Daily Market Notes: 2-7-2023

The market continued to give back some of its earlier 2023 gains yesterday, but once again was able to finish well off of its worst levels of the session.

The Dow actually had the nerve to go positive by 36 points in mid-afternoon after overcoming a decline of as much as 243 at the morning low. It made that upside attempt due to some strength in CAT, MCD, TRV and UNH but was eventually overcome by declines in AXP, HD and AAPL, which resulted in a final close of -35 to 33,891.

The S&P never had a chance due to weakness in some of the larger technology components after their disappointing earnings results and it ended lower by 25 to 4111 after overcoming a morning decline of as much as 43.

The Nasdaq also had nothing going for it as it stayed in a fairly narrow lower range with a final close of -119 to 11,887. The Russell 2000 Index of small stocks was the relatively weakest one with a 28 point loss down to 1957 while that low VIX in the 18’s area on Friday meant that it should get higher as it did on the lower market and ended at 19.43.

Equities were still laboring under the unexpectedly strong January jobs report which showed a gain of 517,000 and an unemployment rate down to a 60-year low of 3.4% which now makes the case for Fed easing less likely as soon as the market was hoping for.

As a result, bond yields rose again with the 2-year Note up to 4.47% from 4.29% late Friday and just 4.10% the day before. The 10-year Note, jumped up to 3.64% from 3.52% late Friday.

Hopes for an easier Fed is what has driven the market higher this year, with the Dow ahead by around 2%, the S&P up by 7% while the Nasdaq has gained 15% as the stocks leading the way have been the ones most beaten down last year by the sharply rising rates engineered by the Fed to combat inflation. This group includes the larger technology stocks and others of lower quality which have come roaring back percentagewise from very low levels.

But this positive sentiment has been partially checked by more signs of softer demand in the technology sector and more caution about spending from businesses overall.

Fed Chair Jerome Powell may give some clues about where rates are heading this afternoon when he is scheduled to speak at the Economic Club of Washington, D.C.

The fourth-quarter earnings reporting season is at its halfway point, with half the companies in the S&P having reported, and they are on track for about a roughly 5% drop from year-earlier levels which would be the first such drop since the summer of 2020, when the pandemic was ravaging the global economy.

TSN fell after it reported weaker profit and revenue for its latest quarter than analysts expected. DELL also dropped after it said that it will cut about 5% of its workforce. The company’s vice chairman said in a message to employees that “market conditions continue to erode with an uncertain future.”

This week sees the fourth-quarter earnings reporting season start to come into the homestretch with the following: yesterday – CMI, ON higher and TSN lower; today  – , CHGG, PINS, SPG lower and Dow component DD, HTZ, ATVI, SAVE, RCL, CMG higher; Wednesday – CVS, MGM, PEP, DIS, ORLY, UBER, YUM; Thursday – EXPE, HLT, K, PYPL, MO; Friday – NWL.

Economic reports will have: today – December trade deficit widened to $67.4 billion; Thursday – weekly jobless claims; Friday – February mid-month U. of Michigan Consumer Sentiment Survey.

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.