Stock Market Today: February 5th - 9th, 2024

Welcome StonkForums to the trading week of February 5th!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:
(N/A.)

 

Mega-Cap Tech Melts-Up Moar Despite Powell Punch-In-The-Face & Regional Bank Rout
FRIDAY, FEB 02, 2024 - 04:00 PM

First things first, economic 'animal spirits' are back baby... and we know why (as we noted for months, the lagged effect of the massive loosening of financial conditions is now hitting and NOT doing The Fed's job)...



Source: Bloomberg

But, away from The Fed's Tyson-esque punch in the dove's face, it was all about 'The Magnificent 7' - the basket of 7 stocks soared to new highs this week...



Source: Bloomberg

But the 7 is now 4...



Source: Bloomberg

As job gains... and productivity gains... and AI... and stuff... trumped a hawkish Powell and anything-but-soft-landing/goldilocks jobs data - that sent rate-cut expectations lower...



Source: Bloomberg

Meanwhile, the bank crisis is back as Regional banks suffered their worst week since May 2023...



Source: Bloomberg

As 'whack-a-mole' has begun again among the most levered...



Source: Bloomberg

But, away from the bank crisis (just ignore it, right), Apollo's Slok notes, there are several current themes in markets

1. Soft landing/Goldilocks priced in everywhere, but probability of hard or no landing is not zero

2. Supply of US Treasuries growing, and Treasury auctions are getting more and more attention

3. Extreme concentration in S&P 500 driven by growing AI bubble

4. China slowing driven by deflating housing bubble, falling exports, and demographic headwinds

5. Germany in trouble because of China slowdown, costly energy transition, and housing disinflation

By the end of this week, 1 is dead, 2 is serious, 3 is worse, 4 remains a problem, and 5 is even uglier.

But none of that matters to tech which soared for the 13th week in the last 14 as Nasdaq rallied 1.5% this week. Small Caps were only index of the majors to close red...



MSFT is now bigger than AAPL, and AMZN is now bigger than GOOGL...



Source: Bloomberg

Today's gain for META is the biggest single-session market value addition, eclipsing the $190 billion gains made by AAPL and AMZN in 2022...



Source: Bloomberg

Treasury yields all exploded higher today, with the short-end underperforming (2Y +17bps, 30Y +10bps) leaving the 2Y the only part of the curve higher on the week...



Source: Bloomberg

With the 10Y Yield back above 4.00% by Friday's close...



Source: Bloomberg

And a big flattening of the yield cure (2s30s) back into inversion (erasing all the steepening from the Dec FOMC)...



Source: Bloomberg

Thanks to a huge surge in the dollar today, the week ended green for the greenback...



Source: Bloomberg

Bitcoin was higher on the week, chopping around the $43000 level...



Source: Bloomberg

Notably, Bitcoin ETFs have seen net inflows for the last 5 days...



Source: Bloomberg

Gold ended the week higher, despite a big drop today, erasing yesterday's gains...



Source: Bloomberg

Oil prices ended the week lower (last week's outsized gain completely erased). This was the worst week for WTI since early October...



Source: Bloomberg

And finally, as one wise prognosticator noted.

Market is soaring because AI hasn't displaced any jobs.

Market is soaring because every tech company is betting AI will displace millions of jobs.

And so, 'you are here'...



Source: Bloomberg

...just remember, this didn't end well last time.

 

Up January vs. Down January Beats All Months

• Largest Improvement over next 11 months and next 12 months
• Next 11 months after Up January: +11.6%
• Next 11 month after Down January: +1.2%

Up January has much more outperformance versus when it’s down than any other month in the year on the following 11-months or 12-months return. Since 1938, when the S&P 500 was up in January the next 11-months average a gain of 11.6%. When January is down, the next 11-months average plummets to just 1.2%. Years with a positive January have historically outperformed a down January by 10.4%. Over the following 12 months, the outperformance grows to 11.2%. No other month comes close to these levels.

Hallelujah! The January Barometer is positive.

S&P 500 was up 1.6% this January which avoids the historically worst combination for the January Indicator Trifecta where all three are negative. Devised by Yale Hirsch in 1972, the January Barometer has registered 12 major errors since 1950 for an 83.8% accuracy ratio. This indicator adheres to propensity that as the S&P 500 goes in January, so goes the year. Of the 12 major errors, nine have occurred since 2001. Including the eight flat years yields a .730 batting average.

Our January Indicator Trifecta combines the Santa Claus Rally (SCR), the First Five Days Early Warning System (FFD) and our full-month January Barometer (JB). The predicative power of the three is considerably greater than any of them alone; we have been rather impressed by its forecasting prowess. It was certainly on the mark last year when all three were positive and S&P 500 gained 24.2%. However, this year is just the fourth time that the SCR and FFD were down, and the JB was positive.

As you can see from the table above, a positive JB has significantly improved the performance over the next 11 months and for the full year compared to when all three January indicators were down. In the prior three years when the SCR and FFD were down, but the JB was positive, next 11-month and full year gains averaged 15.1% and 19.9% respectively. This compares quite favorably to when all three January indicators were down as the next 11-months averaged just 0.2% and full year averaged a loss of 3.6%.

All Election Years Up When January Barometer Up

S&P 500 gained 1.6% in January and thus our January Barometer is positive for 2024. Full years followed January’s direction in 12 of the last 18 presidential election years. But 9 Election Years since 1950 with an up January Barometer are up 100% of the time with an average 15.6% S&P 500 gain.

JB is not a stand-alone indicator. Use in conjunction with other data and indicators to confirm or question your assessment of the market. Since 1938 when JB was positive, full year was positive 86.5% of the time & when it’s down the year was up 44.1% of the time. Every down January since 1950 was followed by a new or continuing bear market, a 10% correction or a flat year. Down Januarys were followed by substantial declines averaging -13.3%. See page 24 in the 2024 Stock Trader’s Almanac.

As Goes January, So Goes the Year? The Bulls Hope So.


An effect widely known as the January Barometer looks at how January does and what it may mean for the next 11 months. It is known by the saying, ‘So goes January, goes the year’ in the media. The late Yale Hirsch of Almanac Trader 1972 discovered this indicator. Today the Almanac is carried on by Yale’s son Jeff. I’ve known Jeff for years, and I must say, he is great, and I believe the work they do is some of the best in the industry on market seasonality, calendar effects, and many other indicators.

Let’s look at the January Barometer. For starters, two years ago saw stocks lower in January and it led to a vicious bear market. Then last year, stocks soared more than 6% the first month of the year and ended up having one of the better years ever. Maybe there is something here?

Historically speaking, when the first month was positive for stocks, the rest of the year was up 12% on average and higher 86.4% of the time. And when that first month was lower? It was up about 2.1% on average and higher only 60% of the time. Compare this with your average year’s final 11 months, up 8.0% and higher 75.7% of the time, and clearly the solid start to ’24 could be a positive for the bulls.



Here’s another way of showing what tends to happen based on whether January was higher or lower. Sure enough, a good first month tends to see better times, while a weak first month can be trouble.



Now, stocks were lower during the historically bullish Santa Claus rally period and first five days of 2024. We wrote about those things more in detail in Some Bad News, and Some Good News, but what does it mean when Santa doesn’t come, the first five days are red, but January is higher? Interestingly, this combo has happened only three other times in history, so we are dealing with a very small sample size. The good news is stocks were higher for the full year each time and up nearly 20% on average.



The huge end-of-year rally last year (remember, the S&P 500 was up 14% in November and December) did suggest some weakness in late December and early January would be perfectly normal. But the bottom line is looking forward, the gains we’ve seen in January matter more.

Another feather in the cap of the bulls is we are officially three calendar months off the October 27, 2023 correction lows. Turns out, stocks gained 19.6% during those three months, for one of the best three-month returns ever. I looked at all the times the index gained at least 17% in three months and once again, the future returns after those huge three-month stretches were quite normal for a bull market: higher six months later 84% of the time and higher a median of 16.2% a year later and up 80% of the time.



In short, the strength we’ve seen the past three months isn’t consistent with the end of a bull market or this being ‘just a bear market rally’ like many claim. In fact, it suggests we’ve been in a strong bull market that’s likely to a continue.

Bullish Sentiment Can Stay Bullish

Concern over frothy bullish sentiment has some of the biggest bulls concerned. But Bullish sentiment can stay high for quite a while. Just look at the two Investors Intelligence Bullish and Bearish readings. Both the difference and ratio of bulls & bears were at and above these levels in 2021 as the market ripped higher all year. Contrary sentiment indicators are more effective at extremes and at calling bottoms not tops.

Yesterday’s selloff as the market came to grips with the fact that a March rate cut is unlikely suggests we may be due for some further weakness. Which is not out of the ordinary for February even into March. February is the weak link of the Best Six Months so expect some pullback.



High Share Prices vs. Low Share Prices
Thu, Feb 1, 2024

It shouldn't matter, but we saw a huge disparity in the performance of stocks with high versus low share prices in January. Here are the numbers:

As shown below, in the large-cap Russell 1,000, the 100 stocks that began 2024 with the lowest share prices fell an average of 7.4% in January, while the 100 stocks that began the year with the highest share prices rose an average of 2%.



There are 25 stocks in the Russell 1,000 that began 2024 with a sub-$10 share price, and these stocks fell an average of 11% in January. Conversely, the 41 stocks in the Russell 1,000 that began the year with a share price of more than $500 rose an average of 3.2% during the month.

What gives?



January 2024 Key ETF Performance
Wed, Jan 31, 2024

The first month of 2024 is already complete, and below is a look at the performance of various asset classes during January using key ETFs that we track closely. The S&P 500 (SPY) finished the month up 1.59% even though the average stock in the index was down 0.84%. While large-cap ETFs like SPY and QQQ finished the month higher, the small-cap Russell 2,000 (IWM) was down 3.9%.

At the sector level, Real Estate (XLRE) and Consumer Discretionary (XLY) both fell 4%+, while Communication Services (XLC) saw the biggest move to the upside at 4.4%. International equity ETFs were all over the place in January with India (PIN) and Japan (EWJ) solidly higher and China (ASHR) and Hong Kong (EWH) sharply lower. Oil (USO) was actually the best performing area of the entire matrix in January with a gain of 6.4%. On the flip side, natural gas (UNG) and silver (SLV) both fell 3%+.



Down at Noon on a Fed Day
Wed, Jan 31, 2024

The first Fed day of the year has arrived. While there's widespread agreement that rates will be held steady today, according to the CME's FedWatch tool, markets are pricing higher probabilities of cuts at other meetings this year. Looking six months out shows the market is giving a greater than 50% chance of rates being cut by at least a full percentage point from the current range of 5.25-5.50%. While time will tell what Powell and company decide, we would note that price action of the S&P 500 intraday on all Fed days since 1994 (when the FOMC first began announcing its decision on the same days as the meeting) when the FOMC holds rates steady has historically been less volatile, particularly post-decision, than when rates are cut or raised.



We would also note that the S&P 500 is currently trading lower by 0.86% as of this writing today in the wake of poorly received mega-cap earnings of Alphabet (GOOGL) and Microsoft (MSFT). While those drags on the market are independent of the Fed, that negative tone could lead to the first decline on a Fed day since the September meeting. As shown below, the meetings of the past couple of months have offered a positive change in tone after the S&P 500 largely fell on Fed days throughout late 2022 and 2023.



Not only have the past couple of meetings seen a more positive response from the S&P 500 but the moves have been particularly pronounced in afternoon trading. Below we show the intraday path of the S&P 500 on recent Fed days. The past two meetings (November and December) have resulted in gains of over 1% by the end of the day. However, in a stark difference to other recent meetings, the bulk of those gains have come from strong afternoon rallies in the wake of the decision. As shown by the red line below, the average if the prior ten meetings (those occurring from July 2022 through this past September) saw the S&P 500 trade higher throughout the session up until the final hour of trading when it gave up the ghost and closed at the lows of the day.



Looking back through all Fed days since 1994 when the FOMC began to announce its decisions on the same day of the meeting, there have been 14 times in which the S&P 500 was down by 0.5% or more by noon. Below we have constructed an intraday composite of those days. While the S&P has tended towards weakness throughout most of the session, it has experienced a rally, eating into those losses post-decision. That being said, the gains were not enough to erase all of the pre-announcement declines and the rally tended to be short-lived. Of those 14 days when the S&P 500 was down 0.5% or more by noon, it only closed higher on the day five times.

Do Stocks Want the 49ers or Chiefs to Win?


“Baseball is 90% mental, the other half physical.” -Yogi Berra

First things first, don’t ever invest based on who wins the Super Bowl. Or what color #87 Taylor Swift will wear at the big game, or the coin toss, or how bad the refs will be. With that out of the way, it is Super Bowl season, and that means it is time to talk about the always popular Super Bowl Indicator!

The Super Bowl Indicator suggests stocks rise for the full year when the Super Bowl winner has come from the original National Football League (now the NFC), but when an original American Football League (now the AFC) team has won, stocks fall. Of course, this is totally random, but it turns out that when looking at the previous 57 Super Bowls, stocks do better when an NFC team wins the big game. But as Yogi playfully told us in the quote above, sometimes things don’t always add up, and investing based on this won’t.

This fun indicator was originally discovered in 1978 by Leonard Kopett, a sportswriter for the New York Times. Up until that point, the indicator had never been wrong.

We like to make it a little simpler and break it down by how stocks do when the NFC wins versus the AFC, ignoring the history of the franchises. As our first table shows, the S&P 500 gained 10% on average during the full year when an NFC team won versus 7.5% with an AFC team won.



So, it is clearcut that investors want the 49ers to ground the Chiefs and win, right? Maybe not, as stocks have gained the full year 11 of the past 12 times when a team from the AFC won the championship going back 20 years. In fact, the only time stocks were lower was in 2015, when the full year ended down -0.7%, so virtually flat.



By my math, there have been 57 Super Bowls and 22 different winners. I broke things up by franchise and city. For instance, Baltimore has won three championships, with one for the Colts and two for the Ravens. So I differentiated the two. Then the Colts won one in Indy, so I broke that out as well. Either way, I still don’t see my Bengals on here, but I expect that to change next year after Joe Burrow heals up! Remember, he is the only man who owns Patrick Mahomes and Josh Allen with a 5-1 record against them combined, but I digress.

Getting to the two teams in it this year, the Chiefs have won it all three times and stocks gained 13.5%, while the 49ers have won it all five times and stocks soared 19.2% on average.



It might not matter who wins, but by how much they win. That’s right, the larger the size of the win, the better stocks do. (Let’s have another disclosure that nearly everything I’m saying here isn’t in any way, shape, or form related to what stocks actually do, and you shouldn’t use it as such.)

That’s right, when it is a single digit win in the Super Bowl, the S&P 500 is up less than 6% on average and higher about 60% of the time. A double-digit win? Things jump to about 11% and 79%. And wouldn’t you know it, when the final score is three touchdowns or more, the S&P 500 gained 13.6% for the year and is higher about 85% of the time.



Here’s a list of all the big blowouts and what happened to stocks those years. Not too bad, huh?



Here are ten other takeaways I noticed while slicing and dicing the data:

• The NFC has won 29 Super Bowls and the AFC 28.
• The Steelers and Pats have won the most at six, but the 49ers sit at five and could match them with a win.
• As great as Peyton Manning was, he only won two Super Bowls. His brother also won two. Odds are their kids will win a few more. Omaha, Omaha!
• The Lions, Browns, Jags, and Texans have still never made the Super Bowl.
• The NFC won 13 in a row from 1985 (Bears) until 1997 (Packers).
• The Bills made the Super Bowl four consecutive years, losing each time.
• The highest scoring game was 75 total points in 1995 between the 49ers and Chargers.
• The lowest scoring game was only 16 points in 2019 when the Pats beat the Rams.
• The closest ever was a one-point win for the Giants over the Bills in 1993 (the Scott Norwood game).
• In 1990 the 49ers beat the Broncos by 45 for the largest win ever.

So, there you have it, your complete breakdown for the big game. I’m saying the 49ers, as they have the better offensive and defensive lines. But Mahomes, Swift and Kelce, and the Chiefs are awesome, and it’ll likely be a great game. In the end, I just hope the refs aren’t the story like they have been so many times in big games!

January Barometer: Why It’s Important & Why It Works

As the S&P 500 goes in January, so goes the year 74.4% of the since 1938. The next 11 months follow January 67.4% of the time. The January Barometer was devised by Yale Hirsch in 1972. With a negative Santa Claus Rally and First Five Days JB holds the key. When January is up after a down SCR and FFD, S&P 500 advanced three times over the remaining eleven months and the full year with average gains of 15.1% and 19.9% respectively.

It all started with the 20th “Lame Duck” Amendment to the Constitution in 1934 where newly elected Senators and Representatives take office in the first week of January and new Presidents are inaugurated on January 20. Prior to that, new members of Congress were not seated until December of the new year. Presidents were not inaugurated until March 4.

Being the first month of the year, it is the time when people readjust their portfolios and try to make a fresh start. Financial analysts rethink their outlook for the coming year. There is also an increase in cash that flows into the market in January, making market direction even more important. Then there is all the information to digest: federal budgets, national goals and priorities, FOMC meetings, 4th quarter GDP data, earnings, and a plethora of other economic data.

Powell: Only Game in Town?
Tue, Jan 30, 2024

The FOMC kicks off its first monetary policy meeting of the year this morning with a decision tomorrow, but with universal agreement that there will be no change in rates, what Chair Powell says in his 2:30 PM ET press conference will be the primary focus of investors around the world. Some would have you believe that the prospects for the market this year rest entirely on Powell's words, so that if he's dovish, there's hope for the bulls, but if he comes out as hawkish, all hope will be lost.

A hawkish tone by the Fed Chair would likely be seen as a negative short-term development for the market, but at the same time, the relationship is not as binary as many seem to believe. The chart below compares the performance of the S&P 500 to the market pricing for the probability of a rate cut at the March meeting (based on Fed Fund Futures) since last October. While equities bottomed and started to rally in late October, it wasn't until late November that the odds for a rate cut in March started to increase and move out of their range (red-shaded area). By that time the S&P 500 was nearly 10% above its low and 3.5% above the high end of its October range. From late November through late December, both the S&P 500 and the odds of a rate cut rose in unison with each other, but pricing for a March rate cut peaked on 12/22. On that day, the S&P 500 closed at 4,754.63, and since then, the odds of a March cut have been cut in half to 44.6%. Over that same period, the S&P 500 is up over 3.5%. If the Fed was driving the bus, how come the market hasn't been going along for the ride lately?

Regional Fed Forecasts Fall Short
Mon, Jan 29, 2024

Today's data slate was light with the only release of note being the Dallas Fed's monthly manufacturing survey. The results were disappointing to say the least as the headline number came in at -27.4, more than twice as low as expectations of -11.8. The huge miss relative to forecasts is not exactly new though. Earlier this month, the Kansas City survey and New York Fed survey likewise came in well below estimates.

Using data from our Economic Indicator Database, below we show the average spread between the actual release value and economist forecast of each regional Fed manufacturing survey (Empire, Philadelphia, Richmond, Kansas City, and Dallas) since 2011. As shown, this January has seen outright massive misses. Only two other months have seen readings disappoint to wider degrees: December 2018 and March 2020. In tonight's Closer we will provide an updated look at our Five Fed Manufacturing Composite which creates a composite of each of these reports to gauge national manufacturing activity.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2024-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 2.2.24-


Here is also the pullback/correction levels from current prices


Here are the current major indices rally levels from 52WK lows as of week ending 2.2.24-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for February 2nd, 2024
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 2/4/24
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED.)

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (2/5-2/9) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (2/5) <-- click there to cast your daily market direction vote for this coming Monday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 2.5.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 2.5.24 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 2.6.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 2.6.24 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 2.7.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 2.7.24 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 2.8.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 2.8.24 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 2.9.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 2.9.24 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($PLTR $PYPL $BABA $SNAP $CAT $LLY $DIS $PEP $MCD $UBER $ENPH $F $AFRM $SPOT $SYM $CVS $FI $CMG $ELF $PINS $NET $FTNT $ARM $ON $VFC $WYNN $EL $AMGN $ACLS $COP $VRTX $DXCM $RBLX $PM $HTZ $EXPE $CCJ $CLSK $BP $BOWL $CFLT $PAYC $SAVE $TM $SPR $BILL $ALGT $MAT $TSN $NXPI)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning February 5th, 2024 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are under an hour from the US cash market open.

GLTA on this Monday, February the 5th, 2024!

 

Morning Lineup - 2/5/24 - Powell Sees His Shadow
Mon, Feb 5, 2024

After hitting record highs last week, sentiment in the equity market is a bit more subdued this morning as the major averages are all indicated to open modestly lower even as futures are off their overnight lows. Oil prices are lower while bond yields are higher. The only economic data on the calendar are PMIs for the services sector, and the rest of the week will be quiet on that front. We're also past the peak of earnings season, but the pace will still be brisk. Already this morning, we have seen some notable reports from Caterpillar (CAT) and McDonald's (MCD). Air Products (APD) is the only one of the major companies reporting that missed EPS forecasts, but the top-line results have been more mixed relative to expectations.

In his 60 Minutes interview on Sunday (taped on Thursday), Fed Chair Powell didn’t make any new headlines relative to his post-Fed meeting comments last Wednesday. He reiterated the stance that the FOMC would likely not be cutting rates at its March meeting by saying “it's not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks.” But he also reiterated that getting to 2% inflation isn’t a pre-requisite for cutting rates: “I've said that we wouldn't wait to get to 2% to cut rates. In fact, you know, we're actively considering now going forward cutting rates, and on a 12-month basis inflation, you know, is not at 2%. It's between 2-3%.” Those comments along with his statement on Wednesday that he repeated in the quote at the top suggest that as long as inflation data comes in as it has been or better, the Fed will be cutting rates by the summer. Powell may not have "seen his shadow" last week, but rate cuts are still coming, it's just going to be later rather than earlier.

While there was nothing new in his comments in Sunday’s interview, market pricing for the number of rate cuts between now and the end of the year is more modest now than it was last week before Friday’s January employment report. The chart below shows the number of 25 bps cuts that the Fed Funds market had priced in at various points this year before last week’s meeting, after the meeting, and now this morning. After last week’s meeting when Powell took March off the table, the number of cuts priced in for that meeting declined, but at the margin, they increased for every other meeting from May through December. After investors have had a weekend to sleep on it and see Powell’s 60 Minutes comments plus a speech from Fed Governor Michelle Bowman on Friday, the number of cuts priced in has declined significantly for every meeting between now and December.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, February 5th, 2024.