Stocks Extend Declines on Weak US Economic News

The S&P 500 Index ($SPX) (SPY) today is down -0.67%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.91%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.72%.  March E-mini S&P futures (ESH25) are down -0.60%, and March E-mini Nasdaq futures (NQH25) are down -0.62%. 

Stocks today are under pressure, with the S&P 500 sliding to a 1-week low and the Dow Jones Industrials falling to a 1-month low. Some negative corporate news is weighing on stocks, with Akamai Technologies is down more than -14% after forecasting full-year revenue below consensus.  Also, UnitedHealth Group is down more than -8% after the Wall Street Journal reported that the US Department of Justice has launched an investigation into the company’s Medicare billing practices.   

Stocks extended their losses today after US consumer sentiment in Feb unexpectedly fell to a 15-month low.  Also, today’s US economic news signaled slower activity combined with higher inflation expectations, negative factors for stocks.

The US Feb S&P Global manufacturing PMI rose +0.4 to an 8-month high of 51.6, stronger than expectations of 51.4.  However, the Feb S&P Global services PMI unexpectedly fell -3.2 to 49.7, weaker than expectations of an increase to 53.0 and the steepest pace of contraction in 2 years.

The University of Michigan US Feb consumer sentiment index was revised lower by -3.1 to a 15-month low of 64.7, weaker than expectations of no change at 67.8.

The University of Michigan US Feb 1-year inflation expectations remained unchanged at 4.3%, right on expectations.  However, the Feb 5-10 year inflation expectations unexpectedly accelerated to a 29-year high of 3.5%, higher than expectations of no change at 3.3%.

US Jan existing home sales fell -4.9% m/m to 4.08 million, weaker than expectations of -2.6% to 4.13 million.

The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.02%.  China’s Shanghai Composite Index climbed to a 7-week high and closed up +0.85%.  Japan’s Nikkei Stock 225 recovered from a 2-1/2 week low and closed up +0.26%.

Interest Rates

March 10-year T-notes (ZNH25) today are up by +8 ticks.  The 10-year T-note yield is down by -5.1 bp to 4.455%.  March T-note prices are climbing today on carryover support from gains in 10-year German bunds.  Also, today’s -1% decline in WTI crude oil to a three-session low is pressuring inflation expectations, a supportive factor for T-notes.  T-note prices raced to their high after today’s US economic reports showed Feb consumer sentiment dropped to a 15-month low and Jan existing home sales fell more than expected. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -6.4 bp to 2.470%.  The 10-year UK gilt yield is down -1.9 bp to 4.588%.

The Eurozone Feb S&P manufacturing PMI rose +0.7 to 46.6, stronger than expectations of 47.0.  The Feb S&P composite PMI was unchanged at 50.2, weaker than expectations of an increase to 50.5.

Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the March 6 policy meeting.

US Stock Movers

Akamai Technologies (AKAM) is down more than -14% to lead losers in the S&P 500 after forecasting full-year revenue of $4.00 billion-$4.20 billion, below the consensus of $4.25 billion. 

UnitedHealth Group (UNH) is down more than -8% to lead losers in the Dow Jones Industrials after the Wall Street Journal reported that the US Department of Justice has launched an investigation into the company’s Medicare billing practices.   

Block (XYZ) is down more than -15% after forecasting Q1 gross profit of $2.32 billion, weaker than the consensus of $2.38 billion. 

NU Holdings Ltd (NU) is down more than -14% after reporting Q4 net income of $552.6 million, below the consensus of $566.4 million. 

Globant SA (GLOB) is down more than -24% after forecasting Q1 revenue of $618 million-$628 million, below the consensus of $637.8 million. 

RingCentral (RNG) is down more than -7% after forecasting Q1 adjusted EPS of 93 cents to 97 cents, weaker than the consensus of $1.00. 

Rivian Automotive (RIVN) is down more than -6% after saying it expects about 8,000 vehicle deliveries in Q1, below the more than 14,000 it made in Q4.

Crowdstrike Holdings (CRWD) is down more than -3% after Bloomberg News reports the Justice Department and the SEC are investigating a $32 million deal between Crowdstrike and a technology distributor to provide cybersecurity to the Internal Revenue Service.

MercadoLibre (MELI) is up more than +6% to lead gainers in the Nasdaq 100 after reporting Q4 net revenue of $6.10 billion, better than the consensus of $5.96 billion. 

PDD Holdings (PDD) is up more than +5% after better-than-expected earnings from Alibaba lifted US-listed Chinese stocks. 

Booking Holdings (BKNG) is up more than +4% to lead gainers in the S&P 500 after reporting Q4 revenue of $5.47 billion, stronger than the consensus of $5.18 billion.

Innodata (INOD) is up more than +26% after reporting Q4 diluted EPS of 31 cents, well above the consensus of 22 cents. 

Five9 Inc (FIVN) is up more than +3% after reporting Q4 adjusted EPS of 79 cents, better than the consensus of 70 cents, and forecast full-year adjusted EPS of $2.58-$2.62, stronger than the consensus of $2.55. 

Consolidated Edison (ED) is up more than +2% after reporting Q4 adjusted EPS of 98 cents, stronger than the consensus of 95 cents. 

Unity Software (U) is up more than +2% after HSBC upgraded the stock to buy from hold with a price target of $34. 

Live Nation Entertainment (LYV) is up more than +1% after reporting Q4 revenue of $5.68 billion, above the consensus of $5.63 billion. 

Earnings Reports (2/21/2025)

AdvanSix Inc (ASIX), AG Mortgage Investment Trust Inc (MITT), Alamo Group Inc (ALG), Altair Engineering Inc (ALTR), Amedisys Inc (AMED), Arbor Realty Trust Inc (ABR), Atmus Filtration Technologies (ATMU), Balchem Corp (BCPC), Boise Cascade Co (BCC), C4 Therapeutics Inc (CCCC), Cross Country Healthcare Inc (CCRN), Edgewise Therapeutics Inc (EWTX), Federal Agricultural Mortgage (AGM), Gencor Industries Inc (GENC), H&E Equipment Services Inc (HEES), Hawaiian Electric Industries Inc (HE), MGE Energy Inc (MGEE), ModivCare Inc (MODV), Oil States International Inc (OIS), Spirit AeroSystems Holdings In (SPR), St Joe Co/The (JOE), Standard Motor Products Inc (SMP), Sunstone Hotel Investors Inc (SHO), Telephone and Data Systems Inc (TDS), TXNM Energy Inc (TXNM), Uniti Group Inc (UNIT).