Market Insights, February 2023

Monthly Market Roundup | U.S. Equities

Big Movers in February 2023

28%

Catalent (CTLT): The contract manufacturer of pharmaceuticals may be acquired by Danaher, according to a report by Bloomberg News.

19%

Tesla (TSLA): The electric-vehicle maker kept advancing amid reports of market-share gains and sold-out queues for new Model Ys.

19%

Nvidia (NVDA): The semiconductor company’s earnings, revenue and guidance surprised to the upside. The gaming market improved and management forecast strong demand as artificial intelligence (AI) spreads.

23%

Match (MTCH): The online-dating stock missed estimates for earnings and revenue as usage slowed.

21%

Moderna (MRNA): The biotechnology company missed profit forecasts as demand weakens for its coronavirus vaccines.

35%

Lumen Technologies (LUMN): The junk-rated telecom issued weak guidance, its second straight drop following quarterly results.

Key Economic Events Last Month

upFed Slows Rate Hikes, Mentions ‘DisinflationThe Federal Reserve raised interest rates by 25 basis points, the smallest increase since March 2022. Chairman Jerome Powell also said that “disinflation” had begun. (1/2)
upHousing at a crossroads?The U.S. economy added 517,000 jobs in January, almost triple the forecast amount. Unemployment fell more than expected to the lowest level since 1969. (3/2)
downOld Inflation Data Revised HigherThe government revised the consumer price index (CPI) higher for November and December. The news erased a welcome decline in prices and contributed to fears of higher interest rates. (10/2)
noStrong Retail Sales Drive Rate Hike FearsRetail sales increased by 3% in January, well ahead of estimates. While the news suggested a recession isn’t likely, it increased worries about the Fed hiking interest rates. (15/2)

Key Futures Contracts

Product NameCurrent MonthExpirationNext Month1-Mon%
S&P 500 E-Mini (@ES)ESH23(March)17 Mar 23ESH23(June)-3%
*S&P 500 E-Mini Micro (@MES)MESH23 (March)17 Mar 23MESH23 (June)-3%
Nasdaq-100 E-Mini (@NQ)NQH23 (March) 17 Mar 23NQM23 (June)-0.9%
*Nasdaq-100 E-Mini Micro (@MNQ)MNQH23 (March) 17 Mar 23MNQM23 (June)-0.9%
Dow Jones E-Mini (@YM)YMH23 (March) 17 Mar 23YMM23 (June)-4.4%
Dow Jones E-Mini (@MYM)MYMH23 (March) 17 Mar 23MYMM23 (June)-4.4%

* Micro contracts are one-tenth the size of standard e-minis.

Events to Watch This Month

DateEventWhat to watch
Wed, 1-FebJerome Powell Testimony in CongressGuidance on monetary policy. Will he hint at 50 basis points later this month?
Fri, 10-MarNon-farm payrollsWages & unemployment. Will January’s large payroll gain be revised lower?
Tue, 14-MarInflation reportThe consumer price index one hour before U.S. markets open could shape rate expectations.
Fri, 17-MarQuadruple witchingTrading volumes are typically heavy as futures and options contracts expire.
Wed, 22-MarInterest rate decisionThe Fed will announce interest rate changes and issue a new quarterly “dot plot” with projections of future policy.

Sector Watch

  • Technology0%
  • Industrials1%
  • Consumer Discretionary2%
  • Consumer Staples2%
  • Financials2%
  • S&P 5003%
  • Communications3%
  • Materials5%
  • Health Care5%
  • Real Estate6%
  • Utilities6%
  • Energy7%
  • Technology rose 0.4%. It was the only sector to climb as large growth stocks like Apple, Microsoft and Nvidia advanced.

  • Industrial stocks held their ground as the strong economy lifted manufacturers, engineering firms and transports.

Noteworthy Calls & Predictions

06-February

Goldman Sachs strategist David Kostin predicted the S&P 500 will end the year little changed around 4,000. He cited high valuations, weak earnings and potential risk associated with the federal debt ceiling.

Stocks

08-February

Deutsche Bank said major short covering from last year’s bear market is mostly finished. The report said $300 billion in downside positioning is gone, potentially removing an upside catalyst for the S&P 500.

Stocks

10-February

Bank of America reported accelerating consumer activity in January. Credit and debit card spending rose 5.1% from a year ago, more than twice the growth rate in December. The bank partially attributed the growth to higher minimum wages and Social Security payments.

Consumer

20-February

JPMorgan Chase strategist Mislav Matejka warned the stock market may have already reached its peak for the year. He cited higher interest rates and ongoing recession risks.

Stocks

21-February

Morgan Stanley strategist Mike Wilson said the S&P 500 could drop to 3,000 in the first half of the year because of poor earnings and rising interest rates. He called the risk-reward “very poor,” adding that the risk premium for stocks has entered a “death zone.”

Stocks



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