Demand Imbalance Arbitrage

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February Markets Recap: NCLH and Zoom Move, U.S. Durable Goods Orders Fall, Home Prices Dip

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U.S. stocks ended the month of February on a low note, with the Dow Jones Industrial Average (DJIA) closing down 181 points, or 0.6%, near 32,709, while the S&P 500 index (SPX) was off 0.1% and the Nasdaq Composite Index (COMP) was 0.3% higher, according to FactSet data.

[0] Shares of Zoom (ZM) increased in value following the announcement of fourth quarter earnings that exceeded expectations, with earnings per share of $1.22, compared to the estimated 80 cents.[1] The total revenue was $1.12 billion.[2] Meanwhile, Occidental Petroleum (OXY) shares moved down on Tuesday after the oil and gas producer posted fourth-quarter results that came in below Wall Street expectations on revenue and earnings per share.[3]

On the economic front, durable goods orders dropped by a larger-than-expected 4.5% in January, while core durable goods jumped 0.7%, outpacing the 0.1% increase that economists had predicted.[4] The University of Michigan’s consumer sentiment index in the U.S. for February was adjusted upwards by 0.6 points to a record high of 67.0 for the past 13 months.[5] In January, the Federal Reserve’s favored measure of inflation in the economy, the Personal Consumption Expenditures (PCE) price index, rose by 0.6%, with an increase of 5.4% from the same period in the previous year.[6] Excluding food and energy components that are subject to frequent fluctuations, prices increased 0.6% from the previous month and 4.7% year-over-year.[6]

Data from the S&P Corelogic Case-Shiller Index revealed that home prices dropped by 0.5% in December.[7] Yearly, home prices increased by 4.6%, which was lower than what analysts predicted (4.8%).[2]

In the fixed income markets, yields moved in different directions.[8] The US10Y 10-year Treasury yield rose 1 basis point to 3.93%, while the US2Y 2-year yield stayed at 4.79%. Examining the bond market, interest rates moved downwards.[9]

0. “US Markets End Down for the Day and Month” Investopedia, 28 Feb. 2023, https://www.investopedia.com/us-markets-end-down-for-the-day-and-month-7152891

1. “Dow futures rise 70 pts; Target earnings, Goldman investor day in focus By Investing.com” Investing.com, 28 Feb. 2023, https://www.investing.com/news/stock-market-news/dow-futures-rise-70-pts-target-earnings-goldman-investor-day-in-focus-3016858

2. “Stock market news today: Stocks fall as volatile month comes to close” Yahoo News, 28 Feb. 2023, https://news.yahoo.com/stock-market-news-live-updates-february-28-2023-120603661.html

3. “Dow closes more than 200 points lower Tuesday, major averages end February with losses: Live updates” CNBC, 28 Feb. 2023, https://www.cnbc.com/2023/02/27/stock-futures-live-update-open-to-close.html

4. “Stock Market News Today: Bulls Finish Today‚Äôs Session in Control” TipRanks, 27 Feb. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-recoup-from-a-dull-trading-week

5. “Stocks Tumble as Strong Economic Reports Bolster the Case for Tighter Fed Policy” Barchart, 24 Feb. 2023, https://www.barchart.com/story/news/14527214/stocks-tumble-as-strong-economic-reports-bolster-the-case-for-tighter-fed-policy

6. “Stock market news today: Stocks slide after hotter-than-expected key inflation print” AOL, 24 Feb. 2023, https://www.aol.com/stock-market-news-today-stock-104349676.html

7. “Stock Market Today: Stocks Wobble as February Draws to a Close” Kiplinger’s Personal Finance, 28 Feb. 2023, https://www.kiplinger.com/investing/stocks/stock-market-today-022823-stocks-wobble-as-february-draws-to-a-close

8. “Nasdaq, Dow, S&P seesaw as stocks look for momentum on last day of February (SP500)” Seeking Alpha, 28 Feb. 2023, https://seekingalpha.com/news/3941896-nasdaq-sp500-dow-jones-stock-market-economic-data-feb-end

9. “Dow, Nasdaq, S&P 500 bounce back after last week’s drop (SP500)” Seeking Alpha, 27 Feb. 2023, https://seekingalpha.com/news/3941369-dow-nasdaq-sp-500-bounce-back-after-last-weeks-drop

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