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Pre-Markets Lower, Looking for Clues to a "Soft Landing"

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Monday, February 6th, 2023

We’re starting slowly this week, following a consequential week that saw not only a huge monthly jobs number and the lowest unemployment since 1969, but also saw another Fed interest rate increase — this time +25 bps, indicating this era of rate hikes is grinding to a close. Stocks sold off in the Friday session, but were up for the week overall.

This morning, pre-market futures look to continue selling these recent profits. With no economic prints ahead of the opening bell — and Q4 earnings season still strong but with most marquee names in the rearview mirror — the Dow is -180 points at this hour, the S&P 500 is -30 and the Nasdaq, which has outperformed the field year to date, is -110 points currently.

Even the economic indicators expected this week are of a slightly muted variety: International Trade Deficit, Consumer Credit, Wholesale Inventories, Jobless Claims and the University of Michigan Consumer Sentiment survey are all important, but are less likely to move markets -- especially compared to last week’s Fed meeting and labor force numbers.

Next week, we pick it up a little heavier again: January Consumer Price Index (CPI) and Producer Price Index (PPI) numbers, Empire State and Philly Fed surveys, Industrial Production and Capacity Utilization productivity prints, Housing Starts and a new homebuilders’ survey all await us. Currently, the narrative is a “soft landing” for the economy is coming into view; we’ll see if we still feel that way after next week.

Tyson Foods (TSN - Free Report) is out with fiscal Q1 earnings this morning, missing on the bottom line for the second-straight quarter: 85 cents per share was -37% beneath the $1.35 expected in the Zacks consensus, -70% from Q1 totals a year ago (which were, admittedly, historically good). Softer demand lowered meat prices while feedstock remained expensive. Shares are -5% in early trading. For more on TSN's earnings, click here.

Earnings later this week have some household names: Chipotle (CMG - Free Report) on Tuesday and Walt Disney (DIS - Free Report) Wednesday, to name just a couple. PepsiCo (PEP - Free Report) and PayPal (PYPL - Free Report) await us on Thursday. For the S&P, we’ve recently completed its fourth positive week in the past five; these numbers coming in complimentary to this soft-landing scenario may help our 2023 winning streak (so far) keep heading in the right direction.

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