- Inflation in the USA is higher than expected
- The dollar strengthens, and yields are rising
- US indexes lose at the opening
The inflation report from the USA did not disappoint and again brought a solid dose of volatility to the market, this time causing declines, unfortunately. Inflation in the USA is much higher than expected. As a result, we are observing a dynamic pullback in the stock markets, with the US500 falling back below 5000 points. The dollar is strengthening and is the strongest currency among the G10 currencies. In the longer term, after the publication, there is still no attempt to recover part of the losses on EURUSD, which is currently losing 0.50% to 1.07150. Yields on US Treasury bonds are rising to 4.27%.
CPI Report Details
Although the data came out higher than analysts' expectations, we still observe a year-on-year decline in January to 3.1% YoY compared to 3.4% YoY in December. However, analysts' expectations indicated a reading of 2.9% YoY.
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Directly after the publication, market expectations related to the first Fed rate cuts fell to just under 100 basis points in 2024 compared to 125 basis points before the report. Consequently, the first interest rate cut has been moved from June to July, and a potential cut in May is now practically excluded.
US500 Index
The US500 loses nearly 1.20% after the CPI report publication, and quotes have returned below the 5000 point threshold. The declines are dynamic, but after the recent almost euphoric rises, a correction in the market is necessary. The nearest support levels worth noting are 4950 points and 4840 points.
Source: xStation 5
Company News
Testers of Microsoft's (MSFT.US) new AI assistant software, Copilot for Microsoft 365, have found it useful but not always justifying its price, according to The Wall Street Journal. The tool, which integrates with Word, Outlook, and Teams, offers functionalities like text generation and email summarization but has shown limitations, particularly in Excel and PowerPoint. Some testers, including Juniper Networks, are hesitant about its $30 per user cost due to these shortcomings and occasional inaccuracies, such as generating incorrect meeting summaries. Despite this, Microsoft has seen unprecedented early demand for Copilot.
JetBlue (JBLU.US) shares saw a significant 13% increase after activist investor Carl Icahn disclosed a substantial 9.91% stake in the airline, amounting to 33.6 million shares valued at $204.1 million.
Waste Management (WM.US) rose 3.70% following the announcement of earnings that exceeded expectations. The company’s management is projecting a revenue growth of 6% to 7% for the fiscal year 2024 and anticipates adjusted operating earnings before interest, taxes, depreciation, and amortization to be between $6.28 billion and $6.43 billion.
ZoomInfo Technologies (ZI.US) surged 10% after reporting fourth-quarter results that exceeded consensus estimates and provided a positive outlook. For the first quarter, they expect GAAP revenue to be between $307 million and $310 million, with Non-GAAP adjusted EPS projected to be between $0.23 and $0.24. For the fiscal year 2024, the company anticipates GAAP revenue to be in the range of $1.26 billion to $1.28 billion, with adjusted EPS between $0.99 and $1.01.
Brighthouse Financial (BHF.US) experienced a sharp 14% drop following lower-than-expected fourth-quarter results, with a notable 15% year-over-year decrease in annuity sales. CEO Eric Steigerwalt attributed the decline to a new statutory requirement impacting reserves and required capital, which negatively affected the company's total adjusted capital but also reduced required capital.
Shopify (SHOP.US) dropped 10% despite slightly exceeding fourth-quarter consensus expectations, with a 23% growth in gross merchandise volume and a 24% increase in revenue. Looking ahead, Shopify anticipates revenue growth in the low twenties percentage range year-over-year, or in the mid-to-high twenties range when adjusting for the impact from the sale of logistics businesses.
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