Stock Futures Drift Sideways After Retail Sales Surge Past Expectations.

Stock Futures Drift Sideways After Retail Sales Surge Past Expectations.


A day earlier, the Dow set a fresh record closing high while the S&P 500 and Nasdaq touched and then retreated from record intraday levels

 

Shares of Chevron (CVX), E.W. Scripps & Co. (SSP) and Verizon (VZ), the parent company of Yahoo Finance, jumped in late trading after Warren Buffett’s Berkshire Hathaway disclosed new stakes in each of the companies. Bitcoin prices (BTC-USD) rocketed above $51,000, after breaking above $50,000 for the first time ever on Tuesday.

 

Markets over the past month have priced in the likelihood that additional, significant fiscal stimulus will help propel the economic recovery and work alongside ongoing monetary stimulus from the Federal Reserve. The yield on the benchmark 10-year Treasury note hit a one-year high of about 1.31% on Tuesday, amid hopes of a firming economy.

 

West Texas Intermediate crude oil prices (CL=F) added to gains after settling above $60 per barrel for the first time since January 2020 on Tuesday, as new supply concerns compounded with optimism over a post-pandemic resurgence in demand for travel and fuel. Domestic oil output has slumped by nearly one-third due to freezing temperatures in Texas, Bloomberg reported on Tuesday.

 

As stocks continue to set fresh record highs, some strategists have warned that markets may need to take a breather before moving higher later this year.

 

“We still believe the market is ripe for a pullback, but the focus should remain on our core fundamental thesis and the global reflation theme,” Cannacord Genuity strategist Tony Dwyer said in a note Tuesday. “The macro backdrop and market action coming off the March 2020 low continues to track the gains coming out of the Great Financial Crisis [of 2009], which means corrections may be coming followed by even more gains.”

 

Even still, others noted that those with a longer-term investment horizon may benefit most by staying the course.

 

“It’s always a nervous situation for investors when markets keep making new highs, and certainly there is froth in some parts of the market. But the question around the stimulus, the roll-out of the vaccines, all of these factors that go into the price in the stock market, ultimately it boils down to when will the economy recover to pre-pandemic levels, and when will earnings get to those levels as well,” James Liu, Clearnomics founder and CEO, told Yahoo Finance.

 

“Right now, consensus estimates are that by the end of 2021, we should see a case where we get to about $170 in S&P earnings, which is essentially getting back to where we began pre-pandemic. And if that’s the case, then it does justify some of the enthusiasm we have in the stock market today,” he added. “That’s a little bit different than saying the stock market will keep going up in a straight line. Obviously, that’s probably not the case. But it is a reason for most everyday investors to basically stay diversified and stay invested despite the all-time highs.”

 

Producer prices jumped 1.3% in January, versus a 0.4% rise expected:

Producer prices rose much faster than expected in January, as producer pricing power firmed at the start of the year.

 

Producer prices jumped 1.3% in January over December, following a 0.3% rise during the prior month. This handily topped estimates for a rise of 0.4%, according to Bloomberg consensus data.

 

Excluding more volatile food and energy prices, the producer price index (PPI) was still up 1.2%, or better than the 0.2% anticipated.

 

Over last year, producer prices rose 1.7% or nearly double the 0.9% estimate. Excluding food and energy prices, producer prices were up 2.0%, versus 1.1% expected.

 

Retail sales surged 5.3% in January, versus 1.1% jump expected:

Retail sales rocketed higher in January following a December slide.

 

Retail sales rose at a 5.3% monthly clip in January, the Commerce Department said Wednesday, following a drop of 1.0% in December. This was much faster than the 1.1% rise expected, according to Bloomberg consensus data.

 

The jump came as sales at department stores, electronics and appliance stores, and non-store retailers reversed December declines. Department stores sales surged 23.5% but were still down 3.0% year-over-year. Non-store retailers, a proxy for e-commerce sales, jumped 11% in January and surged by 28.7% year-over-year.

 

Overall, retail sales were 7.4% higher than in January 2020, extending a streak of year-over-year growth that began over the summer.

 

Shopify 4Q results handily top estimates, but outlook suggests 2021 revenue slowdown:

Shopify (SHOP) posted fourth-quarter results that sailed above expectations, as the pandemic drove another surge in e-commerce demand in the final months of 2020. However, shares fell about 2% in early trading after the company suggested growth would moderate this year.

 

Fourth-quarter revenue nearly doubled over last year to $977.7 million, coming in well above the $910.4 million expected, according to Bloomberg consensus data. Adjusted earnings of $1.58 per share were also strongly ahead of the $1.21 expected.

 

However, Shopify suggested that its growth would retreat from 2020’s record clip this year, as the vaccine rollout allows more in-person businesses to reopen.

 

“We expect that we will continue to grow revenue rapidly in 2021, albeit at a lower rate than in 2020,” the company said in a statement. “While we expect that the first quarter will likely still contribute the smallest share of full-year revenue and the fourth quarter the largest, the revenue spread may be more evenly distributed across the four quarters than it has been historically if the rollout of a vaccine shifts more spending to services and offline shopping towards the back half of the year.”

 

Mortgage applications fell for back-to-back weeks as interest rates creep higher:

Mortgage applications in the U.S. declined for a second consecutive week, according to the Mortgage Bankers Association’s weekly index. Applications for mortgages were down 5.1% during the week ended February 12, following a drop of 4.1% the prior week.

 

The decline came as the subindex tracking refinances slid 5%, while the subindexes tracking purchase fell 6% during the week. However, refinances remained 51% higher than in the same period last year. And on an unadjusted basis, purchase applications were still 15% higher than the comparable week in 2020.

 

“Expectations of faster economic growth and inflation continue to push Treasury yields and mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, and last week climbed to its highest level since November 2020,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “The uptick in rates has slightly dampened refinance activity, with MBA’s index falling for the second week in a row, and the overall share dipping below 70% for the first time since last October.”

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