Stock market today: Stocks end turbulent week lower after another hot inflation report | Feb16, 2024

Stock Market

• The stock market is experiencing a flatline near the end of the trading day, with the Dow Jones Industrial Average, S&P 500, and NASDAQ all experiencing declines.
• Recent economic data, including a higher-than-expected Producer Price Index (PPI) and a plunge in housing starts, has surprised investors and raised questions about the Federal Reserve's rate strategy.

Federal Reserve

• San Francisco Fed President Mary Daly expressed her disagreement with the notion that the last leg of the inflation fight will be the hardest and suggested that the Fed should not wait for inflation to reach 2% before cutting rates.
• Economists have highlighted the rise in portfolio and investment management fees within PPI, which could impact the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index.
• The market is expecting the Fed to start cutting interest rates later this year if inflation continues its gradual path towards the Fed's target.
• PNC Chief Economist Gus Faucher believes the CPI and PPI numbers for January were slightly elevated, but the overall trend is for slowing inflation.
• Faucher expects the Fed to start cutting the federal funds rate in May of this year, with four 25 basis point rate cuts over the course of 2024.

Housing Market

• The housing sector is expected to see a pullback in multifamily building due to slower rent growth, but single-family home building is expected to remain strong due to undersupply and lower mortgage rates.
• Builders are considering withdrawing buyer incentives due to rising mortgage rates, but some builders continue to offer incentives to gain market share.
• Housing starts declined in January due to winter weather, but economists expect single-family starts to gain momentum.

Technology

• Hyperscalers are expected to increase their GPU usage from 10% to 50-60%, creating a significant market opportunity for Nvidia.
• Applied Materials shares rose after beating first-quarter earnings estimates and issuing stronger guidance for the second quarter, driven by demand for memory chip equipment and China's contribution.
• Nvidia is set to report its latest quarterly earnings next week, generating significant interest among investors and analysts.
• Nvidia faces challenges such as US export restrictions on high-end chip sales to China and increasing competition from AMD and Intel in the AI chip market.

Cryptocurrencies

• Bitcoin prices surged this week, leading to increased optimism in the crypto market.
• Spot Bitcoin ETFs have experienced significant inflows, with iShares through BlackRock gaining $5.2 billion, followed by Fidelity with $3.7 billion and Ark with $1.2 billion.
• Grayscale Bitcoin Trust, which recently converted to an ETF, has the most assets at $23 billion, followed by iShares and Fidelity.
• Ethereum and Bitcoin are the leading cryptocurrencies in terms of 7-day price flows, while altcoins like Solana and Cardano have taken a backseat.

Legal

• Former President Donald Trump has been ordered to pay $350 million in damages in a civil business fraud trial brought by the New York State Attorney General.
• A New York judge has ordered Donald Trump to pay $250 million for misusing charitable funds from his foundation.
• Trump is facing multiple legal challenges and has already been ordered to pay $83 million to writer Jean Carroll.

Retail

• Walmart is expected to report strong fourth-quarter results, with revenue growth and increased same-store sales.
• The company is also considering acquiring Vizio, a connected TV platform, to compete with Amazon Prime and gain consumer data.

Healthcare

• Weight loss drugs, particularly GLP-1s, are in high demand, driving profits for pharmaceutical companies and raising concerns about changing consumer appetites.
• Eli Lilly is seen as a buy opportunity due to the continued growth potential of GLP-1s, its pipeline of obesity and Alzheimer's drugs, and the increasing focus on obesity as a reversible condition.
• PepsiCo's revenue is heavily reliant on unhealthy snacks like Cheetos and Doritos.
• Consumer preferences are shifting towards healthier food options due to the increasing popularity of GLP-1 drugs.
• PepsiCo has been slow to pivot its product portfolio towards healthier options compared to its competitors.

Earnings Season

• The broader market experienced a down week, with the S&P 500 on the verge of breaking below 5,000, ending a 14-week winning streak.
• Oppenheimer Chief Investment Strategist John Stoltz viewed the earnings season as solid, with double-digit growth in cyclical sectors like technology, communication services, and consumer discretionary.
• Negative earnings growth was seen in materials, energy, and healthcare.

Artificial Intelligence

• AI is seen as a seminal moment in business, comparable to the founding of the internet, with the potential to revolutionize network engineering, customer service, and enhanced