 14966.59 -3.60 (-0.02%)
SP 500 4777.06 -3.18 (-0.07%)
10-yr Note +2/32 3.945
NYSE Adv 1470 Dec 1172 Vol 173 mln
Nasdaq Adv 2106 Dec 1858 Vol 1.9 bln

Industry Watch
Strong: Energy, Real Estate, Utilities, Communication Services, Consumer Staples
Weak: Consumer Discretionary, Health Care, Industrials, Financials

Moving the Market
— Sharp drop in yields, especially the 2-yr note, which is most sensitive to changes in the fed funds rate, after the cooler-than-expected December Producer Price Index
— Increased expectations for rate cuts starting in March
— Digesting the first batch of Q4 earnings results, which garnered mixed reactions
— Earnings-related loss in UnitedHealth (UNH) weighing down the price-weighted Dow Jones Industrial Average

Apple (AAPL 185.53, -0.08, -0.1%), Amazon.com (AMZN 154.37, -0.81, -0.5%), and NVIDIA (NVDA 544.79, -3.33, -0.6%) were all trading up at their highs of the day. Tesla (TSLA 220.81, -6.41, -2.3%) is another laggard from the mega cap space. Bank stocks lag after earnings results

The SPDR S&P Bank ETF (KBE) is down 1.2%. This weakness is due in part to negative reactions to earnings results from Bank of America (BAC 32.30, -0.85, -2.6%), Wells Fargo (WFC 47.92, -1.12, -2.3%), and Citigroup (C 51.51, -0.56, -1.1%). JPMorgan Chase (JPM 171.78, +1.18, +0.7%) is trading up after its earnings report.

Market breadth is still positive, though, despite downside moves. Advancers have a better than 2-to-1 lead over decliners at the NYSE and a 3-to-2 lead at the Nasdaq.

Rate cut expectations have increased following the pleasing PPI report.

The fed funds futures market now sees an 83.2% probability of a 25 basis points rate cut at the March FOMC meeting versus a 73.2% probability yesterday and a 68.1% probability one week ago. Notably, rate cut expectations also increased yesterday despite a December CPI report that wasn’t exactly what the market hoped to see, suggesting the market doesn’t think the CPI report indicated an acceleration in inflation.