Daily Market Notes: 2-24-2023

During a see-saw day yesterday, the market started out strong, then took a dive at mid-day before recovering to end higher which broke a four-day losing streak which was its longest since December.

For instance, the Dow started with a nice gain of 227, then drifted lower at 11am to a decline of 250 before going positive again at 2:30pm to finally end with a closing advance of 108 points to 33,153. It was led by gains in BA, GS, MSFT and UNH.

The S&P followed a similar pattern with an early gain of as much as 37, which then turned into a decline of 22 but it also turned positive to finally end 21 points higher to 4012 as it held near some moving-average levels slightly below its low of the day.

The Nasdaq followed the same path with a higher opening, then a lower mid-day slump before a late rally allowed it to finish up by 83 points to 11,590 as it was helped by a large gain in the shares of NVDA after it reported better results for the latest quarter than expected. It also gave a forecast for upcoming revenue that topped some analysts’ expectations and cited recovering strength in video gaming and demand for artificial intelligence products.

The Russell 2000 Index of small stocks ended higher by 13 points up to 1908 while the VIX came down again to end at 21.14 as it continues to drift in this lower narrow range for the longest time.

After a tremendous start in January, stocks have slammed into a wall this month on worries that inflation isn’t cooling as quickly or as smoothly as hoped, as a lengthening list of reports have shown the economy is in stronger shape than expected.

While that has raised hopes about avoiding a recession in the near term, it has also  forced analysts to increase their forecasts for how high the Fed will take interest rates and then how long it will keep them there.

The latest economic data released yesterday also suggested an economy with enough strength to encourage the Fed to continue with its “higher for longer” campaign on rates. The fear is that a strong economy could feed into upward pressure on inflation.

Weekly jobless claims at 5K lower to 192K was another indication that the labor market remains resilient despite the fastest increase in rates in decades.

The second reading for 4Q G.D.P. said that the economy’s growth was likely a little weaker in the last three months of 2022 than earlier estimated. But it still grew at a 2.7% annual rate.

The yield on the 10-year Treasury dipped to 3.88% from 3.93% late Wednesday which was perhaps the main reason for the mid-day recovery for stocks into the close as mentioned above. Earlier this week, it topped 3.95% as it raced toward its highest level since November.

Some notable losers were MRNA, whose shares slid after it reported its fourth-quarter profit tumbled by 70% as COVID-19 vaccine sales fell and the drugmaker caught up on a royalty payment. DPZ dropped by 12% despite reporting stronger profit than expected. Its revenue fell short of forecasts, and it lowered the top and bottom ends of its forecasted range for global sales growth in the next two to three years.

The fourth-quarter earnings reporting season is now in the home stretch and retailers usually predominate with this week’s lineup as follows: yesterday –  NVDA, IMAX, LNG, BMBL, ANSS higher while CAKE, LCID, EBAY, DPZ, FIVU, BABA, DG, W, U, TDOC lower; today –  SQ, BYND higher and WBD, CVNA, BKNG, INTU and ADSK lower.

Economic reports include: yesterday –   2nd estimate of 4Q G.D.P. came in at 2.7%, weekly jobless claims fell by 5K to 192K; today – January PCE deflator number came in at 0.6% and was up by 5.4% year over year while the core rate was also 0.6% higher and year over year it was 4.7%, higher than expected, January personal income and spending rose by 0.6% and 1.8% respectively, and the latter was the highest since 8/2021, January new home sales were higher at 670K and final February U. of Michigan Consumer Sentiment Survey rose to 67.

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.