[Chart courtesy of MarketWatch.com]

1. Moving the markets 

The stock market rose today after a terrible day yesterday, when the Federal Reserve kept interest rates the same but hinted that it won’t lower them in March.

That made stocks fall, but they bounced back today as investors decided that the Fed might have made a mistake. The Fed has always said that it would rather keep rates too high for too long, than lower them too soon. It hasn’t changed its mind. The market tried to pressure it to do otherwise.

But yesterday, Powell hinted “I won’t be pushed around. We’re in charge here.” New York Community Bank dropped by more than 11% in early trading today, after losing 37% yesterday because of a big loss, a huge amount of bad loans, and a lower dividend. Is this a sign of trouble for the banking sector?

Then we found out that Japan’s Aozora bank collapsed because of too much lending to businesses that own properties like offices, malls, or hotels. This means that the property crisis has spread around the world and could cause more problems. Ouch!

The index that tracks regional banks KRE fell at first but then recovered later in the day and reduced its losses.

You would think that bad news about the banking sector would hurt the market, but no, investors saw it as a reason to hope that the Fed will lower rates sooner. And that’s good for stocks. Makes sense, right?

At the end of the day, stocks went up a lot, bond yields went down, the dollar, which was higher, ended lower, while the gold ETF GLD zoomed ahead and gained more than 1%.

In other news, we saw that the Manufacturing Survey showed an improvement in January, but the problem was that prices went up too. With more people losing their jobs, it was not surprising that Initial and Continuing Jobless Claims increased and had their biggest two-week rise in initial claims since early 2022, as ZeroHedge reported.

Back to the banks. Which one will be the next domino to fall?

[Chart courtesy of MarketWatch.com]

1. Moving the markets 

Today was a bad day for tech stocks, as Microsoft and Alphabet dragged down the whole sector with their disappointing performance. Alphabet’s shares fell over 5%, their worst drop since last October, as their ad revenue failed to impress investors despite beating earnings and sales expectations.

Microsoft and AMD also lost 1.3% and 4% of their value, respectively, after giving weak guidance for the future. The tech sector, which has been the main driver of the market rally since 2023, is now valued at almost 29 times its 2024 earnings.

That’s pretty high, even for tech. To justify these prices, the tech companies need to show some serious growth in their profits. Otherwise, they might be in for a rude awakening.

Adding to the market woes were the comments from Fed chairman Powell, who dashed the hopes of many traders who wanted a rate cut in March. Powell said the Fed was not ready to lower the rates until inflation reached 2%.

He did leave some room for a possible cut later, but he also removed a sentence from the statement that said the U.S. banking system was sound and resilient. That’s not very reassuring, especially after the trouble at NY Community Bank today.

ZeroHedge wondered if the Fed was lying before or just telling the truth now. Either way, it’s not a good look for the Fed.

The result was a bloodbath on Wall Street. The Mag7 stocks, which include Apple, Amazon, Facebook, Google, Microsoft, Netflix, and Tesla, had their worst day since December 2022.

Bond yields fell, but the 10-year Treasury bounced back to 4% by the end of the day. The dollar and gold reversed their course and ended at the opposite ends of the spectrum. Oil prices also slid on weak data.

It was a crazy day on Wall Street, and with Powell’s hawkish tone on interest rates, I wonder if the bulls can keep their spirits up without a rate cut in March.

[Chart courtesy of MarketWatch.com]

1. Moving the markets 

The market was in a holding pattern, as investors weighed the latest earnings reports and waited for the Fed’s policy decision.

Some stocks shone, while others fizzled. General Motors revved up 7% after beating earnings expectations. F5 and Sanmina also impressed investors with their strong financial results, gaining 2% and 27%, respectively. Whirlpool, on the other hand, plunged more than 5% after giving a disappointing outlook for the year. JetBlue also fell 5% despite reporting better-than-expected earnings.

The spotlight was on the tech giants, which are set to report their quarterly numbers this week. Microsoft and Alphabet were up first, followed by Amazon, Meta, and Apple. These companies, dubbed the “Magnificent 7,” have been driving the market higher with their massive growth.

The Fed kicked off its two-day meeting today, with most traders expecting no change in interest rates. The odds of a rate hike are only 3%, according to the futures market.

The bond market was mixed, as higher job openings boosted yields, but the 10-year Treasury slipped below its break-even point. The MAG7 stocks also gave up some of their gains ahead of Apple’s earnings announcement this afternoon.

The dollar edged lower, gold spiked and then retreated, and oil bounced back towards $78 a barrel.

In a hilarious twist, ZeroHedge reported that the Consumer Confidence data was revised down for the third month in a row.

This raised the same question as last month:

How do you lower consumer confidence after the fact? Do you call them back and say, “Are you sure you were feeling that good?”

Hmm…

[Chart courtesy of MarketWatch.com]

1. Moving the markets 

Wall Street was in a good mood as it awaited the earnings reports of some of the biggest tech giants and the Fed’s decision on interest rates.

This week is the peak of the earnings season, with nearly a fifth of the S&P 500 companies revealing their financial performance. The market darlings Microsoft, Apple, Meta, Amazon, and Alphabet — the fab five of tech that have driven this year’s rally — will be among them.

Some other Dow members, such as Boeing and Merck, will also share their quarterly results, but who cares about them, right?

The Fed will also hold its two-day policy meeting starting on Tuesday. Investors are pretty sure the central bank will not change rates. The fed funds futures market gives a 97% chance the Fed will stay put. That’s almost as certain as death and taxes.

This week is crucial. The market needs to dodge any earnings bombs from the big techs, get some reassurance from the Fed on interest rates, and see some decent but not too spicy jobs numbers. Otherwise, the party might be over.

Bond yields went down, helping stocks go up. Gold shone, the dollar faded, and the MAG7 stocks (Microsoft, Apple, Google, Meta, Amazon, Netflix, and Tesla) reached new highs.

The odd one out was crude oil, which fell 1.31% thanks to a rare peaceful day in the Middle East. The Nasdaq was the leader of the pack and its unstoppable ascent reminded ZeroHedge of the dot-com bubble.

Are we headed for another crash?