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Market Moves You Need to See
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Up Yesterday, And Sharply Higher For The Month

Stocks closed higher yesterday with all of the major indexes in the green. The Nasdaq led the way with a 0.90% gain. But the mid-cap S&P 400, and small-cap Russell 2000 were close behind with 0.82% and 0.71% respectively.

Yesterday's Personal Consumption Expenditures (PCE) index (the Fed's preferred inflation gauge) came in as expected. The headline number showed inflation up 0.3% m/m (as expected) vs. last month's downwardly revised 0.1% (from 0.2%). On a y/y basis it came in at 2.4% as expected, which is down from last month's 2.6%. The core rate (ex-food and energy) showed inflation up 0.4% m/m (also as expected) vs. last month's downwardly revised 0.1% (from 0.2%). On a y/y basis it came in at 2.8%, in line with expectations, and under last month's 2.9%.

With a March (19-20) rate cut all but off the table, yesterday's PCE numbers aren't likely to change that. But the consistent easing of inflation (even though the pace has slowed), underscores the narrative that interest rates should begin to come down.

We'll get two more pieces of inflation data before the next FOMC meeting: the Consumer Price Index (CPI) on March 12, and the Producer Price Index (PPI) on March 14.

The Fed is expected to discuss the timing of the first rate cut when they meet in a few weeks. If those reports continue to show disinflation, that would augur favorably for a rate cut sooner (May?) rather than later (June?).

In other news, yesterday's Weekly Jobless Claims rose by 13,000 to 215K vs. the consensus for 210K. The smoother 4-week moving average, however, came in at 212.50K vs. last month's 215.50K.

Pending Home Sales were down -4.9% m/m vs. last month's downwardly revised pace of 5.7% (from 8.3%). The index itself came in at 74.3 vs. last month's 78.1.

The Chicago PMI slipped to 44.0 vs. last month's 46.0 and views for 47.3.

And the Kansas City Fed Manufacturing Index improved to -4 from last month's -9.

Today we'll get the PMI Manufacturing report, the ISM Manufacturing Index, Construction Spending, and the Consumer Sentiment report.

We'll also get more earnings.

Even though earnings season is winding down, there's still plenty of opportunities to surprise. Before the open yesterday, Hormel Foods posted a positive EPS surprise of 20.6%, and a positive sales surprise of 2.01%. They were up 14.6%. After the close yesterday, Dell Technologies reported a positive EPS surprise of 27.2%, and a positive sales surprise of 0.84%. They were up 1.51% in the regular session before earnings, but soared an additional 17% in after-hours trade following their report.

There's another 60 companies on deck to report today.

With one more day to go, the S&P and Nasdaq are both up for the week, while the Dow is just below the mark (although, it won't take much to get into the green). The small-cap Russell 2000, and the mid-cap S&P 400 are also higher for the week, so far, and by a convincing margin.

But they were all up for the month. That makes it 4 months in a row for the big three indexes. And the 2nd month out of the last 3 months for the Russell 2000 and S&P 400.

In order of performance it was the Nasdaq with a gain of 6.12%, followed by the mid-cap S&P 400 with 5.80%, then the small-cap Russell 2000 with 5.52%, the S&P 500 with 5.17%, and finally the Dow with 2.22%.

And it looks like there's plenty more upside to go this year.


Kevin Matras

Executive Vice President, Zacks Investment Research


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