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| | | Good morning, | This week in the stock market was nothing short of a spectacle, with the S&P 500 achieving a landmark feat that left many investors and market enthusiasts wide-eyed. For the first time in its history, the S&P 500 closed above the elusive 5,000 mark, a milestone that underscores the dynamic and ever-evolving nature of the financial markets. | However, several dark clouds are forming that could make the recent highs the peak of a roller coaster. Let's get into it. | Have a great week! | Irving Wilkinson, Editor | AlphaBetaStock.com | | Table of Contents (Opens On Main Site) | | LAST WEEK’S MARKET OVERVIEW |
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| | The S&P 500’S Milestone | The S&P 500 did something remarkable this week – it closed above 5,000 for the first time! Gains in the mega-cap and semiconductor sectors supported this milestone. The Vanguard Mega Cap Growth ETF (MGK) rose 2.6%, while the PHLX Semiconductor Index (SOX) saw an impressive 5.3% increase. | But it wasn’t just these sectors shining bright. The equal-weighted S&P 500 also saw a modest gain of 0.5%. Interestingly, there wasn’t any major selling frenzy despite some murmurs about the market being overbought in the short term. This concern seemed to fuel further buying – talk about a paradox! | Standout Performers And Laggards | Earnings Winners: Companies like Ford (F), Eli Lilly (LLY), DuPont (DD), Arm Holdings (ARM), and Walt Disney (DIS) basked in the glory of positive earnings reports. Earnings Losers: On the flip side, Amgen (AMGN) and PayPal (PYPL) didn’t fare as well, impacted by their earnings outcomes.
| Bonds And Interest Rates: A Tug Of War | | The bond market saw some action too. The 2-yr note yield rose to 4.50%, and the 10-yr note yield climbed to 4.19%. This uptick in yields (which means bond prices fell) was a reaction to strong economic data and a reevaluation of rate cut expectations. Fed Chair Jerome Powell’s recent comments added to this sentiment, emphasizing a need for clear evidence of inflation cooling down before considering rate cuts. | Economic Data Insights | ISM Services PMI: This index, which measures the health of the services sector, showed a jump, indicating robust activity. It’s a sign that the economy isn’t ready for rate cuts just yet. Jobless Claims: The number of claims dropped, suggesting the labor market remains strong. CPI Revisions: These didn’t significantly alter the market’s view on inflation, which is a relief for many.
| Broader Economic And Global Developments | Credit Card Delinquencies: A worrying 50% surge in 2023, with consumer debt hitting a record $17.5 trillion. Corporate Moves: Layoffs at Snap, DocuSign, Cisco, and Toyota’s $1.3 billion investment in an EV plant in Kentucky. Global Market Trends: China’s deflation issues and the Reserve Bank of Australia’s interest rate stance are key developments to watch.
| Key Takeaways For Investors | Diversification is Key: The varied performance across sectors highlights the importance of a diversified portfolio. Economic Indicators Matter: Keeping an eye on economic data like the ISM Services PMI and jobless claims can provide crucial insights into market trends. Global Developments Impact Markets: From China’s deflation to corporate restructuring, global events can significantly influence market dynamics.
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| | Oil & Energy | | Oil prices are like a yo-yo, aren’t they? Just when you think you’ve got a handle on them, they swing in an entirely new direction. This week, we saw crude prices rise amidst a backdrop of geopolitical tensions and shifting production forecasts. | Middle East Uncertainty: The situation in the Middle East remains a powder keg. Israel’s refusal to accept a ceasefire in Gaza, coupled with the US’s actions against pro-Tehran groups in Iraq, has only added fuel to the fire. US Energy Agency’s Forecast: Adding to the mix, the US Energy Agency threw a curveball by revising its 2024 production outlook, now expecting it to peak at just below 13.3 million barrels per day. Brent Crude and WTI Prices: On the price front, Brent crude oil made a comeback, leaping over the $80 mark to settle at $81.7. Meanwhile, US WTI isn’t far behind, trading around $76.50. Natural Gas: Over in Europe, natural gas prices are playing it cool, lateralizing at 27 EUR/MWh for the Rotterdam TTF.
| Gold & Metals | | The world of industrial metals ended the week with a bit of a jumble. It’s like a game of musical chairs, with some metals finding a seat and others left standing. | Aluminum and Tin: These two managed to gain ground, showing some resilience in an otherwise uncertain market. Copper, Zinc, and Lead: On the flip side, copper, zinc, and lead took a step back. Copper, in particular, felt the heat, trading at around $8,200 per tonne in London. It’s battling against a stronger US dollar and increased production in Peru, the world’s second-largest producer. Precious Metals: Gold seems to be treading water at $2025, while silver is losing its shine at $22.50. Palladium, unfortunately, continues its downward spiral to $870.
| Crypto | | Cryptocurrencies, the wild cards of the financial world, have once again surprised us all. | Bitcoin’s Impressive Surge: Bitcoin, the king of crypto, soared by more than 11% this week, brushing against the $47,500 mark. It’s like watching a phoenix rise from the ashes! Ether’s Steady Climb: Not to be outdone, Ether is hot on Bitcoin’s heels, up almost 10% since Monday and breaking past the $2,500 threshold. Investors’ Renewed Appetite for Risk: This resurgence in crypto-assets seems to be part of a broader trend of investors getting their groove back, as seen in the all-time highs on US stock indices. ETFs Attracting Attention: The Bitcoin Spot ETFs, launched just a month ago, are turning heads. The BlackRock ETF (IBIT) raised a whopping $3.5 billion, while the Fidelity ETF (FBTC) isn’t far behind with $2.81 billion. February 8 was a particularly good day, with BlackRock and Fidelity recording inflows of $204.1 million and $128.3 million, respectively.
| | Economic Reports | Next week is packed with economic releases that will keep investors on their toes. Here’s what’s coming up: | Tuesday – Consumer Price Index (CPI) and Producer Price Index (PPI) reports: These are key indicators of inflation. A higher-than-expected rise could signal increased inflationary pressures, impacting interest rates. Thursday – Retail Sales Report: This data provides insights into consumer spending, a major driver of the economy. Thursday – Philadelphia Fed Index Update: It’s a significant gauge of manufacturing health in the Philadelphia region. Thursday – Industrial Production Report: This measures the output of the industrial sector, including manufacturing, mining, and utilities. Friday – University of Michigan Consumer Sentiment Survey: It offers a snapshot of consumer confidence, which can influence spending and saving behaviors.
| These reports could provide vital clues about the economy’s direction, influencing the Federal Reserve’s interest rate decisions. So, keep your eyes peeled! | Earnings Reports: The Corporate Scorecards | Apart from economic data, several key earnings reports are due next week. Let’s break them down: | Monday, February 12 | | Tuesday, February 13 | | Wednesday, February 14 | | Thursday, February 15 | | Friday, February 16 | TC Energy (TRP) Vulcan Materials (VMC)
| These reports will give us a peek into how companies are navigating the current economic landscape. Strong earnings could boost investor confidence, while disappointments might raise concerns about corporate health. | Hedge Fund 13F Filings: The Big Reveal | Investors are also eagerly awaiting hedge fund 13F filings. These filings will reveal Q4 positions, including any significant moves with the Magnificent Seven Group: | Apple (AAPL) Amazon (AMZN) Alphabet (GOOGL) Meta Platforms (META) Microsoft (MSFT) Nvidia (NVDA) Tesla (TSLA)
| These filings can offer valuable insights into hedge fund strategies and market trends. | M&A Spotlight: A Hawaiian Twist | On the M&A front, shareholders of Hawaiian Holdings (HA) will vote on the pending deal with Alaska Air Group (ALK). This decision could have significant implications for the airline industry. |
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