US Open: Wall Street loses momentum as Fed cuts in June are less likely 📌

• US500 index rises 0.58% led by real estate sector
• Higher than expected PPI data lower chances for the interest rates cut in June

Wall Street indexes are losing on Friday after another negative report regarding inflation this week. Core Producer Price Inflation (PPI) showed a higher price dynamic at 2.00% in January compared to the 1.6% expected. As a consequence, the dollar strengthened and is currently the strongest currency among the G10 currencies. However, market volatility today is low, so increases of 0.2-0.4% are sufficient for the USD to maintain its strongest position. Yields on 10-year U.S. bonds are also gaining, standing at 4.31%.

US500

The index is maintaining above 5000 points, recording a decline of about 0.25% today. However, the upward momentum has evidently decreased. On the MACD indicator, we can notice an emerging divergence, where despite the new ATH, the indicator remains lower than at the end of 2023. The upcoming Nvidia report, to be published in the middle of next week, could be another significant catalyst for movement both upwards and downwards. Considering a potential correction, it is worth watching the levels of 4950 and 4840 points, which are the nearest support zones.

Source: xStation 5

PPI Inflation

In January, the US producer price index (PPI), a measure of prices received by producers of domestic goods and services, rose unexpectedly by 0.3%, marking its biggest increase since August and surpassing Dow Jones economists' forecasts of a 0.1% rise. Core PPI, excluding food and energy, also exceeded expectations with a 0.5% increase. This report follows the consumer price index (CPI) data, indicating that inflation remains higher than anticipated, challenging the Federal Reserve's hopes for easing inflation and affecting market expectations of aggressive interest rate cuts. After the publication Fed Swaps assign lower odds to May and June rate cuts.

Company News

Coinbase Global (COIN.US): The company's stock rose over 15% after it returned to profitability in Q4 for the first time in three years, bolstered by higher interest income from stablecoin reserves during a crypto bull market. Coinbase forecasts Q1 subscription and services revenue between $410M-$480M, surpassing the consensus of $373.1M, and expects a reduction in sales and marketing expenses to $85M-$100M.

Source: xStation 5

Applied Materials (AMAT.US): Shares increased by 8% following better than expected FQ1 earnings and a positive outlook. The semiconductor equipment maker anticipates adjusted EPS between $1.79 and $2.15, exceeding the consensus of $1.80, and projects revenue between $6.1B and $6.9B, surpassing the consensus of $6.34B.

The Trade Desk (TTD.US): The company's shares climbed over 20% after mixed Q4 results but optimistic guidance for early 2024. The Trade Desk expects revenue to reach at least $478M, exceeding analyst predictions of $452.3M, and forecasts adjusted EBITDA of about $130M.

Roku (ROKU.US) shares fell by 20% due to a Q4 loss, despite exceeding top-line expectations. The company struggled with challenges like intense competition and reduced consumer spending on video streaming services.

Deere & Co. (DE.US), a manufacturer of agricultural and construction equipment, surpassed profit and sales forecasts in its first quarter of fiscal 2024 but experienced an 8% revenue decline from the previous year. Despite this, the company reduced its full-year income projection from the initial estimate of $7.75 billion to $8.25 billion to a new range of $7.50 billion to $7.75 billion. This revision reflects an expectation of decreased fleet replenishment by customers, as agricultural fundamentals are predicted to normalize after record levels in 2022 and 2023.

The Wendy's Co (WEN.US) reported its fourth-quarter earnings with an EPS of $0.21, which was slightly below analyst expectations of $0.23. The company's revenue for the quarter was $540.7 million, falling short of the consensus estimate of $547.03 million.