Thoughts On The Stock Market Week Of President’s Day 2025

Prepared by Chris

Solid week of gains for the service

This piece is a rare, free look, at what we offer at our investing group. It contains our subscriber only thoughts on the market we provide every Saturday. Now you get a free look. And it was a pretty decent week for the service with a few trades closed for sizable gains. We still have a number open, many in buy zones, some up, some are down. We will monitor them, but as a whole, an absolutely tremendous start to 2025 for the service. I would like to remind you that the market and the service are closed on Monday in honor of the President’s Day holiday. Enjoy the long weekend!

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Range bound

The market has been range bound, but despite international tariff talk, inflation scares, and more, the market has been resilient still, near highs. It is impressive. But as we look to the rest of the month, investors are going to need some of their concerns around trade or inflation to lift in order for the stock market to rally again from here in my opinion. What do I mean range bound. Generally, we have been between 5850 and 6100 on the (SP500). And as a whole, stocks haven’t moved much since the start of the year. Even with an onslaught of policy developments and fears of sticky inflation rocking the market in 2025, a healthy economy underpinning strong earnings growth has mostly helped traders shrug off their concerns. The Dow Jones Industrial Average and S&P 500 are not even 1% off their recent records, while the Nasdaq Composite is not quite 2% off its own milestone. What we are seeing here is some cyclical leadership. Earnings are really strong, while outlooks have been mostly decent. But by and large, this is a great Q4 season. Our next catalyst higher, or lower, could still be fresh news on tariffs or inflation.

The next big print is PCE

So, it wont be next week, but to finish the month I think the largest potential upcoming catalyst known on the economic calendar will be the personal consumption expenditures price index, the PCE, which is set to release Feb. 28. We will be looking for that print to confirm what we suspect after Thursday’s PPI print. And that is, that a weakening in some of the underlying components means inflation is actually coming down more than the headline number suggests. Remains to be seen. So, if its a weaker PCE number thatcould raise investors’ expectations that the Fed may wind up lowering interest rates more than the one quarter-point cut markets are currently pricing. Amazing how quick we came down from expecting at least three cuts. If it is lighter than expected it could also spark a move down in Treasury yields. And when we see yields relax it often leads to less pressure on the equity markets. I think we continue to chop, and frankly, I think we chop a bit back toward and likely under 6,000 while we wait. Can Meta (META) really continue to continue leading the market higher. Note its up 20 sessions in a row. The last down day was when President Biden was still in office! Anyway I digress but if PCE could beat to the downside, and perhaps suggest rate cuts are likely, it could lead to the next break higher. I still think we can see 3 cuts, but toward H2 2025. While past predictions are no guarantee I will remind you that I have been pretty much spot on on the degree of rate hikes, timing of cuts, and degree of cuts. Right now, my 3 call is in jeopardy. Though, this was one time coming into the year my prediction was more in line with consensus. Maybe that is a reason it is in jeopardy! But it seems right, depending on tariff impact.

Tariff impacts

Well, some say the higher inflation prints could keep a lid on tariffs as Trump will not want to be the reason for more inflation. He watches markets closely. We shall see. But some further confirmation tariffs are being used mainly as negotiating tools would also be a huge positive catalyst. It would remove the inflationary impact of keeping them in place. I do think Trump is largely using tariffs to negotiate largely. We may have some stick, but less would be positive for markets. But traders need to be nimble in regards to trade policy and expect volatility on headlines. Regardless of the uncertainty, many traders are confident stocks can continue to climb to fresh heights this year, even if they do not make the massive gains of 2023 and 2024. We were thinking a correction (we did see a mini one) hits this year, but we end the year single digits higher. Of course such outlooks are simply crystal ball reading attempts. Seeing three years of 20% plus in a row has only happened once before. I think single digits is likely. But I also view it as a stock pickers market

Next week

As we come into the holiday shortened week, Fed President Harker has some comments Monday which may be scrutinized by the market. We also get some PMI data, and weekly claims. The earnings calendar is lightening up but some energy names will report as will some materials. We are bit out of big retail reports but those tend to be of interest to us, with walmart (WMT) however reporting which is one of our favorite defensive names to own. Finally, we get FOMC minutes which sometimes unexpected language or comments can move markets.

 

The week ahead

Monday, Feb. 17

 

9:30 a.m. Philadelphia Reserve Bank President Harker speaks in “Global Interdependence Center Central Banking Series Conference” with the University of the Bahamas

 

Markets closed for President’s Day holiday; BAD BEAT Closed

 

Tuesday, Feb. 18

 

8:30 a.m. Empire State Index (February)

 

10 a.m. NAHB Housing Market Index (February)

 

Key Earnings

 

Arista Networks, Occidental Petroleum, Cadence Design Systems, International Flavors & Fragrances, Devon Energy, CoStar Group, Vulcan Materials

 

Wednesday, Feb. 19

 

8:30 a.m. Building Permits preliminary (January)

 

8:30 a.m. Housing Starts (January)

 

2 p.m. FOMC Minutes

 

Key Earnings

 

CF Industries, Analog Devices, Trimble

 

Thursday, Feb. 20

 

8:30 a.m. Continuing Jobless Claims (02/08)

 

8:30 a.m. Initial Claims (02/15)

 

8:30 a.m. Philadelphia Fed Index (February)

 

10 a.m. Leading Indicators (January)

 

Key Earnings

 

Live Nation Entertainment, Insulet, Booking Holdings, Akamai Technologies, Walmart, Hasbro, EPAM Systems, Quanta Services

 

Friday, Feb. 21

 

9:45 a.m. PMI Composite preliminary (February)

 

9:45 a.m. S&P PMI Manufacturing preliminary (February)

 

9:45 a.m. S&P PMI Services preliminary (February)

 

10 a.m. Existing Home Sales (January)

 

10 a.m. Michigan Sentiment final (February)

 

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