Stock Market Faces Pressure Amid Weak Consumer Sentiment and Corporate Earnings
The S&P 500 Index ($SPX) (SPY) has declined by -0.67%, while the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.91%, and the Nasdaq 100 Index ($IUXX) (QQQ) has lost -0.72%. March E-mini S&P futures (ESH25) are down -0.60%, and March E-mini Nasdaq futures (NQH25) have dipped -0.62%.
Markets Slide Amid Negative News and Economic Concerns
Stocks are facing downward pressure today, with the S&P 500 hitting a one-week low and the Dow Jones Industrials falling to a one-month low. Akamai Technologies has seen its shares drop over -14% after announcing full-year revenue projections below consensus estimates. Additionally, UnitedHealth Group’s stock is down more than -8% following a Wall Street Journal report about an investigation by the US Department of Justice into its Medicare billing practices.
The market extended its losses after US consumer sentiment for February surprisingly fell to a 15-month low. The latest economic data indicated a slowdown in activity along with rising inflation expectations, adding to the uncertainty for investors.
The February S&P Global manufacturing PMI rose +0.4 to an eight-month high of 51.6, surpassing expectations of 51.4. In contrast, the February S&P Global services PMI unexpectedly decreased -3.2 to 49.7, marking the sharpest contraction in two years and falling short of an anticipated rise to 53.0.
Consumer sentiment, tracked by the University of Michigan’s February index, was revised down by -3.1 to reach a 15-month low of 64.7, lower than the predicted stability at 67.8. Expectations for inflation over the next year remained steady at 4.3%, meeting projections, while long-term inflation expectations for 5-10 years increased to 3.5%, a 29-year high against expectations of staying the same at 3.3%.
In January, existing US home sales decreased -4.9% month-over-month to 4.08 million, also worse than the anticipated decline of -2.6% to 4.13 million.
Interest Rates and Global Market Movements
Expectations for interest rate changes are muted, with the markets assigning just a 2% probability to a 25 basis-point rate cut at the next Federal Open Market Committee (FOMC) meeting on March 18-19.
Globally, stock markets are showing some strength today. The Euro Stoxx 50 is up +0.02%, China’s Shanghai Composite Index increased +0.85% to a seven-week high, and Japan’s Nikkei Stock 225 rose +0.26% after recovering from a recent low.
US Treasury and European Bond Markets
March 10-year Treasury notes (ZNH25) have risen by +8 ticks, with the yield on the 10-year T-note decreasing -5.1 basis points to 4.455%. Price increases for T-notes are partly supported by previous gains in German bunds. Alongside a -1% drop in WTI crude oil, which is pressuring inflation expectations, T-note prices surged following negative US economic reports.
European government bond yields are also trending downward, with the 10-year German bund yield down -6.4 basis points to 2.470% and the 10-year UK gilt yield down -1.9 basis points to 4.588%.
In the Eurozone, the S&P manufacturing PMI for February rose +0.7 to 46.6, though it was still below expectations of 47.0, while the S&P composite PMI stayed flat at 50.2, missing projections of an increase to 50.5.
Expectations are high for a rate cut by the European Central Bank (ECB) as swaps indicate a 98% probability for a 25 basis-point cut at the March 6 policy meeting.
Key Stock Movers in the Market
Akamai Technologies (AKAM) leads the S&P 500 losers, falling over -14% after it forecasted revenue for the year between $4.00 billion and $4.20 billion, below the consensus of $4.25 billion.
UnitedHealth Group (UNH) has dropped more than -8% following news of a DOJ investigation into its Medicare operations. Block (XYZ) fell over -15% after reporting Q1 gross profit expectations of $2.32 billion, short of the consensus of $2.38 billion.
NU Holdings Ltd (NU) is down more than -14% with a reported Q4 net income of $552.6 million, missing analysts’ expectations of $566.4 million.
Globant SA (GLOB) experienced a significant decline of over -24% as it projected Q1 revenue of $618 million to $628 million, below the consensus forecast of $637.8 million. Meanwhile, RingCentral (RNG) dropped by more than -7%, lowering its Q1 adjusted EPS forecast to between 93 cents and 97 cents, versus the consensus estimate of $1.00. Rivian Automotive (RIVN) is down more than -6% with expectations of approximately 8,000 vehicle deliveries in Q1, significantly lower than the 14,000 delivered in Q4.
On a positive note, MercadoLibre (MELI) is up more than +6% after reporting Q4 net revenue of $6.10 billion, exceeding expectations of $5.96 billion.
PDD Holdings (PDD) has risen over +5% following better-than-expected earnings from Alibaba, boosting US-listed Chinese stocks. Booking Holdings (BKNG) gained more than +4% after reporting strong Q4 revenue of $5.47 billion, above the consensus of $5.18 billion.
Innodata (INOD) climbed over +26% due to a Q4 diluted EPS of 31 cents, substantially outperforming the consensus of 22 cents. Five9 Inc (FIVN) increased more than +3% following a Q4 adjusted EPS report of 79 cents, beating expectations of 70 cents, and projecting a full-year adjusted EPS of $2.58-$2.62, slightly above the consensus of $2.55. Consolidated Edison (ED) has also shown strength, rising by more than +2%, reporting a Q4 adjusted EPS of 98 cents, outperforming the consensus of 95 cents.
Unity Software (U) is up more than +2% following an upgrade from HSBC to a buy rating with a price target of $34. Live Nation Entertainment (LYV) has increased more than +1% after announcing Q4 revenue of $5.68 billion, exceeding analyst expectations of $5.63 billion.
Earnings Reports (2/21/2025)
AdvanSix Inc (ASIX), AG Mortgage Investment Trust Inc (MITT), Alamo Group Inc (ALG), Altair Engineering Inc (ALTR), Amedisys Inc (AMED), Arbor Realty Trust Inc (ABR), Atmus Filtration Technologies (ATMU), Balchem Corp (BCPC), Boise Cascade Co (BCC), C4 Therapeutics Inc (CCCC), Cross Country Healthcare Inc (CCRN), Edgewise Therapeutics Inc (EWTX), Federal Agricultural Mortgage (AGM), Gencor Industries Inc (GENC), H&E Equipment Services Inc (HEES), Hawaiian Electric Industries Inc (HE), MGE Energy Inc (MGEE), ModivCare Inc (MODV), Oil States International Inc (OIS), Spirit AeroSystems Holdings In (SPR), St Joe Co/The (JOE), Standard Motor Products Inc (SMP), Sunstone Hotel Investors Inc (SHO), Telephone and Data Systems Inc (TDS), TXNM Energy Inc (TXNM), Uniti Group Inc (UNIT).
On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned. All information and data in this article are for informational purposes only. For further details, please see the Barchart Disclosure Policy here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
