Stock Markets Dismiss Further Tariff Discussions; Meta Platforms Unlikely Sustained Success
Revised and Original Article
In an unexpected turn of events, stocks saw substantial gains on Thursday, bucking trends of inflation concerns and tariff uncertainties. The S&P 500, Russell 2000, and Dow Jones Industrial Average all recorded gains of about 1%, with the Nasdaq Composite following closely at 1.5%.
Inflation worries started to simmer on Wednesday following a Consumer Price Index (CPI) report hinting at price increases. However, Thursday's Core Producer Price Index (PPI) report suggested that while inflation is on the rise, it might not escalate as significantly as previously anticipated. The higher-than-expected reading has elevated focus on upcoming economic data and Fed comments at speaking engagements, especially the Fed's meeting minutes scheduled for next week.
President Trump announced plans to impose reciprocal tariffs on nations imposing tariffs on US goods. This threat is viewed as targeting nations like India and the European Union. Details about the tariffs are yet to be unveiled and will be announced next Tuesday.
The Trump administration's policy-by-tweet approach - characterized by unexpected announcements via social media - is something investors should remain vigilant about, especially on Fridays.
On the earnings front, Coinbase and DraftKings announced their results last Thursday. Coinbase's revenue witnessed a significant boost in the last quarter, surpassing both top and bottom-line projections. Shares of Coinbase saw an 8% rise on Thursday but are expected to open slightly lower on Monday. DraftKings, in contrast, missed earnings and revenue expectations but reported a 36% surge in monthly unique payers and increased 2025 projections. Shares of DraftKings gained 2% on Thursday and saw further growth in premarket trading. Applied Materials, which did not release earnings but has been on a remarkable rally, closed Monday with shares down nearly 10% in premarket due to below-expectation outlooks.
One stock enjoying a remarkable streak is Meta Platforms. Meta's shares have rallied for seventeen consecutive days, with a probability of less than 0.0000008. While there's excitement surrounding the streak, there might be a good reason to consider taking profits or protecting gains.
With Meta Platforms and gold dominating my radar, I'm keeping a close eye on market movements. Gold, despite bullish stock market performance and its ability to brush off concerns, hit all-time highs. This trajectory might serve as a warning sign for a reluctant return of inflation, capable of having significant implications for equities.
As a three-day weekend with President's Day approaching, I can't foresee investors adopting a wait-and-see approach, as policy decisions or announcements may trigger selling near the market close today. Additionally, with the coming weekend, don't be surprised if you see an influx of advertisements for mattress sales.
As always, maintain focus on your long-term objectives and investment plan.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
Enrichment Insights Integrated
- The current inflation rate is higher than the Federal Reserve's target, with 3% annual growth in 2025 and 0.5% monthly rise, resulting in price increases in essential categories like food, energy services, shelter, and transportation services.
- Healthcare costs represent a serious concern for retirees with a 2.7% annual rise in 2025, as medical expenses constitute a substantial portion of older Americans' budgets.
- Investors expect an inflation rate of 3.2% for 2025, matching recent headline inflation figures despite lingering economic uncertainties.
- Stock market performance has remained resilient despite inflation concerns, boasting solid gains for the major indices, including the S&P 500, Dow Jones Industrial Average, Russell 2000, and Nasdaq Composite.
- DraftKings and Meta Platforms showed robust earnings, with DraftKings posting a 36% surge in monthly unique payers and an increase in 2025 expectations, and Meta Platforms rising for seventeen consecutive trading days. These company performances are driven by their individual financial reports and market dynamics rather than inflation concerns.
- Despite inflation concerns and tariff uncertainties, stocks, including the S&P 500, Russell 2000, and Dow Jones Industrial Average, experienced substantial gains on Thursday.
- President Trump announced plans to impose reciprocal tariffs on nations imposing tariffs on US goods, targeting nations like India and the European Union.
- Coinbase, in its earnings announcement, saw a significant boost in revenue in the last quarter, surpassing both top and bottom-line projections, resulting in an 8% rise in its shares.
- DraftKings, on the other hand, missed earnings and revenue expectations but reported a 36% surge in monthly unique payers and increased 2025 projections, resulting in a 2% rise in its shares.
- Meta Platforms' shares have rallied for seventeen consecutive days, hitting all-time highs, despite inflation concerns and bullish stock market performance.
- Applied Materials, despite not releasing earnings, saw shares drop nearly 10% in premarket due to below-expectation outlooks, despite being on a remarkable rally prior to this.
- In the midst of inflation concerns, tariff uncertainties, and the upcoming President's Day weekend, investors should remain vigilant and focus on their long-term objectives and investment plans.
