As we begin another trading week, there's a lot to catch up on in the world of finance and stocks. With stocks under pressure and ongoing retail earnings reports, staying on top of the latest news and trends is essential. In this blog post, we'll provide an overview of the most significant events shaping the markets this week, along with an analysis of last week's key developments.
We'll also look closely at three of the hottest stocks currently making headlines so that you can stay informed and up-to-date. So, let's dive into the exciting world of stocks!
Last Week's Summary:
US stocks significantly declined on Friday, resulting in weekly losses across all three major indexes. The dip was caused by a report from the Bureau of Economic Analysis, which revealed that the personal-consumption-expenditures price index, the Fed's preferred inflation gauge, had risen more than anticipated in January.
The index showed that the cost of US goods and services jumped 0.6% in January, the biggest rise since last summer. The year-over-year rate also increased to 5.4%, from 5.3% in December, in the first uptick in seven months.
The more closely followed core index, which excludes food and energy prices and is viewed as a better gauge of underlying inflation trends, also rose 0.6% in January, climbing 4.7% over the past 12 months. Economists had forecast that core PCE prices would rise 0.5% in January and 4.4% year over year.
The disappointing inflation data sparked concerns that "inflation is sticky and persistent," said Philip Orlando, chief equity market strategist at Federated Hermes. "It is not coming down nearly as quickly as the immaculate disinflation crowd expected." That has investors "nervous" that "the Fed may have to get even more aggressive than the 'Street' thought just a month or two ago," said Orlando.
For the week, the Dow fell 3%, the S&P 500 slid 2.7%, and the technology-heavy Nasdaq Composite dropped 3.3%. The Dow has fallen for four straight weeks, booking its biggest weekly percentage decline since September 2022 and longest weekly losing streak since May 2022, according to Dow Jones Market Data. The S&P 500 saw a third consecutive week of declines.
Despite concerns over inflation, there were also some positive economic data releases on Friday. Consumer spending rose 1.8% in January, the biggest increase in almost two years, while an index of consumer sentiment rose in early February to a 13-month high of 67, up from a preliminary 66.4 and from 64.9 in January, the University of Michigan said.
However, according to Fed governor Philip Jefferson, the strong job market may make it hard for the US central bank to bring down inflation. "The ongoing imbalance between the supply and demand for labor, combined with the large share of labor costs in the services sector, suggests that high inflation may come down only slowly," Jefferson said in a speech at a University of Chicago Booth School of Business conference in New York.
Looking ahead, many investors are worried that rising inflation could lead the Federal Reserve to raise interest rates more aggressively than expected, which could weigh on stocks. "We think we're going to grind lower over the next couple of months," said Orlando. "We could very easily retest the mid-October lows we saw last year.
Commodities markets:
Let's explore the latest developments in the commodities markets.
Recently, there has been a slight rebound in oil prices as investors keep a close watch on Russia's production cuts and exports while also monitoring Chinese demand. This has led to a rise in futures, and the situation is developing rapidly.
The US benchmark is currently trading around 17% below levels seen before Russia's invasion of Ukraine a year ago. After breaking a seven-day losing streak on Thursday, West Texas Intermediate crude for April delivery increased by 93 cents, or 1.2%, closing at $76.32 a barrel on the New York Mercantile Exchange. The global benchmark, Brent crude, also saw a 0.2% weekly gain.
The recent drop in oil prices can be attributed to an influx of Russian supply, but the country is now planning to cut production by 500,000 barrels a day in March in response to further price caps and sanctions in light of their invasion of Ukraine. How these production cuts will play out in the coming weeks remains to be seen.
In other market news, gold prices have significantly dropped this week, with markets falling as investors attempt to get down to the 50-Week EMA. As gold is highly sensitive to the US dollar, its recent downturn may be due to the US dollar taking off again.
While there is significant support just below the $1800 level, breaking down below that level could open up the possibility of a move down to the $1750 level. Investors should monitor the US dollar to gauge where gold prices may be headed in the longer term.
Upcoming Market-Moving Events:
As we move forward into the coming week, it's time to turn our attention to the most significant events on the horizon.
Investors are preparing for a week filled with important events, including results from retail bellwether Target, data from the manufacturing and housing sectors, and consumer confidence. With inflation data from last week that exceeded expectations and growing pessimism over the Federal Reserve's rate hikes, the stock market rally is under pressure.
The Dow suffered a fourth-straight losing week, while the S&P 500 and Nasdaq had their worst week of the year, losing 2.7% and 3.3%, respectively. With that said, investors will keep a close eye on the retail sector, particularly the results from Target, after Walmart's warning on the state of US consumers last week.
Additionally, a jam-packed calendar of reports from the housing and manufacturing sectors, which are the two areas of the economy most impacted by policy tightening, is also scheduled for release, along with a critical measure of consumer confidence.
- On Monday, the economic calendar includes Durable Goods Orders, Dallas Fed Manufacturing Activity, and Pending Home Sales, among other data.
- Tuesday's calendar includes Conference Board Consumer Confidence, Retail, and Wholesale Inventories.
- Wednesday will have Construction Spending, month over month, and ISM Manufacturing, and Thursday includes Initial Jobless Claims.
- Finally, Friday will have S&P Global U S Services MI.
The earnings calendar is also filled with big names, with results expected from Workday, Zoom Video, Dollar Tree, Salesforce, and Kroger. Investors are likely to closely monitor these earnings reports as they could significantly impact the markets.
In conclusion, with a week filled with important economic data and earnings reports, it will be interesting to see how the stock market reacts to the events. It will be worth keeping a close eye on Target's results and the data from the housing and manufacturing sectors, which will provide a snapshot of the current state of the economy.
Hot stocks that everyone's searching for:
Let's shift focus from upcoming events and look at the three hottest stocks on everyone's minds and frequently searched for on StockInvest.us. For an in-depth analysis of these stocks, simply enter the ticker name in the search bar on StockInvest.us.
1. On Friday, February 24th, 2023, NVIDIA's stock price fell by -1.60% from $236.64 to $232.86, with sales and earnings also dropping due to subsiding consumer demand for electronics. However, NVIDIA's management has done an excellent job of shifting the focus away from its crashing gaming segment and toward its long-run prospects in the artificial intelligence industry.
2. Amazon's stock price fell 2.42% on the same day, dropping from $95.82 to $93.50. This decline is attributed to the continued effects of inflation, which have impacted many companies, including Amazon. The online retail giant experienced over $10 billion in operating losses in its retail segments last year. Despite this, Amazon remains dominant in multiple high-growth industries, which has led to differing opinions among investors on whether now is the right time to invest in the company.
3. Lastly, on February 24th, 2023, Tesla's stock price fell by -2.57% from $202.07 to $196.88. The company is hosting an investor event on March 1st, which is expected to cover Tesla's growing power business, increasing cash flow, and potentially the announcement of a new, lower-priced vehicle to ensure growth through the end of the decade and defend against competitors in the EV market.
After rising by around 64% year-to-date before experiencing a drop, analysts believe that Tesla's current stock price may require a new catalyst to continue its upward trajectory. Many suggest that releasing a $30,000 third-generation vehicle could serve as the necessary boost to drive growth.
And to wrap things up:
Let's dive into our final topic.
In his annual letter to shareholders, the legendary investor behind Berkshire Hathaway, Warren Buffett, expressed his unwavering optimism in the US economy and his company's future.
Despite facing challenges such as higher inflation and other market factors that have affected stock prices, Berkshire Hathaway has remained steady. Buffett urged investors to focus on the big picture and remain patient rather than being consumed by self-doubt and self-criticism.
Buffett emphasized his faith in the "American Tailwind," citing its dynamism and ability to benefit Berkshire Hathaway over the last 58 years. He also defended buybacks, which have come under scrutiny from politicians in Washington. He signaled confidence in his company's stock by repurchasing $7.9 billion of its own shares.
Berkshire Hathaway posted a record $30.8 billion operating profit in 2022, despite facing challenges such as elevated inflation, rising interest rates, and supply chain disruptions. However, the company also posted a $22.8 billion net loss, compared to an $89.8 billion gain in the previous year, due to the decline in the prices of stocks in its investment portfolio.
Buffett downplayed the net results, stating that they are volatile and are affected by accounting rules. Despite being one of the most famous American investors, Buffett remained humble and self-critical of his own investment prowess, emphasizing that most of his capital allocation decisions have been "so-so." He attributed Berkshire Hathaway's "satisfactory" results to only a dozen "truly good" decisions.
Buffett stressed the importance of trust and rules in running large businesses and urged investors not to focus on short-term market conditions. While indirectly criticizing President Joe Biden's proposal to quadruple the 1% tax on corporate stock buybacks, Buffett reminded investors of the amount of federal income taxes Berkshire Hathaway has paid over the years and expressed his hope to pay even more in the next decade.
Buffett also renewed his affection for his friend and business partner, Charlie Munger, and announced that they will attend Berkshire Hathaway's annual shareholder weekend in May. Despite facing challenges and criticisms, Warren Buffett and Berkshire Hathaway remain a force to be reckoned with in the world of finance.
Thanks for tuning into StockInvest.us! We hope you found this blog post helpful in your quest for informed investment decisions. Remember to keep an eye on a stock's fundamentals, financial health, industry trends, and any relevant information or events that may impact the stock price.
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