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It’s been an eventful week in the markets as Q4 earnings season heads into its home stretch and major reports like CPI and PPI mapped economic developments over the recent past. The consumer has held up its end, but prices remain stubbornly high. Perhaps we’ve experienced a stutter between legs-down — we’ve seen this at various times during the draw-down from peak inflation in 2022 — but only time will really tell.
In any case, market indices are lower in today’s pre-market: the Dow is -107 points, the S&P 500 -23 and the Nasdaq -90 points at this hour. Ultimately, we’ve been in a hodgepodge trading environment of late, with the Dow looking to finish its third straight week in the red (four of the last five weeks) while the Nasdaq looks to add its sixth week in the green of the last seven. Overall, the strong tech narrative for 2023 remains intact.
Import Prices for January came in lighter than expected: -0.2% on the headline was lower than -0.1% expected and +0.4% posted the previous month. Year over year, imports are running -4.9% lower. On the Exports side, we see +0.8% year over year growth, which is the lowest print since the pandemic year 2020. Overall, we add these figures to the “inflation coming down” column, which is good when considering the forward outlook of interest rates.
This week has also seen a shift in understanding regarding where the Fed funds rate is headed, and how soon it will get there. Two non-voting members of the Fed — St Louis’ James Bullard and Cleveland’s Loretta Mester — were both clear advocates of a 50 bps hike at the March 22nd Fed meeting; Fed Chair Powell had earlier indicated a 25 bps hike was likely. Another 25 bps hike was also being priced-in for the following meeting in early May, although now we’re hearing about the possibility of another 25 bps June hike. Either way you slice it, 5.50% looks to be in the cards — potentially.
Zacks Rank #2 (Buy)-rated heavy machinery manufacturer Deere & Co. ((DE - Free Report) posted one of the strongest earnings reports of the week with its fiscal Q1 print ahead of today’s opening bell: earnings of $6.55 per share easily swept past the $5.53 expected and the $2.29 per share reported in the year-ago quarter. Revenues of $11.40 also beat expectations, albeit by a narrower margin: +0.84%. Deere share also raised guidance, and shares are climbing nearly +4% in pre-market activity; the stock had sold off -6% year to date.
We hope you’ll be able to enjoy the three-day weekend as we here at Zacks will, in recognition of Presidents Day in the U.S. Markets and banks will also be closed until Tuesday. Economic reports will continue through next week, with PMI Manufacturing and Services, the first revision to Q4 GDP, and January PCE and Consumer Spending prints are all due, in addition to Weekly Jobless Claims. Stay warm!
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Pre-Markets In The Red on Last Day of The Week
It’s been an eventful week in the markets as Q4 earnings season heads into its home stretch and major reports like CPI and PPI mapped economic developments over the recent past. The consumer has held up its end, but prices remain stubbornly high. Perhaps we’ve experienced a stutter between legs-down — we’ve seen this at various times during the draw-down from peak inflation in 2022 — but only time will really tell.
In any case, market indices are lower in today’s pre-market: the Dow is -107 points, the S&P 500 -23 and the Nasdaq -90 points at this hour. Ultimately, we’ve been in a hodgepodge trading environment of late, with the Dow looking to finish its third straight week in the red (four of the last five weeks) while the Nasdaq looks to add its sixth week in the green of the last seven. Overall, the strong tech narrative for 2023 remains intact.
Import Prices for January came in lighter than expected: -0.2% on the headline was lower than -0.1% expected and +0.4% posted the previous month. Year over year, imports are running -4.9% lower. On the Exports side, we see +0.8% year over year growth, which is the lowest print since the pandemic year 2020. Overall, we add these figures to the “inflation coming down” column, which is good when considering the forward outlook of interest rates.
This week has also seen a shift in understanding regarding where the Fed funds rate is headed, and how soon it will get there. Two non-voting members of the Fed — St Louis’ James Bullard and Cleveland’s Loretta Mester — were both clear advocates of a 50 bps hike at the March 22nd Fed meeting; Fed Chair Powell had earlier indicated a 25 bps hike was likely. Another 25 bps hike was also being priced-in for the following meeting in early May, although now we’re hearing about the possibility of another 25 bps June hike. Either way you slice it, 5.50% looks to be in the cards — potentially.
Zacks Rank #2 (Buy)-rated heavy machinery manufacturer Deere & Co. ((DE - Free Report) posted one of the strongest earnings reports of the week with its fiscal Q1 print ahead of today’s opening bell: earnings of $6.55 per share easily swept past the $5.53 expected and the $2.29 per share reported in the year-ago quarter. Revenues of $11.40 also beat expectations, albeit by a narrower margin: +0.84%. Deere share also raised guidance, and shares are climbing nearly +4% in pre-market activity; the stock had sold off -6% year to date.
We hope you’ll be able to enjoy the three-day weekend as we here at Zacks will, in recognition of Presidents Day in the U.S. Markets and banks will also be closed until Tuesday. Economic reports will continue through next week, with PMI Manufacturing and Services, the first revision to Q4 GDP, and January PCE and Consumer Spending prints are all due, in addition to Weekly Jobless Claims. Stay warm!