Market Summary
Stocks experienced a rebound today, following a downturn in the previous session. Despite a dip from their peak in the afternoon, major indices managed to close with gains between 0.2% and 0.7%. This positive shift was largely fueled by a 'buy-the-dip' strategy, which has proven effective since the year's start. Additionally, a resurgence in purchasing within growth stocks and the tech sector, sparked by CrowdStrike's (CRWD, Financial) impressive earnings and outlook, played a significant role in today's upward movement.
Broad Market Rally
- The Invesco S&P 500 Equal Weight ETF (RSP) saw a 0.6% increase.
- Nine out of the eleven S&P 500 sectors ended the day on a positive note.
- The utilities sector led with a 1.0% gain, closely followed by the information technology sector at 0.9%.
- However, the communication services and consumer discretionary sectors lagged, recording declines of 0.2% and 0.4%, respectively.
Fed Chair Powell's Testimony
Market participants also paid close attention to Fed Chair Powell's semiannual monetary policy testimony. Powell hinted at the possibility of lowering the fed funds rate range later this year. However, his remarks did not significantly alter rate cut expectations, with the probability of a 25 basis points cut at the June FOMC meeting slightly adjusting to 71.4% from 72.4%.
Noteworthy News
New York Community Bancorp (NYCB, Financial) witnessed a 7.5% surge after announcing a substantial equity investment from entities including Liberty Strategic Capital. This news came after an initial drop following a Wall Street Journal report about the company's capital raising efforts.
Interest Rates and Market Performance
- The 10-year note yield decreased by three basis points to 4.10%.
- The 2-year note yield saw a minor increase of one basis point.
- Year-to-date performance: S&P 500 (+7.0%), Nasdaq Composite (+6.8%), S&P Midcap 400 (+5.7%), Dow Jones Industrial Average (+2.6%), and Russell 2000 (+2.0%).
Economic Data Overview
- Weekly MBA Mortgage Applications rose by 9.7%.
- The February ADP Employment Change was reported at 140K, slightly below the consensus of 150K.
- January's JOLTS - Job Openings were slightly revised and reported at 8.863 million.
- January Wholesale Inventories decreased by 0.3%, against a consensus of a 0.1% decrease.
Upcoming Economic Calendar Highlights
- Weekly Initial Claims, Continuing Claims, January Trade Balance, revised Q4 Productivity, and Unit Labor Costs are scheduled for release.
- Weekly natural gas inventories and January Consumer Credit figures are also due.
Global Market Performance
- Europe: DAX (+0.1%), FTSE (+0.4%), CAC (+0.3%).
- Asia: Nikkei (+0.1%), Hang Seng (+1.7%), Shanghai (-0.3%).
Commodity Updates
- Crude Oil: +0.86 @ 79.02
- Natural Gas: -0.03 @ 1.93
- Gold: +17.60 @ 2159.60
- Silver: +0.54 @ 24.52
- Copper: +0.03 @ 3.88
Today's News
Wall Street's major indexes ended the trading session with gains, recovering from their worst performance since mid-February. The Nasdaq Composite led the charge, buoyed by a surge in cybersecurity firm CrowdStrike following its earnings report. The S&P 500 and the Dow Jones Industrial Average also finished in positive territory, with the majority of sectors closing higher. Federal Reserve Chair Jerome Powell's testimony to Congress was closely watched by investors, where he reiterated that the central bank is not in a rush to cut interest rates, signaling that the current policy rate might have reached its peak for this tightening cycle.
Spirit Airlines (SAVE, Financial) experienced a significant drop, declining 4.6% amid concerns over its financial stability. This follows a report suggesting that bondholders are preparing for the possibility that the airline may not meet its debt obligations. The concerns have escalated since the termination of Spirit's transaction with JetBlue, which was blocked by a federal judge. Since then, Spirit's shares have plummeted, raising doubts about the airline's ability to survive independently.
New York Community Bancorp (NYCB, Financial) announced a substantial capital raise, securing over $1 billion from investors led by former Treasury Secretary Steven Mnuchin's firm. This move comes as the bank aims to strengthen its balance sheet and liquidity position, amidst a period of significant transformation and turnaround efforts. The investment has been seen as a vote of confidence in the bank's future prospects.
Metagenomi (MGX, Financial) received bullish ratings from Jefferies and BMO, highlighting the company's comprehensive gene editing toolbox and its potential in the field of gene therapy. The analysts pointed to upcoming data and a strong cash runway as key factors supporting their positive outlook on the stock. Metagenomi's partnerships and the expertise of its CEO/founder were also cited as reasons for the company's high probability of success.
Foot Locker (FL, Financial) shares continued their decline, dropping nearly 30% following disappointing quarterly results and future guidance. The downturn affected other companies in the sector, with Hibbett, Inc (HIBB, Financial), Weyco Group (WEYS, Financial), and Nike (NKE, Financial) also experiencing losses. Foot Locker's CFO highlighted ongoing challenges but expressed optimism for improvement throughout the year.
Broadcom (AVGO, Financial) is set to report its first-quarter earnings, with expectations of a year-over-year increase in revenue and earnings per share. Analysts anticipate a modest beat, driven by AI sales and synergies from the VMware acquisition. However, concerns remain about weakness in non-AI segments.
Meta Platforms (META, Financial) faces scrutiny from state attorneys general over a significant increase in hacked accounts on Facebook and Instagram. The attorneys general have called for immediate action to address the issue, which has become a major concern for users and a drain on resources for their offices.
