Daily Market Notes: 2-16-2023

In another strange day that follows an all-too familiar pattern this year, the market was able to turn a sharply lower opening into a strong rush higher into the close.

For instance, the Dow got as low as 256 points down and then proceeded to improve as the session wore on and went positive right near the close for a final 38 point gain led by advances in CAT, GS, HD and AAPL.

The S&P also got blasted on the opening to a 33 point negative print before it went positive at 2pm and also ended with a rush to finish with a final gain of 11 to 4147. It is now ahead by 8% so far in 2023. The Nasdaq once again did the best as it turned an early 84 point loss into a gain by 12noon and finished strong to a 110 point advance up to 12,070. It was led by ongoing gains in seemingly unstoppable (for the time being) TSLA, in addition to advances in COST and AAPL.

The Russell 2000 Index of small stocks gained 21 up to 1961 while the VIX continues its downward move at 18.23 and it seems to be indicating somewhat of an overbought condition which is not the case until we see some sort of turndown by equities which has not taken place as of yet. But today’s opening looks weak and if the recent pattern of improving from those levels does not repeat itself, then perhaps a near-term top has been achieved for the time being.

The main feature of the day was the January retail sales report which came in better than expected with an overall 0.3% gain while excluding auto and gas sales it was ahead by a more robust 2.6% for the highest gain in almost two years, even as shoppers contended with higher interest rates on credit cards and other loans. The surprising strength offers hope that the most important part of the U.S. economy, namely consumer spending, can show strength despite worries about a possible recession looming. It is the latest piece of data to show the economy remains more resilient than feared.

At the same time, though, the strong buying potentially adds more fuel to inflation, which the January C.P.I. report showed is cooling by less than expected. Upward pressure on inflation could force the Federal Reserve to stay more aggressive in keeping interest rates high. The main question now is how resilient can the consumer be in this higher for longer rate environment.

And reflecting the concerns about rates, the two-year Note, briefly jumped toward 4.70% at its highest level since November after the retail sales report, up from less than 4.60% overnight and from 4.62% late Tuesday. It then eased back to 4.60%.

The 10-year yield rose to 3.79% from 3.75% late Tuesday.

And as an example of how bullish the market has become, AAPL actually increased to its best level of the session despite the announcement of Federal investigations into some of its business practices.

Shares of ABNB jumped after reporting stronger profit and revenue for its latest quarter than analysts expected. It also said trends remain encouraging into the new year, and it gave a forecast for revenue that topped expectations.

On the losing end were stocks of energy producers, hurt by DVN which fell 10% after reporting weaker profit for the latest quarter than expected.

Earnings reports this week include: yesterday  – ABNB, TRIP, GDDY, GNRC, ADI, TTD, RBLX higher and DVN, BIIB, BCS lower; today – Dow component CSCO higher plus ROKU, SHAK,TWLO, Z while QS, PARA, SHOP, SAM are lower; tonight – AMAT, RDFN, DASH, DBX; Friday – DE.

Economic reports will be the main focus this week with: yesterday – January retail sales were higher by 0.3% and excluding autos and gas were up by 2.6%, January industrial production was unchanged and capacity utilization fell to 78.3% which was the lowest since May 2021, February NY State Empire Manufacturing Survey fell by 5.8 which was the lowest since November, NAHB Homebuilder February Sentiment  rose by 7 to 42, which was the second straight higher month; today – January P.P.I. came in stronger than expected with a monthly gain of 0.7% for a year over year advance of 6% while the core rate excluding food and energy increased by 0.5% for a year over year advance of 5.4%, January housing starts fell by 4.5%, weekly jobless claims fell by 1K to 194K, February Philadelphia Fed Manufacturing Index plunged to -24.3 which was the lowest since late 2020; Friday – January L.E.I.

Donald M. Selkin

Chief Market Strategist


 Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our current or potential customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analysis concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, and Associated Press}. It is possible that at any given point in time, the author, Newbridge Securities, or one or more of its employees or registered individuals associated with Newbridge Securities, may hold a position, either long, or short, as well as options, bonds or other instruments in the companies mentioned in this report.