S&P 500 hits record high despite Fed worries 20/02/2025

HOT stories for today

US market wrap:
 

• The S&P 500 reached a new peak on Wednesday as equities remained robust, despite a persistently cautious stance from the Federal Reserve and President Donald Trump’s warning of additional tariffs. The benchmark index edged up 0.24%, securing its second consecutive record close. It also hit a fresh all-time intraday high.
• Meanwhile, the Nasdaq Composite inched up 0.07%, and the Dow Jones Industrial Average gained 0.16%. Microsoft shares advanced 1.3%, propelling the broader tech sector upward after the company introduced its first-ever quantum computing chip. Tesla climbed nearly 2%, while Analog Devices soared close to 10% following stronger-than-anticipated quarterly earnings on both revenue and profit. Additionally, market participants analyzed minutes from the most recent Federal Reserve meeting, which indicated that policymakers seek further progress on inflation before considering additional interest rate cuts.

FED signals patience on rate cuts

• Business leaders nationwide told Federal Reserve officials they plan to pass higher costs from potential Trump tariffs onto consumers, according to minutes from the central bank’s January meeting. Fed officials expressed concerns that tariffs and other Trump policies could hinder inflation’s return to the 2% target. Staff noted “heightened uncertainty” around trade, immigration, and regulatory changes, preparing alternative scenarios for policymakers.
• The Fed forecast suggests inflation will remain near 2024 levels, assuming trade policies push prices higher. Officials emphasized the need for further inflation progress before cutting rates. At the meeting’s conclusion, they unanimously kept the federal funds rate at 4.25%–4.5%. However, opinions on future cuts varied—some saw little room for reductions, while most believed rates remain restrictive. Overall, officials signaled a patient approach, echoing Chair Jerome Powell’s stance that the Fed is in no rush to cut rates. A new forecast will be released in March.

 
Stocks on the move:       

• Klaviyo (KVYO) — The software firm jumped nearly 6% after surpassing Wall Street forecasts for Q4 results. The company reported adjusted earnings of 7 cents per share on $270 million in revenue, exceeding analysts’ projections of 6 cents per share and $257 million in revenue, according to LSEG estimates.
• Carvana (CVNA) — The online used-car marketplace dropped almost 12% as gross profit per retail unit reached $6,671 in Q4, missing FactSet’s consensus estimate of $6,851.
• Palantir (PLTR) — The defense tech company declined another 1% after a 1% dip on Wednesday, following CEO Alex Karp’s adoption of a new stock trading plan. Additionally, The Washington Post reported that the Pentagon has been directed to draft plans for an 8% annual reduction in the U.S. defense budget over the next five years. miss, the company exceeded analyst expectations on both revenue and earnings for the previous quarter.

Today’s action

• Asia-Pacific markets slipped Thursday as traders evaluated U.S. President Donald Trump’s proposed tariffs on autos, semiconductors, and pharmaceuticals, along with the Federal Reserve’s stance on keeping interest rates elevated. Trump indicated the tariffs could take effect as early as April 2 but did not specify whether they would target specific countries or apply broadly. China’s CSI 300 edged down 0.28%, while Hong Kong’s Hang Seng Index lost 1.20%. Japan’s Nikkei 225 fell 1.24%, and the broader Topix slid 1.18% in late trading. The yen climbed to a two-month high of 150.52 per U.S. dollar amid speculation of further Bank of Japan rate hikes.
• Meanwhile, U.S. stock futures dipped after the S&P 500 hit a fresh all-time high. Futures tied to the S&P 500 declined 0.32%, Nasdaq 100 futures dropped 0.43%, and Dow Jones Industrial Average futures slipped 99 points, or 0.22%. On the economic front, investors await weekly jobless claims data at 8:30 a.m. ET, along with earnings reports from Walmart and Alibaba before the opening bell.

Wahtclist: PLTR, CVNA, WMT, BABA, NTES, SO, SMCI, MSFT

Bitcoin
 

• Bitcoin’s bull run is accelerating, fueled by institutional investment, favorable government policies, and surging inflows into U.S. spot bitcoin ETFs. Analysts highlight a mix of positive catalysts driving the surge. Bernstein analysts suggest Bitcoin is entering its next major rally, propelled by growing institutional participation and policy shifts. A key development includes the Trump administration’s creation of a sovereign wealth fund (SWF), which could strategically invest in major U.S. crypto firms. Bitcoin is currently trading around the $96,700 mark, as optimism builds around its long-term prospects.
  Watchlist: Bitcoin: 89 000-108 000, Ethereum: 2200-3000, Solana: 180-276

Forex

• The Japanese yen continues to appreciate as speculation grows over further rate hikes by the Bank of Japan. Rising Japanese government bond yields, now at decade-high levels, are narrowing the rate gap between Japan and other economies, adding strength to the yen. Meanwhile, investor sentiment remains cautious due to U.S. President Donald Trump’s tariff threats, which are also bolstering the safe-haven yen. The Federal Reserve’s hawkish stance has failed to support the U.S. dollar or lift USD/JPY.
• In the European session, EUR/USD trades around 1.0430, maintaining a bullish outlook above the 100-period EMA with a strong RSI. Immediate resistance is seen at 1.0461, while the first downside target lies at 1.4936. The pair is benefiting from dollar weakness, though concerns over U.S. trade policies and geopolitical risks may limit its upside potential.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 153.6-158.80

Basic Materials
 

• West Texas Intermediate (WTI) crude oil prices face selling pressure on Thursday, breaking a three-day winning streak after reaching a one-week high near $73.00. The commodity declines to the $71.75 area as rising US crude inventories and concerns over Trump’s tariff threats weigh on oil prices. However, fears of supply disruptions in Russia and a weaker US dollar could provide some support.
• Meanwhile, gold (XAU/USD) hits a fresh all-time high in early European trading, confirming a breakout from its short-term range. Market worries over Trump’s tariff plans and a potential global trade war fuel demand for the safe-haven metal. A decline in US Treasury bond yields adds further pressure on the US dollar, boosting gold prices. However, the Federal Reserve’s hawkish stance may limit additional upside, especially as the metal approaches overbought conditions.
  Watchlist: GOLD 2600-2945, US Oil: 70.00-79.00

Key Economic Events Today:

EST time
08:30 am: USD Unemployment Claims
08:30 am: USD Philly FED Manufacturing Index
09:35 am: USD FOMC Member Goolsbee Speaks 
12:00 pm: USD Crude Oil Inventories
12:05 pm: USD FOMC Member Musalem Speaks
02:30 pm: USD FOMC Member Barr Speaks

Earnings

BMO (Before the US Market opens)
WMT            Wallmart Inc.
BABA           Alibaba Group
SO               Southern Comp.
NTES           NetEase Inc.
CCJ             Cameco Corp.

AMC (After the US Market closes): MELI, NU, CRPT, NEM

The TEFS Analyst team wishes you a successful day!