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Holding Pattern as Pre-Markets Book Profits

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Wednesday, February 8th, 2023

Pre-market futures are again starting early trading in the red this morning, after a closing bell Tuesday that rang in solid profits across the board on less-than-hawkish rhetoric from Fed Chair Powell about inflation and what he Fed plans to do about it. It would appear investors are booking those gains, near term: the Dow is currently -100 points, the S&P 500 is -20 and the Nasdaq -50 points at this hour.

Activision Blizzard (ATVI - Free Report) is selling off 3%+ this morning, as UK regulators appear to be putting the kibosh on the company’s buyout from Microsoft (MSFT - Free Report) , citing the harm such a merger could do for UK gamers. Microsoft, on the other hand, is +1.7% in early trading. Activision, which posted an earnings miss earlier this week on higher quarterly revenues, is roughly flat over the past five trading days.

Uber (UBER - Free Report) posted Q4 results this morning that CEO Dara Khosrowshahi called its “strongest quarter ever” in the company’s “strongest year,” swinging to a positive +29 cents per share versus expectations of -21 cents. Revenues of $8.6 billion outpaced the $8.5 billion anticipated. For the fourth quarter in a row, the company’s Mobility (ride sharing) service outperformed its Delivery service. Gross bookings for Q1 are now expected to reach +20-24% year over year (constant currency).

We’re light on economic data for today, with only December Wholesale Inventories expected after the opening bell this morning. However, we expect to hear from no fewer than six Fed Presidents and Governors regarding the Fed’s recent 25 bps interest rate increase and, presumably, what the thinking at the Fed is going forward. Current expectations are for two more 25 bps hikes — the first in late March and the second in early May. That’s several weeks of data (not to mention Q1 earnings) to help change the Fed’s mind.

Thus: holding pattern for right now. Not every week can be chock full of market-moving data. Thus far in Q4 earnings season, we’ve not seen the bottom fall out of the economy. We also continue to see a robust labor market, even as wage increases appear muted. These are all about as Goldilocks as we might expect, ergo the gains in the markets year to date. We’ll see what’s in store elsewhere once it gets here.

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