Stock market today: Stocks wobble after another hot inflation report | February 16, 2024

Inflation and Interest Rates

• The producer price index (PPI) for January rose nearly 1%, much higher than the expected drop, indicating persistent inflation.
• Atlanta Fed President Raphael Bostic cautioned that inflation may decline more slowly than markets anticipate, signaling that interest rates could remain at current levels for longer.

Coinbase

• Coinbase reported its first quarterly profit in two years, driven by the approval of spot Bitcoin exchange-traded funds (ETFs).
• Kathy Wood, CEO of Ark Invest, praised Coinbase's regulatory compliance and execution during the crypto winter.
• Owen Lau, an Oppenheimer analyst, emphasized the importance of compliance investments for crypto exchanges and highlighted Coinbase's strong position as a custodian for spot Bitcoin ETFs.
• Coinbase has been gaining market share in the US and globally, benefiting from its transparency, disclosure, and compliance practices.
• Analysts' recommendations for Coinbase stock are mixed, but investors should focus on fundamental data such as earnings and adjusted EPS to assess its value.
• Oppenheimer's Owen Lao predicts that the SEC may approve a spot ether ETF by May 23rd, 2023, but there is no certainty.

Roku

• Roku shares are plummeting in pre-market trading despite a Revenue beat and double-digit gains in accounts and hours streamed.
• Roku is facing increased competition from Amazon, Netflix, and Disney in the ad-supported market, leading to estimate cuts across the street.
• Walmart's reported purchase of budget TV company Vizio is adding pressure on Roku's shares.
• Roku reported better-than-expected revenue in Q4 but faces challenges due to an uncertain macro backdrop and uneven recovery in the ad market.
• Roku's growth rate in 2024 may be lower than expected due to muted demand in the media and entertainment segment and tougher comparisons in the subscription business.
• Roku's profitability may be tempered in 2024 as the company plans to invest in product and feature upgrades.
• Roku's competitive advantage lies in its large audience, first-party data, and user stickiness, but it faces challenges from increasing supply in the ad-supported streaming market.
• Roku's customer awareness may not be a significant issue as the company benefits from its integrated operating system in many smart TVs.

DoorDash

• DoorDash shares are slumping despite solid fourth-quarter results, with total orders and Marketplace gross order value topping Wall Street estimates.
• DoorDash is facing regulatory costs and steep competition in the food delivery arena.
• The company's growth is expected to slow down from the high teens to a low teens type of growth rate.
• DoorDash is expanding internationally and making progress in new verticals like groceries and convenience stores.
• DoorDash is well-positioned against Uber in different markets, but they are different animals with different strengths.
• DoorDash's buyback program is seen as a positive move, indicating strong cash flow generation and growth.
• DoorDash has better cash flow growth and stock buyback potential compared to Uber.

Super Micro Computer

• Super Micro Computer, an AI-driven chip play, has shown resilience and growth potential, making it an affordable alternative to Nvidia.

Stock Market Indices

• The Russell 2000 index, representing small caps, has experienced volatility but has recovered from losses and maintained gains.
• The New York Stock Exchange composite index has reached record highs, joining a growing list of stock indices at peak levels.

Bond Market

• The bond market has been volatile, with yields rising and approaching levels seen during the CPI print.

US Dollar

• The US dollar has been pressuring stocks, and if it accelerates above a potential trend line, it could further impact risk markets.

Sector Action

• Sector action saw tech underperforming, while materials, real estate, and utilities took the lead.
• Oil and Chinese internet stocks gained, while regional banks declined.

Apple

• Apple is reportedly developing software for app developers to compete with Microsoft's GitHub co-pilot and is ramping up in-house development of a tool to generate code for testing applications.

Wholesale Prices

• Wholesale prices in January came in hotter than expected, complicating the path to rate cuts.

Liz Young's Perspective

• Liz Young, Sofi's head of investment strategy, believes investors are getting nervous about the possibility of overheating and that the risk of inflation not going down linearly is still present.

Market Reaction

• The bond market and equity market are queuing off different things, with the bond market focused on the rate path and the equity market driven by momentum and late-cycle behavior.
• The market is reacting to earnings, but there is a risk of overreacting and punishing entire industry groups because of one company's report.
• Some sectors that have not kept up with the market, such as dividend-paying