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Wednesday, February 12

Noteworthy macro moves today: US 10Y Treasury Bond -0.6%. US 2Y Treasury Bond -0.2%. S&P 500 Index (US) -1.0%. Noteworthy US mega-cap moves today: Broadcom Inc (AVGO) -1.7%. Amazon.com Inc (AMZN) -1.2%. Exxon Mobil Corp (XOM) -1.2%. 

Recent economic data from the United States has shown unexpected increases in inflation, with core consumer prices rising by 0.4% month-over-month and annual core inflation reaching 3.3%, surpassing market expectations of a slower increase to 3.1%. This uptick in inflation is causing concern among investors regarding potential shifts in Federal Reserve policy, particularly as Fed Chairman Jerome Powell continues his testimony before Congress, emphasizing that there is no urgency for rate cuts despite strong overall economic conditions.

In response to these developments, U.S. stock futures have dropped significantly following the CPI report release; Dow futures are down approximately 429 points (-0.95%), while S&P500 futures fell around -64 points (-1%). The heightened volatility reflects investor anxiety over how persistent inflation might influence future monetary policy decisions and interest rates.

Additionally, geopolitical tensions surrounding trade policies remain prominent as President Trump prepares to announce reciprocal tariffs on imports which could further impact markets globally—particularly affecting European equities amid fears of retaliatory measures from the EU against proposed U.S.-imposed tariffs on steel and aluminum imports. These factors collectively contribute to an uncertain trading environment across major global economies at this time.

SPDR Gold Shares (GLD) [-0.8%]
SPDR Gold Shares (GLD) experienced a decline of approximately 0.8% as gold traded lower at $2,908.29 early on February 12, 2025. This drop follows a mixed performance in U.S. markets, influenced by Federal Reserve Chair Powell's remarks indicating no immediate urgency for interest rate cuts amid a robust economy. The NFIB Small Business Optimism Index fell to 102.8 in January, below expectations. Market volatility remains elevated due to ongoing tariff discussions and geopolitical tensions, notably involving Israel and Hamas. Concurrently, silver prices decreased, reflecting a strong historical correlation with gold. Social media discussions highlighted expectations of increased demand from Chinese insurers and bullish forecasts from analyst Nomi Prins, who predicted a potential rise in gold prices by another $2,000. These developments may have contributed to the recent price movement of GLD.

Consumer Staples Select Sector SPDR Fund (XLP) [-0.9%]
The U.S. Consumer Price Index (CPI) report released today revealed a month-over-month increase of 0.3% and an annual rise of 2.9%, aligning with expectations. This data may influence Federal Reserve decisions regarding interest rates, which could impact consumer spending in the staples sector represented by the Consumer Staples Select Sector SPDR Fund (XLP). Additionally, persistent high mortgage rates are affecting home buyers, resulting in increased price cuts on homes, which may further influence consumer sentiment towards discretionary spending in the retail market for essential goods tracked by XLP. On social media, a post indicated that XLP had experienced a breakdown, interpreted as a bearish signal. Among the ETF's holdings, Kraft Heinz Co. reported a disappointing fiscal year 2025 forecast, contributing negatively to performance, while Coca-Cola Company exceeded expectations with strong fourth-quarter earnings, projecting growth for fiscal year 2025.

CFLT | +13.8% | +1.5B
Confluent Inc | Application Software
Confluent Inc reported its fourth-quarter results, revealing total revenue of $261.2 million, surpassing estimates of $256.8 million, and reflecting a year-over-year growth of 23%. The adjusted earnings per share (EPS) was $0.09, exceeding the consensus estimate of $0.06. Notably, Confluent Cloud revenue increased by 38% year-over-year, reaching $138 million for the quarter and totaling $492 million for the full fiscal year 2024, marking a 41% increase. The company also announced a strategic partnership with Jio Platforms to enhance cloud services in India and expanded its collaboration with Databricks to integrate data streaming capabilities for AI-driven applications. Following these developments, Barclays raised its price target for Confluent to $37, while Guggenheim increased it to $38. In after-hours trading, the stock experienced a notable increase, reflecting strong market response to the earnings report.

CVS | +9.8% | +7.5B
CVS Health Corp | Health Care Services
CVS Health Corp reported fourth-quarter adjusted earnings per share of $1.19, exceeding analyst expectations of $0.92, while revenue reached $97.71 billion, surpassing the anticipated $96.88 billion. The healthcare benefits segment generated $32.96 billion in revenue, and the pharmacy and consumer wellness segment saw a 7.5% increase to $33.51 billion. The medical loss ratio for the quarter was 94.8%, slightly better than the expected 95.46%. CVS's medical membership increased to 27.1 million, reflecting a year-over-year gain of 1.4 million. For fiscal year 2025, guidance includes an adjusted EPS range of $5.75 to $6.00, closely aligning with consensus estimates of $5.96. Following these announcements, CVS shares surged, reflecting a notable increase in pre-market trading.

DASH | +6.2% | +5.2B
DoorDash Inc | Restaurants
DoorDash Inc. reported its fourth-quarter earnings on February 11, 2025, posting earnings per share of $0.33, in line with analyst expectations, while revenue reached $2.87 billion, surpassing the consensus estimate of $2.84 billion. Total orders increased by 19% year-over-year to 685 million, and Marketplace gross order value rose by 21% to $21.3 billion. The adjusted EBITDA was reported at $566 million, above the expected $562 million. For the first quarter of 2025, DoorDash forecasts Marketplace gross order value between $22.6 billion and $23 billion, with adjusted EBITDA projected at $550 million to $600 million. Following the earnings announcement, shares rose approximately 6% in after-hours trading, buoyed by a new $5 billion share repurchase plan, despite some caution regarding future guidance on EBITDA.

KHC | -5.5% | -1.9B
Kraft Heinz Co | Packaged Foods & Meats
Kraft Heinz Co. announced a fiscal year 2025 adjusted earnings per share (EPS) forecast of $2.63 to $2.74, falling short of the consensus estimate of $3.04. The company reported fourth-quarter revenue of $6.58 billion, below the analyst expectation of $6.66 billion, with organic revenue declining by 3.1% year-over-year. Although the adjusted EPS for Q4 was $0.84, exceeding the forecast of $0.78 and marking a year-over-year increase of 7.7%, the overall financial outlook has led to a negative market reaction, with shares trading lower after the guidance release. Additionally, Kraft Heinz declared a quarterly dividend of $0.40 per share, payable on March 28, 2025. Social media discussions highlighted the decline in operating income, which reportedly dropped significantly to a loss of $40 million due to non-cash charges.

BIDU | +2.4% | +6.2B
Baidu Inc | Interactive Media & Services
Baidu Inc. is set to begin robotaxi tests in Dubai, as reported recently. The company is also expected to unveil its next-generation AI model, Ernie 5.0, later this year, with a confirmed release in the latter half of 2025. Social media discussions have highlighted the competitive landscape, particularly with the emergence of DeepSeek, which is reportedly disrupting the AI market. Additionally, conversations have noted Baidu's significant revenue growth projections, estimating an increase from $1.1 billion in 2010 to a projected $19 billion in 2024, while the stock price currently stands at $90. Furthermore, Baidu's robotaxi trials could commence by mid-year, with CEO Robin Li engaging with UAE officials on this initiative. The company is also expected to announce its Q4 FY2024 earnings on February 18, 2025, with an EPS estimate of $2.65 and a revenue estimate of $5.0 billion.

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