This week showcased mixed reactions in the US equity markets as macroeconomic data highlighted underlying weaknesses. Investors expressed disappointment with Nvidia’s quarterly results, which fell short of expectations. Additionally, a tense exchange between President Donald Trump and President Volodymyr Zelensky at the Oval Office sparked discussions surrounding geopolitical risks.
On Friday, the S&P 500 closed at 5,954.50, down from 6,013.13 the previous week. Similarly, the Nasdaq Composite finished at 18,847.28 compared to 19,524.01 a week earlier. The Dow Jones Industrial Average wrapped up the week at 43,840.91, a slight increase from 43,428.02 the week before. Consumer sentiment took a hit as indicated by the Conference Board's measure of consumer confidence, which experienced its steepest decline since August 2021 in February.
Initial jobless claims in the US surged to 242,000 for the week ending February 22, surpassing forecasts which had estimated 221,000. Additionally, the personal consumption expenditures price index and the core PCE index increased as predicted for January on a month-to-month basis, yet the growth rate for both indices showed signs of deceleration compared to the previous year.
Stifel provided insights on the PCE data, suggesting it may provide some reassurance and signal a potential disinflationary trend following four consecutive months of increasing consumer and producer price growth. However, they noted, 'there appear to be at least some rising concerns of waning economic momentum amid fears of further upside risks to inflation.' In trade policy, Trump plans to implement import duties on goods from Mexico and Canada next week, while China is poised to face an additional 10% tariff starting from the same date.
The economic landscape is increasingly precarious, with a 'stagnating' US economy juxtaposed with rising prices, creating a significant challenge for policymakers, as highlighted by a report from deVere Group. The yield on the US 10-year treasury note traded at 4.21% by late Friday, down from 4.43% the week prior.
In corporate news, Nvidia released its fiscal Q4 results which reportedly exceeded analyst expectations. However, its shares declined by 7.2% during the week. Analysts from Deutsche Bank commented on the performance, stating, 'A modest beat and nothing major in terms of guidance implied that the report failed to match the hype that preceded it.
Indeed, it was the smallest revenue beat in two years, so that was underwhelming for investors who are accustomed to much larger upside surprises.' Overall, the week was marked by uncertainty as investors navigated economic indicators, corporate performance, and potential policy changes affecting the markets..