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Debt Ceiling, Deposits And Disney Set The Stage For A Wobbly Open

Penny Stocks

Small Cap

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BYND

PACW

(Thursday market open) ) After a few days out of the spotlight, regional banks popped back into the news this morning as shares of PacWest (NASDAQ: PACW) slid 20% following a sharp loss in deposits.

Dollar, Yields Retreat as Investors Pile into Stocks Following Fed Rate Hike

Federal Reserve

AAPL

AMZN

GOOGL

PYPL

(Thursday Market Open) Caution is napping for the moment. Yesterday’s Federal Reserve meeting and press conference seemed to fuel sweet dreams for investors hoping for a so-called “soft landing,” and sent major indexes to five-month highs.

Powell Talk: It’s All About the Fed Chair’s Comments Today, as 0.25% Rate Hike Baked In

News

(Wednesday Market Open) Today’s Federal Reserve rate decision comes just ahead of Groundhog Day. If the groundhog sees its shadow, it means another six weeks of winter, tradition tells us. If the Fed sees an inflation shadow still overhanging the economy, it could mean many, many more weeks of higher rates.

Powell Talk: It&#39;s All About the Fed Chair&#39;s Comments Today, as 0.25% Rate Hike Baked In

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BONESUPPORT HOLDING AB by Bonesupport Holding AB

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Boeing Company (The) Depositary Shares, each representing a 1/20th interest in a share of 6.00% Series A Mandatory Convertible Preferred Stock, par value $1.00

(Thursday market open)&nbsp;) After a few days out of the spotlight, regional banks popped back into the news this morning as shares of&nbsp;PacWest&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pacw#NASDAQ">PACW</a>) slid 20% following a sharp loss in deposits. This came as a reminder that we&rsquo;re not out of the woods yet on issues with smaller banks.
Other regional banking shares fell in sympathy ahead of the opening bell, and major indexes also came under pressure. While a deposit decline at one bank doesn&rsquo;t necessarily signal broader problems, the market is hypersensitive to anything affecting this sector.
Another delicate issue is the debt ceiling, which takes center stage Friday for the second time this week when officials in Washington, D.C., meet again for high-level discussions. There were no signs of progress after Tuesday&rsquo;s meeting, but stock market&nbsp;volatility&nbsp;doesn&rsquo;t reflect much strain yet. That could occur if we approach the June 1 ceiling deadline with no deal.
Also dragging the market this morning is weakness in&nbsp;Disney&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dis#NYSE">DIS</a>) shares after the entertainment company reported quarterly results that reflected additional subscriber losses for its TV streaming platform.
In the latest data news, April producer prices rose 0.2%, according to the Producer Price Index (PPI) just released this morning. That&rsquo;s below Wall Street&rsquo;s expectation of 0.3% but up from a negative reading in March. Core PPI rose 0.2% as well. Major indexes bounced back into green territory after the data.
<h2>Morning rush</h2>
<ul>
<li>The&nbsp;10-year Treasury note yield&nbsp;(TNX) fell 6 basis points to 3.36% and is back toward recent lows. The yield weakness accelerated following in-line PPI data.</li>
<li>The&nbsp;U.S. Dollar Index&nbsp;($DXY) inched up to 101.8.</li>
<li>The&nbsp;Cboe Volatility Index&reg;&nbsp;(VIX) futures climbed to 17.34 but remain well under last week&rsquo;s peaks.</li>
<li>WTI Crude Oil&nbsp;(/CL) dipped to $72.11 per barrel after a slight rally earlier this week.</li>
</ul>
The Fed&rsquo;s hawkish policy could be one reason crude prices remain relatively low. Higher rates often support the U.S. dollar, and a strong dollar tends to depress crude. The dollar is well below last year&rsquo;s highs but remains relatively strong, historically, versus other currencies.
<h2>Just In</h2>
Producer prices rose 0.2% in April after falling a revised 0.4% in March, but the sequential increase largely reflects higher energy prices. Core PPI (which strips out food and energy) also rose 0.2%, up from a flat reading the prior month but below the 0.3% average analyst estimate. These readings were in line with market thinking and could reinforce ideas of a Federal Reserve pause.
Also this morning, weekly jobless claims jumped to 264,000&mdash;the highest reading since October 2021 and another sign that the labor market may be slowing.
In overseas news, the&nbsp;Bank of England&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/boe#NYSE">BOE</a>) raised rates 25 basis points, in line with analysts&rsquo; expectations. Inflation there remains in the double digits. In happier tidings, the BoE said it&rsquo;s been surprised at the economy&rsquo;s resilience and raised its projections from contraction to growth.
JPMorgan Chase&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jpm#NYSE">JPM</a>) CEO Jamie Dimon, in an interview with Bloomberg, said he would &ldquo;happily take a mild recession right now.&rdquo; He believes commercial real estate and office loans are an issue and may take a few banks down.
Talking technicals:&nbsp;Major indexes are breathing thin air in terms of their long-term ranges. From a technical perspective, the&nbsp;S&amp;P 500&reg;&nbsp;index&nbsp;(SPX) hasn&rsquo;t successfully clawed above 4,200 since last summer despite numerous attempts. Support could be near 4,050, an area near the 50-day moving average that the SPX bounced off last week.
<h2>Stocks in the Spotlight</h2>
No enchanted evening for Disney:&nbsp;We&rsquo;ve been hearing for a while that people want experiences outside the home as the pandemic recedes.&nbsp;Disney&rsquo;s&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dis#NYSE">DIS</a>) latest quarterly report released after yesterday&rsquo;s close reflects that, with theme park revenue taking off like a flying elephant while streaming video keeps losing ground.
Returning DIS CEO Bob Iger didn&rsquo;t exactly get a warm welcome from the Disney+ streaming platform, which continues to bleed subscribers. Four million more abandoned the service during the most recent quarter. Still, DIS described things positively by noting the unit&rsquo;s narrowing losses, which came thanks in part to higher prices paid by North American subscribers. In a press release, DIS noted &ldquo;the improved financial performance of our streaming business.&rdquo;
Theme park reopenings in Asia helped ignite a 17% gain in the Parks and Experiences category, DIS said. Overall, quarterly revenue and earnings met Wall Street&rsquo;s expectations, but the focus on streaming subscriber losses seemed to disenchant investors. Shares fell 5% in premarket trading.
And beyond&hellip;:&nbsp;Shares of&nbsp;Trade Desk&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/ttd#NASDAQ">TTD</a>) bounced in premarket trading after the advertising technology company beat Wall Street&rsquo;s earnings expectations. Also,&nbsp;Beyond Meat&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bynd#NASDAQ">BYND</a>) shares sizzled ahead of the open, up 8% after an earnings beat. The stock is at just a fraction of its 2019 highs, recorded back when BYND was a hot initial public offering (IPO).
As earnings season winds down, the market&rsquo;s focus will likely shift back to bigger-picture subjects, such as inflation, the economy, and the path of Fed policy.
<h2>Eye on the Fed</h2>
The probability of a June rate pause stands at 98%, according to the&nbsp;CME FedWatch Tool. That&rsquo;s up from about 90% a week ago. The tool also prices in about a 99% chance that the Federal Reserve will cut rates by the end of this year. Fed Governor Christopher Waller speaks at 10:30 a.m. ET today.
Yesterday&rsquo;s April Consumer Price Index (CPI) rose 0.4% month over month and 4.9% from a year ago, the smallest annual increase since April 2021. This got a generally warm reception on Wall Street, helping send the tech-heavy&nbsp;Nasdaq 100&reg; (NDX) index up more than 1% Wednesday. Tech is considered among the more rate-sensitive sectors and might benefit from a Fed rate pause.
However, 4.9% inflation remains well above the Fed&rsquo;s 2% goal, and Fed Chairman Jerome Powell made it clear this month in his post-Federal Open Market Committee&nbsp;(FOMC) press conference that the Fed isn&rsquo;t entertaining ideas of adjusting that goal upward, as some economists have suggested.
<h2>What to Watch</h2>
Remember to listen closely for reactions to PPI this week from Waller and other Fed speakers. There are signs already from recent data&mdash;like April wage growth&mdash;that the Fed is having less progress against rising prices.
There&rsquo;s one more number on the way for data-weary investors, and that&rsquo;s tomorrow&rsquo;s preliminary May University of Michigan Consumer Sentiment reading. Sentiment&rsquo;s been in the dumps for months, and analysts don&rsquo;t expect a major surge of enthusiasm. The consensus is 62.9 for headline sentiment, Briefing.com said, down from 63.5 in April and from highs above 110 back in the 2017-2019 period. Investors will likely pay close attention to the report&rsquo;s year-ahead inflation expectations, which held steady at 4.6% in April&rsquo;s final report. An uptick there might lower investor sentiment.
CHART OF THE DAY:&nbsp;VOLATILITY STALLS&hellip;FOR NOW.&nbsp;Despite hand-wringing over the debt ceiling, volatility (VIX-candlesticks) remains not far off its 2023 lows and dipped below 17 yesterday. Gold (/GC-purple line), which, if it rallies, can sometimes indicate the kind of economic jitters associated with such things as possible default, continues to trade above $2,000 an ounce and not far from record highs. The gap seems likely to narrow, but will it be gold receding or VIX rising? Data sources: CME Group, Cboe.&nbsp;Chart source: The&nbsp;<a href="https://www.tdameritrade.com/tools-and-platforms/thinkorswim.page">thinkorswim&reg; platform</a>.&nbsp;For illustrative purposes only. Past performance does not guarantee future results.
<h2>Thinking cap</h2>
Ideas to mull as you trade or invest
Miles of aisles:&nbsp;It&rsquo;s almost time for big box stores and other retailers to start opening their books.&nbsp;Home Depot&nbsp;(HD) is expected to kick things off next Tuesday, followed by&nbsp;Target&nbsp;(TGT) on Wednesday and&nbsp;Walmart&nbsp;(WMT) next Thursday.&nbsp;Lowe&rsquo;s&nbsp;(LOW) and&nbsp;Best Buy&nbsp;(BBY) approach the register the following week. Judging by how earnings season&rsquo;s gone so far, it seems fair to expect solid results from many of the major retailers. Consumers spent freely during much of Q1, though the government did record softness in Retail Sales data during February and March after a robust January. Those numbers, however, included automobile sales, which looked relatively underpowered during the quarter and lowered the overall sales number. With autos excluded, retail sales generally seemed healthy.
Earnings hint at resilience:&nbsp;What&rsquo;s behind claims of consumer health? Recent earnings reports, for the most part.&nbsp;Visa&nbsp;(V), for instance, said revenues rose 11% in its most recent quarter, with payments volume up 10%. The fact that volume nearly kept up with actual revenue suggests that the growth didn&rsquo;t simply reflect price inflation. Low unemployment (near 3.5% much of Q1) possibly kept customers coming through retailers&rsquo; doors. Also consider reports from large consumer products companies like&nbsp;Coca-Cola&nbsp;(KO) and&nbsp;McDonald&rsquo;s&nbsp;(MCD) indicating that customers kept buying despite higher product prices. And DIS just yesterday reported solid gains in its theme park business. Lots to unpack here, and once we do, we&rsquo;ll have a better sense of how consumers held up amid inflation and high rates.
Bull still sleeping:&nbsp;The SPX has risen 18% since its 2022 low below 3,500 posted back in mid-October. That&rsquo;s very close to the 20% needed to run up a new bull market flag, but not quite, research firm CFRA pointed out in a note to investors this week. However, CFRA expects the SPX to continue trading in its long-term range between 3,800 and 4,200 during what traditionally are seasonally soft months between now and October. On a positive note, 10 of the 11 S&amp;P sectors have posted double-digit gains since the October low&mdash;a sign of at least some market breadth. That said, the two leading sectors over that period are information technology and communication services, which include the dominant &ldquo;mega-cap&rdquo; tech stocks that have the most influence on the SPX&rsquo;s weighting. The small-cap&nbsp;Russell 2000&reg;&nbsp;(RUT) index is not a participant in the rally, by the way, down 6% over the last six months. This could reflect high interest rates, credit tightening, and concerns about a possible U.S. recession, all of which presumably would have a deeper effect on smaller companies that depend on financing, and which are generally more exposed to domestic economic trends.
<h2>Calendar</h2>
May 12: Preliminary May University of Michigan Consumer Sentiment
May 15: May Empire State Manufacturing
May 16:&nbsp;April Retail Sales and expected earnings from Home Depot (HD).
May 17:&nbsp;April Housing Starts and Building Permits, and expected earnings from Target (TGT)
&nbsp;
TD Ameritrade&reg; commentary for educational purposes only. Member SIPC.
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(Wednesday Market Open)&nbsp;Today&rsquo;s Federal Reserve rate decision comes just ahead of Groundhog Day. If the groundhog sees its shadow, it means another six weeks of winter, tradition tells us. If the Fed sees an inflation shadow still overhanging the economy, it could mean many, many more weeks of higher rates.
The&nbsp;Federal Open Market Committee&nbsp;(FOMC) meeting concludes at 2 p.m. ET with a rate announcement, and there&rsquo;s a 99.1% probability of a quarter-point rate hike, according to the&nbsp;CME FedWatch Tool. That would put the target rate between 4.5% and 4.75%, a new 15-year high.
That&rsquo;s followed by Federal Reserve Chairman Jerome Powell&rsquo;s press conference. As we&rsquo;ve noted before, investors might want to be cautious taking big positions ahead of Powell&rsquo;s comments today. His recent press conferences have caused market whiplash, usually to the downside. The big question is what hints he gives, if any, about the future path of rates. The market expects a pause, possibly followed by rate cuts later this year. The Fed has told the market repeatedly it needs to be far less optimistic.
The&nbsp;Bank of England&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/boe#NYSE">BOE</a>) and&nbsp;European Central Bank&nbsp;(ECB) meet tomorrow and both are expected to be even more aggressive with 50-basis-point hikes.
As central bank news heats up, we&rsquo;ll get additional earnings starting with&nbsp;Meta&nbsp;(META) after the close today. More on that below.&nbsp;Apple&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>),&nbsp;Amazon&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>), and&nbsp;Alphabet&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/googl#NASDAQ">GOOGL</a>) follow tomorrow afternoon as investors continue to parse yesterday afternoon&rsquo;s tidings from semiconductor firm&nbsp;Advanced Micro Devices&nbsp;(NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amd#NASDAQ">AMD</a>).
But don&rsquo;t forget Friday. That&rsquo;s when January&nbsp;Nonfarm Payrolls&nbsp;report (more below) wraps up what&rsquo;s likely to be one of the biggest economic weeks of the quarter.
<h2>Morning rush</h2>
<ul>
<li>The&nbsp;10-year Treasury yield&nbsp;(TNX) is down slightly at 3.48%.</li>
<li>The&nbsp;U.S. Dollar Index&nbsp;($DXY) is off 0.1% at 101.91, nearing recent lows.</li>
<li>Cboe&nbsp;Volatility&nbsp;Index&reg;&nbsp;(VIX) futures are back under 20 at 19.54.</li>
<li>WTI Crude Oil&nbsp;(/CL) is climbing again, trading at $79.24 per barrel.</li>
</ul>
<h2>Just In</h2>
Private-sector jobs growth rose just 106,000 in January following a 253,000 increase in December, payroll processing firm ADP said.&nbsp;It&rsquo;s a below-estimates report with most of the weakness in small business and the strongest gains in manufacturing and hospitality. &nbsp;Those two sectors make an interesting mix for wage growth as hospitality tends to be lower-paying while manufacturing can pay a little more.
<h2>Earnings ahead</h2>
Meta&nbsp;(META): In November, the social media company announced an 11,000-worker soon after disappointing Wall Street with its Q4 guidance. Shares fell to six-year lows, but they clawed back some of those losses in December and January as the entire communication services sector regained strength.
Shareholders likely approach this afternoon&rsquo;s Q4 META earnings report with trepidation, wondering what other unwelcome news might be in store as industry-thought leaders continue to question metaverse demand and note META&rsquo;s struggles in other facets of its business, like advertising.
<h2>Earnings scorecard</h2>
On Tuesday afternoon,&nbsp;AMD&nbsp;became one of the first major semiconductor firms reporting this quarter that did not disappoint investors. Shares rose 3% in after-hours trading as the company beat Wall Street&rsquo;s estimates on both revenue and earnings per share (EPS). AMD&rsquo;s guidance was as analysts expected.
Drilling down a bit more, data center sales growth was strong at higher than 40%, but gaming sales fell year over year. AMD expects further gaming weakness ahead. That could have ramifications for AMD&rsquo;s gaming competitor&nbsp;Nvidia&nbsp;(NVDA), which is expected to report later this month.
Shares of&nbsp;Snap&nbsp;(SNAP) went the other way after the social media company reported yesterday afternoon, falling 13%. Slowing sales and lack of guidance told the tale. This might speak the breadth of tightening we&rsquo;re seeing from some companies out there.
<h2>Earnings nuggets</h2>
It&rsquo;s hard to listen to or read transcripts of every key earnings call, especially in weeks like this when around 100&nbsp;S&amp;P 500&reg; companies report. Still, we&rsquo;ve listened for key commentary from executives around the spectrum. Here are a few takeaways we&rsquo;ve picked up on these calls:&nbsp;&nbsp;
Less Room to Maneuver: Yesterday,&nbsp;Caterpillar&nbsp;(CAT) discussed supply chain issues, and&nbsp;McDonald&rsquo;s&nbsp;(MCD) served up some inflation worries.&nbsp;United Parcel Services&nbsp;(UPS) saw slower package volume but shored up earnings with higher prices. How much room do companies have to keep jacking up costs for consumers before they hurt demand? In other signs of corporate struggles,&nbsp;Intel&nbsp;(INTC) announced yesterday it&rsquo;s trimming salaries and&nbsp;PayPal&nbsp;(PYPL) announced job cuts. Ad budgets are being cut as well, and it points to a general softening we&rsquo;re seeing that makes the Fed&rsquo;s observations today on the economy potentially more interesting.
Bargain-hunting spreads: The strong same-store sales across the globe at MCD could hint that customers on the lower-income side of the spectrum are gravitating more toward cheaper fast food. Even higher-income people might be shying away from spending too much, judging from price cuts for electric vehicles by&nbsp;Tesla&nbsp;(TSLA) and&nbsp;Ford&nbsp;(F). Overall, more price sensitivity could spell trouble for casual dining establishments with higher-cost menu items and could mean tough sledding for the auto industry if consumers rebel against these record-high sticker prices.
Buybacks resurfacing?&nbsp;Chevron&nbsp;(CVX) announced a $75 billion buyback package despite recent static from Washington about the practice or the new 1% federal tax on such transactions. Beyond that, it hasn&rsquo;t really been a buyback-heavy quarter so far, but Chevron isn&rsquo;t alone. Energy infrastructure company&nbsp;Kinder Morgan&nbsp;(KMI) was among a handful of other firms increasing its share repurchase authorization earlier this earning season. Will this stay an energy-only phenomenon? Stay tuned.
Expanding near home: Speaking of energy firms,&nbsp;ExxonMobil&nbsp;(XOM) announced mechanical completion of a major U.S. refining facility while also growing oil production in the Permian Basin of the southwestern United States.&nbsp;General Motors&nbsp;(GM) and&nbsp;Lithium Americas&nbsp;(LAC) announced a $650 million equity investment by GM in LAC&rsquo;s project to develop a Nevada lithium mine aimed at providing raw materials for batteries to power electric cars. Intel Foundry Services, the division of&nbsp;Intel&nbsp;(INTC) that manufactures semiconductors, saw revenue rise 30% year over year as the company invests in new U.S. plants. All this could please the White House, which has been encouraging companies to focus on domestic investment.
Pandemic hangover: Some industries, including chipmakers, remain saddled with too much supply left over from pandemic times when demand spiked. Health care is also in the same boat. For instance,&nbsp;Pfizer&nbsp;(PFE) expects sales to fall this year for both its COVID-19 treatment and vaccine in part because governments around the world stockpiled so much of both, and product remains on shelves.
<h2>Fed thoughts</h2>
Fed Chairman Jerome Powell takes the mic at around 2:30 p.m. ET today, and the market might be prepared for another hawkish look at the rate picture. What should we listen for?
<ul>
<li>What would Powell and the rest of the FOMC need to see data-wise before they feel comfortable with a pause in rate hikes?</li>
<li>Does Powell feel that the current Fed expectation for a terminal, or peak, rate of between 5% and 5.25% this year seems appropriate considering some Fed speakers recently said it might need to go higher?</li>
<li>What perspective does Powell have on Q4 corporate earnings to date? Has he seen or heard any signs that the Fed&rsquo;s tightening has made things tougher for companies, potentially slowing growth?</li>
<li>How does Powell view the impact so far of China&rsquo;s reopening? Is it causing economic activity there to increase?</li>
</ul>
<h2>Data Docket</h2>
Before Friday&rsquo;s&nbsp;Nonfarm Payrolls&nbsp;report, investors get a look at weekly&nbsp;Initial Jobless Claims&nbsp;before the open Thursday. The consensus is 201,000, up from an historically low 186,000 the prior week, according to research firm Briefing.com.
And even before that, today&rsquo;s December&nbsp;Job Openings and Labor Turnover Survey&nbsp;(JOLTS) hits the tape soon after the open. The November figure was a higher-than-expected 10.46 million, and bullish investors would likely welcome a drop to below 10 million. That might signal a tighter jobs market where wage pressures could ease, taking more steam out of inflation.
Key data today comes right after the open too, when we get January&rsquo;s&nbsp;Institute for Supply Management (ISM) Manufacturing Index. Expectations are for a headline figure of 48%, down from 48.5% in December and signaling more contraction in the manufacturing economy. If so, it would mark the third consecutive contracting month.
Important European and Asian economic data arrived overnight. Manufacturing numbers out of China and Japan showed&nbsp;their manufacturing sectors remain in contraction mode, while Europe&rsquo;s January consumer inflation eased a bit more than expected.&nbsp;That&rsquo;s a good reminder that the ECB meets tomorrow, and it&rsquo;ll be interesting to get their take and other central banks&rsquo; takes on the global economic situation and progress on the inflation front.
Speaking of data, S&amp;P put out a global manufacturing report for January that shows glimmers of strength in southeast Asia, perhaps a sign of China&rsquo;s reopening starting to improve economic demand. This is good and bad&mdash;good in that it signals support for the global economy but could work against the Fed in its effort to slow inflation.&nbsp;
<h2>Reviewing the market minutes</h2>
Major indexes stumbled early Tuesday but quickly regained footing for a vigorous run uphill that lasted pretty much all day. Some leaders included companies that reported Tuesday morning like GM, UPS, PFE, and&nbsp;International Paper&nbsp;(IP). These companies all benefitted either from solid earnings results or because investors liked their guidance.
Meanwhile, MCD and CAT shares were among the worst performers of the session. MCD&rsquo;s results were strong, but shares fell after MCD made comments in its conference call about a tough environment ahead.
Tuesday&rsquo;s rally was evenly spread across many sectors and can&rsquo;t be properly called a growth rally or a value rally. Info tech and communication services finished mid-pack among sectors. Consumer discretionary led the way, but real estate was close behind and energy lagged.
Here&rsquo;s how the major indexes performed Tuesday:
<ul>
<li>The&nbsp;Dow Jones Industrial Average&reg; ($DJI) rose 365 points, or 1.09%, to 34,086.</li>
<li>The&nbsp;Nasdaq Composite&reg; ($COMP)&nbsp;climbed 1.67% to 11,584, staying above its 200-day moving average.</li>
<li>The&nbsp;Russell 2000&reg;&nbsp;(RUT) gained 2.45% to 1,931.</li>
<li>The&nbsp;S&amp;P 500 index&nbsp;(SPX) rose 58 points, or 1.46%, to 4,076; its highest close since December 1.</li>
</ul>
Talking technicals: It might be meaningful that the SPX closed at 4,076 yesterday simply because that was also the SPX&rsquo;s previous highest close back on December 1. It&rsquo;s touched 4,100 intraday both in December and January but hasn&rsquo;t closed above that since mid-September. Support at 4,015 held firm Tuesday with more support at 4,000 and below that near the 200-day moving average now at 3,954.
<div class="simple-image - - -"><a class="img-zoom zoom-wrapper-2018" href="https://tickertapecdn.tdameritrade.com/assets/images/pages/lg/chart-2-1.png"><img alt="" class="img-fluid" src="https://tickertapecdn.tdameritrade.com/assets/images/pages/md/chart-2-1.png" style="height:433px; width:650px" /></a>
<div class="image-caption">
CHART OF THE DAY:&nbsp;WATCH IT CLIMB. Last week saw the SPX move above a key downtrending line. The&nbsp;Russell 2000 index&nbsp;(RUT&mdash;candlesticks) followed with a similar move of its own, as this one-year chart shows. It crossed a downtrending line (red line) from previous highs and is now well above both that and its 200-day moving average (blue line). Could a test of August highs above 2,000 be next for the RUT? Time will tell. Data source: FTSE Russell.&nbsp;Chart source: The&nbsp;<a href="https://www.tdameritrade.com/tools-and-platforms/thinkorswim.page" rel="noopener" target="_blank" title="https://www.tdameritrade.com/tools-and-platforms/thinkorswim.page">thinkorswim&reg; platform</a>.&nbsp;For illustrative purposes only. Past performance does not guarantee future results.
</div>
</div>
<h2>Three Things to Watch</h2>
Jobs, jobs, jobs: It&rsquo;s all about the Fed today, but don&rsquo;t lose sight of Friday&rsquo;s critical U.S. January Nonfarm Payrolls report. Analysts expect January jobs growth of 190,000, according to consensus from research firm Briefing.com. If the actual data are close to that, it&rsquo;d be the lowest monthly growth since December 2020 and down from 223,000 in December 2022. Jobs growth of 190,000 is historically still solid, but not in the &ldquo;outstanding&rdquo; category of 250,000 and above seen so often last year. Until recently, the market often welcomed signs of a slowing economy in hopes it might take the Fed&rsquo;s foot off the brake. More recently, weak data has received a more negative view. If the jobs data seem extremely light, that might actually hurt the market rather than help.
Yield Signs: The&nbsp;10-year Treasury yield&nbsp;(TNX) closed right at 3.5% Tuesday, a level it&rsquo;s pivoted around for a while now. This came despite a weaker dollar, which can often push yields higher. The rise in fixed income may have reflected easing inflation fears following Tuesday&rsquo;s benign employment cost index data. The inverted spread between the 10-year yield and the&nbsp;2-year Treasury yield&nbsp;has narrowed somewhat from last year&rsquo;s peaks but remains historically wide at 70 basis points. Historically, a sharp inversion in the yield curve is a recessionary signal, so monitor where the curve goes today after the Fed meeting.
A January to remember: The first month of 2023 wrapped up Tuesday in marquee fashion as the SPX posted its best January since 2019. While history guarantees nothing, historical records show that the market often had strong years following January rallies. The strength wasn&rsquo;t just here in the United States or in the stock market alone,&nbsp;<a href="https://www.schwab.com/learn/story/everything-everywhere-all-once-rally">Charles Schwab Chief Global Investment Strategist Jeffrey Kleintop pointed out in a recent column</a>. Getting into the Oscar spirit, Kleintop says January&rsquo;s rise was an &ldquo;Everything, Everywhere All at Once&rdquo; rally, bringing back to mind the heady pre-pandemic markets where almost everything seemed to work for investors. The rally included U.S., international, and emerging markets stocks, bonds, and some commodities. Why the strength? It&rsquo;s a mixture of things, including global central banks possibly reducing the size of their rate hikes, China&rsquo;s reopening, and a European economy benefiting from a warmer winter and lower-than-expected energy costs. Risks ahead include commodities-driven inflation, additional rate hikes, and a possible U.S. earnings recession.
<h2>Notable calendar items</h2>
Feb. 2: December Factory Orders and expected earnings from Apple (AAPL), Amazon (AMZN), and Alphabet (GOOGL)
Feb. 3: January Nonfarm Payrolls and expected earnings from Sanofi (SNY) and Cigna (CI)
Feb. 6: Expected earnings from Cummins (CMI) and Tyson Foods (TSN)
Feb. 7: December Trade Balance and Consumer Credit and expected earnings from BP (BP), Centene (CNC), and Hertz (HTZ)
Feb. 8: December Wholesale Inventories and expected earnings from Bunge (BG), Uber (UBER), and Yum Brands (YUM)
Feb. 9: Weekly Initial Jobless Claims and expected earnings from AbbVie (ABBV), AstraZeneca (AZN), Baxter (BAX), and PepsiCo (PEP)
Feb. 10: University of Michigan February Consumer Sentiment and expected earnings from Enbridge (ENB) and Honda Motor (HMC)
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TD Ameritrade&reg; commentary for educational purposes only. Member SIPC.
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Powell Talk: It's All About the Fed Chair's Comments Today, as 0.25% Rate Hike Baked In

- Dow Jones Citing WSJ
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