Stansberry Research

Tuesday Afternoon Market Recap

C. Scott GarlissStansberry NewsWire

Tuesday Afternoon Market Recap:

U.S. equity markets finished mixed.

Economic Indicators

  • S&P Global's preliminary composite purchasing managers' index ("PMI") data for January showed an improvement in domestic manufacturing and services for the first time in four months.
  • The Federal Reserve Bank of Richmond's January manufacturing survey showed prices paid for raw materials and received for goods keep declining, signaling easing inflation.

Macro Commentary

  • Investors were increasingly optimistic about the interest-rate outlook on the heels of today's manufacturing numbers. While S&P Global's preliminary PMI survey for January showed business is improving somewhat, it still remains in contraction territory, signifying economic activity is slowing. That takes the pressure off the Federal Reserve to keep raising interest rates.
  • Diversified industrials behemoth 3M (MMM) said it would eliminate about 2,500 manufacturing jobs as demand slows and production volume declines. Management endorsed full-year 2023 earnings below Wall Street's expectations.
  • The next big test for technology stocks will take place after the close today when software giant Microsoft (MSFT) releases its fourth-quarter results and guidance. As the first mega-cap tech company to report, it will likely set the near-term tone for the sector.

Within the S&P 500 Index, 6 of the 11 sectors finished higher...

European equity markets finished relatively unchanged.

Economic Indicators

  • S&P Global's preliminary Eurozone composite PMI data for January beat expectations as manufacturing- and services-sector activity recovered.
  • German consumer confidence figures for February improved for the fourth straight month as individuals were increasingly optimistic about prices and their willingness to spend.
  • French business confidence for January eased compared with December as orders, inventories, and prices all fell.

Macro Commentary

  • European stocks took a breather after a torrid start to 2023. The Euro Stoxx 50 Index has rallied 9.7% year to date, beating the S&P 500 Index's 4.7% gain. The primary driver has been a discount valuation relative to the U.S. The question now is, how will technology stocks fare on the heels of earnings? If the group can report solid results, it could fuel gains for the S&P 500 given its tech-heavy weighting.

Asian equity markets finished higher.

Economic Indicators

  • Au Jibun Bank's preliminary Japanese composite PMI for January rebounded into economic-expansion territory as services-sector activity surged.
  • Australian business confidence improved for the first time in four months during December as purchase costs continued to decline.

Macro Commentary

  • Japanese stocks fully recovered the losses endured after the Bank of Japan announced it would allow its yield cap on 10-year sovereign bonds to double, from 0.25% to 0.50%, back in December. The primary beneficiary has been the nation's banks, due to expectations the shift will allow net interest income to rebound after years of low rates.
  • Australia's business-confidence numbers point to easing inflation. That's important from a monetary-policy outlook as a shift lower in costs could potentially take pressure off the Reserve Bank of Australia to keep raising interest rates.

(Narratives written as of local market close.)

Asset Snapshot

Risk:

VIX -3.08%

Bitcoin -0.04%

Ethereum -1.09%

Growth:

WTI Crude -1.65%

Brent Crude -2.20%

Nat Gas -5.80%

Copper  +0.08%

Safety:

Gold +0.32%

Silver +0.86%

What we're paying attention to this week...

U.S.

  • Chicago Fed Manufacturing Index for December (Thursday)
  • GDP for Q4 (Thursday)
  • Kansas City Fed Manufacturing Index for January (Thursday)
  • Personal Consumption Expenditures for December (Friday)

Europe

  • K. – PPI for December (Wednesday)
  • K. – CBI Distributive Trades Survey for January (Thursday)
  • France – Consumer Confidence Survey for January (Friday)

Asia

  • China – Markets Closed for Lunar New Year Holiday (Monday-Friday)
  • Australia – CPI for December (Wednesday)
  • South Korea – GDP (Advanced) for Q4 (Thursday)
  • Japan – CPI for January (Friday)

Have a great evening!

C. Scott Garliss and Kevin Sanford