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Opening Bell: Dow Falls as CPI Data Comes in Hot

Opening Bell

Opening Bell: Dow Falls as CPI Data Comes in Hot

Good Morning!

On Tuesday, February 11, the S&P 500 closed at 6,068.50, up 0.34% from the previous trading session. The NASDAQ was up 0.21%, finishing at 19,643.86. The Dow Jones Industrial Average was down 0.41% to close at 44,593.65. Meanwhile, the Russell 2000 was flat (-0.1%), ending the session at 2,275.70.

The Dow Jones Industrial Average fell 426 points, or 1%, as a higher-than-expected consumer price index (CPI) reignited inflation concerns and sent interest rates surging. January’s CPI rose 0.5% for the month, pushing annual inflation to 3%, exceeding economists' forecasts of 0.3% and 2.9%, respectively. Core CPI, which excludes food and energy, also came in hotter than expected at 0.4% for the month and 3.3% for the year. In response, the 10-year Treasury yield spiked above 4.6%, triggering a broad sell-off in the stock market. Tech giants like Amazon, Microsoft, and Alphabet declined, along with consumer and banking stocks sensitive to interest rate movements. However, Tesla, Intel, and Palantir managed to post gains, and CVS Health surged over 14% on strong earnings.

Crypto Highlights

  • Bitcoin (BTC): Currently trading at $98,508, down 1.53% over the past 24 hours.

  • Ethereum (ETH): Down 2.35%, now trading at $2,598 per coin.

  • Solana (SOL): Slid 3.98%, currently trading at $192.11.

  • Ripple (XRP): Up 3.26% in the last 24 hours, now trading at $2.39 per coin.

Headlines

Inflation Rises Unexpectedly, Complicating the Fed’s Path Forward

U.S. inflation unexpectedly rose to 3% in January, reigniting concerns that price pressures remain persistent and making it less likely that the Federal Reserve will cut interest rates in the near future. The Consumer Price Index (CPI) climbed 0.5% from December, marking the fastest monthly increase since August 2023. Core inflation, which excludes food and energy, also rose more than expected, up 0.4% for the month and 3.3% year-over-year.

Source: The New York Times

Wall Street Falls as Hot Inflation Data Dims Rate Cut Hopes

U.S. stocks tumbled after higher-than-expected inflation data fueled concerns that the Federal Reserve will delay cutting interest rates. The Consumer Price Index (CPI) rose 3.0% year-over-year in January, surpassing economists’ forecasts of 2.9%, while core inflation also exceeded expectations. This unexpected price surge has led traders to scale back expectations for rate cuts, now pricing in only one 25-basis-point reduction this year. Some analysts even suggest that the Fed's next move could be a rate hike instead of a cut, adding to market uncertainty.

Source: Reuters

Dollar Jumps as Inflation Surges, Fed Likely to Hold Rates Higher

The U.S. dollar strengthened on Wednesday after hotter-than-expected inflation data reinforced expectations that the Federal Reserve will keep interest rates elevated for longer. The Consumer Price Index (CPI) rose 0.5% in January, with core inflation increasing 0.4%, both surpassing economists’ forecasts. On an annual basis, inflation reached 3.0%, while core inflation hit 3.3%, casting doubt on the likelihood of achieving the Fed’s 2% target anytime soon. As a result, traders have scaled back expectations for rate cuts this year, now pricing in only one 25-basis-point reduction by December.

The dollar index climbed 0.48% to 108.45, with the euro slipping to $1.0327 and the yen weakening to 154.39 per dollar. Fed Chair Jerome Powell reaffirmed the central bank’s cautious stance, stating that the U.S. economy remains strong and that the Fed is in no hurry to cut rates. Meanwhile, investors are closely monitoring trade developments as President Donald Trump’s administration finalizes plans for new reciprocal tariffs, set to take effect soon. With additional tariffs on steel and aluminum imports scheduled for March 4, concerns are growing that trade tensions could add further upward pressure on inflation.

Source: Reuters

Trump Executive Order Vows Substantial Cuts to Federal Workforce

President Donald Trump signed an executive order on Tuesday mandating federal agencies to collaborate with the U.S. Department of Government Efficiency (DOGE) to reduce their workforce and restrict future hiring. This directive represents the most definitive step taken by the president in support of large-scale reductions to the federal workforce. The order further strengthens DOGE, an initiative led by billionaire Elon Musk and designed to identify government inefficiencies, by expanding its authority over federal employment practices.

Under the order, a "DOGE Team Lead" will be assigned to each federal agency, granting them oversight of hiring decisions and reinforcing the administration’s commitment to streamlining government operations. This move underscores the president’s broader strategy to shrink the federal government and enhance operational efficiency.

Source: Washington Post

Trump Readies Reciprocal Tariffs as Trade War Fears Mount

President Donald Trump is preparing to impose reciprocal tariffs on all countries that levy duties on U.S. imports, escalating concerns over a global trade war. The move, expected to be announced by Wednesday, comes as industries struggle to manage rising steel and aluminum costs following earlier tariff hikes. Trade ministers from the European Union are already strategizing countermeasures, with Germany advocating for negotiations while preparing for potential retaliation. Meanwhile, U.S. inflation surged in January, further fueling fears that these tariffs could push prices even higher for American consumers.

The administration faces significant challenges in structuring these reciprocal tariffs, as each country has distinct duty rates. Experts warn that implementing such a system would be a complex and unprecedented undertaking, potentially requiring artificial intelligence to navigate the vast array of global trade classifications. Some analysts argue that these tariffs could backfire, raising costs for U.S. businesses and consumers without achieving meaningful economic benefits.

Source: Reuters

S.E.C. Moves to Kill Climate Disclosure Rule

The Securities and Exchange Commission (S.E.C.) has taken a major step toward rolling back its climate disclosure rule, with Acting Chair Mark Uyeda directing the agency to pause its legal defense of the regulation. The rule, enacted last year under former S.E.C. Chair Gary Gensler, requires publicly traded companies to disclose the financial risks of climate change and their greenhouse gas emissions. However, Uyeda, a longtime critic of the measure, argued that the rule is overly burdensome, potentially harmful to the economy, and outside the S.E.C.’s regulatory authority. His decision to halt the rule’s legal defense signals that the commission may rescind it altogether.

Source: The New York Times

California’s Insurer of Last Resort Runs Out of Money to Pay L.A. Fire Claims

California’s FAIR plan, the state’s insurer of last resort, has exhausted its funds after an overwhelming number of claims from recent Los Angeles wildfires, prompting a $1 billion bailout from state regulators. The financial strain highlights the growing instability of California’s home insurance market, as private insurers continue to pull back due to wildfire risks. The recent fires, among the most destructive in the state’s history, ravaged nearly 16,000 structures across Pacific Palisades and Altadena, leaving thousands of homeowners reliant on FAIR for compensation. With $914 million already paid out and claims still rising. The FAIR plan, originally designed as a temporary safety net for those unable to secure private coverage, is now facing an unsustainable surge in demand.

Source: Washington Post

Restaurant Brands Reports 2.5% Same-Store Sales Growth, Fueled by Burger King and Popeyes

Restaurant Brands International posted a 2.5% increase in same-store sales for the fourth quarter, driven by strong performances from Burger King and Popeyes. The company exceeded Wall Street expectations, reporting adjusted earnings per share of 81 cents versus the expected 79 cents and revenue of $2.3 billion compared to the projected $2.27 billion. Net income fell to $361 million from $726 million a year earlier, largely due to restructuring costs and acquisitions, including the purchase of its largest U.S. Burger King franchisee and Popeyes China. CEO Josh Kobza highlighted that the company outperformed its quick-service restaurant competitors, including McDonald’s and KFC, both of which reported sales declines.

Burger King’s U.S. sales grew by 1.5%, surpassing estimates, helped by promotions such as the Addams Family menu and the Million Dollar Whopper deal. Popeyes reversed previous declines with slight U.S. sales growth of 0.1%, aided by stronger value offerings. Tim Hortons also saw domestic same-store sales rise by 2.5%, driven by increased morning sales and a surge in cold drink purchases. Looking ahead, Restaurant Brands plans to continue expanding, adding 1,055 new locations over the past year, and expects to invest up to $450 million in 2025 on restaurant remodels, incentives, and new developments.

Source: CNBC

Ford CEO Warns Trump Policies Could Lead to Layoffs

Ford Motor CEO Jim Farley cautioned that the Trump administration’s trade and auto policies could force the company to cut jobs, particularly if subsidies and financial support for electric vehicle production are revoked. Speaking at a New York conference, Farley emphasized that Ford has made significant investments in battery and EV factories across Ohio, Michigan, Kentucky, and Tennessee, and that eliminating Biden-era incentives could put many of those jobs at risk. Additionally, Farley criticized Trump’s proposal to impose a 25% tariff on cars and components from Mexico and Canada, warning that such a move would severely disrupt the U.S. auto industry while giving an advantage to European and Asian automakers not subject to the same tariffs.

While Farley acknowledged Trump’s push to strengthen U.S. auto manufacturing, he described the administration’s current approach as bringing "a lot of costs and a lot of chaos" rather than stability or growth. His remarks highlight a dilemma for Republicans seeking to roll back Democratic EV policies—many of the affected jobs are in states and districts represented by Republican lawmakers.

Source: The New York Times

Yesterday's Earnings

  • Coca-Cola (KO): Actual EPS: $0.55 (Beat by 5.77%), Expected EPS: $0.52, Actual Revenue: $11.5B (Beat by 7.48%), Expected Revenue: $10.7B, Market Cap: $291.37B

  • S&P Global (SPGI): Actual EPS: $3.77 (Beat by 12.20%), Expected EPS: $3.36, Actual Revenue: $3.59B (Beat by 4.66%), Expected Revenue: $3.43B, Market Cap: $163.00B

  • Gilead (GILD): Actual EPS: $1.90 (Beat by 11.11%), Expected EPS: $1.71, Actual Revenue: $7.6B (Beat by 6.15%), Expected Revenue: $7.16B, Market Cap: $130.28B

  • Welltower (WELL): Actual EPS: $0.19 (Miss by 53.66%), Expected EPS: $0.41, Actual Revenue: $2.25B (Beat by 6.13%), Expected Revenue: $2.12B, Market Cap: $90.38B

  • DoorDash (DASH): Actual EPS: $0.33 (Met Expectations), Expected EPS: $0.33, Actual Revenue: $2.87B (Beat by 1.06%), Expected Revenue: $2.84B, Market Cap: $83.17B

  • Marriott Int (MAR): Actual EPS: $2.45 (Beat by 3.38%), Expected EPS: $2.37, Actual Revenue: $6.43B (Beat by 0.94%), Expected Revenue: $6.37B, Market Cap: $79.79B

  • Ecolab (ECL): Actual EPS: $1.81 (Met Expectations), Expected EPS: $1.81, Actual Revenue: $4.01B (Beat by 0.25%), Expected Revenue: $4B, Market Cap: $72.90B

  • Carrier Global (CARR): Actual EPS: $0.54 (Beat by 10.20%), Expected EPS: $0.49, Actual Revenue: $5.15B (Miss by 2.28%), Expected Revenue: $5.27B, Market Cap: $56.00B

  • AIG (AIG): Actual EPS: $1.30 (Beat by 1.56%), Expected EPS: $1.28, Actual Revenue: $6.76B (Miss by 0.44%), Expected Revenue: $6.79B, Market Cap: $46.17B

  • Edwards Lifesciences (EW): Actual EPS: $0.59 (Beat by 7.27%), Expected EPS: $0.55, Actual Revenue: $1.39B (Beat by 2.21%), Expected Revenue: $1.36B, Market Cap: $44.26B

  • Fidelity National Info (FIS): Actual EPS: $1.40 (Beat by 2.94%), Expected EPS: $1.36, Actual Revenue: $2.6B (Miss by 1.14%), Expected Revenue: $2.63B, Market Cap: $39.39B

  • DuPont De Nemours (DD): Actual EPS: $1.13 (Beat by 14.14%), Expected EPS: $0.99, Actual Revenue: $3.09B (Beat by 0.32%), Expected Revenue: $3.08B, Market Cap: $33.90B

  • Humana (HUM): Actual EPS: -$2.16 (Miss by 1.41%), Expected EPS: -$2.13, Actual Revenue: $29.21B (Beat by 1.71%), Expected Revenue: $28.72B, Market Cap: $31.50B

  • Super Micro Computer (SMCI): Actual EPS: $0.58 (Miss by 92.85%), Expected EPS: $8.12, Actual Revenue: $5.65B (Miss by 18.71%), Expected Revenue: $6.95B, Market Cap: $24.28B

  • GlobalFoundries (GFS): Actual EPS: $0.46 (Beat by 2.22%), Expected EPS: $0.45, Actual Revenue: $1.83B (Met Expectations), Expected Revenue: $1.83B, Market Cap: $22.16B

  • Eversource Energy (ES): Actual EPS: $1.01 (Beat by 1.00%), Expected EPS: $1.00, Actual Revenue: $2.97B (Miss by 5.11%), Expected Revenue: $3.13B, Market Cap: $21.53B

  • Leidos (LDOS): Actual EPS: $2.37 (Beat by 4.87%), Expected EPS: $2.26, Actual Revenue: $4.37B (Beat by 5.81%), Expected Revenue: $4.13B, Market Cap: $17.85B

  • Masco (MAS): Actual EPS: $0.89 (Beat by 1.14%), Expected EPS: $0.88, Actual Revenue: $1.83B (Miss by 0.54%), Expected Revenue: $1.84B, Market Cap: $16.09B

  • Assurant (AIZ): Actual EPS: $5.54 (Beat by 61.52%), Expected EPS: $3.43, Actual Revenue: $3.1B (Beat by 0.98%), Expected Revenue: $3.07B, Market Cap: $10.97B

Earnings Today

  • Cisco (CSCO): Expected EPS: $0.9079, Expected Revenue: $13.87B, Market Cap: $245.18B

  • Applovin (APP): Expected EPS: $1.25, Expected Revenue: $1.26B, Market Cap: $127.06B

  • CME Group (CME): Actual EPS: $2.52 (Beat by 1.61%), Expected EPS: $2.48, Actual Revenue: $1.53B (Met Expectations), Expected Revenue: $1.53B, Market Cap: $90.20B

  • Equinix (EQIX): Expected EPS: $2.75, Expected Revenue: $2.28B, Market Cap: $89.86B

  • CVS Health Corp (CVS): Actual EPS: $1.19 (Beat by 19.00%), Expected EPS: $1.00, Actual Revenue: $97.7B (Beat by 0.75%), Expected Revenue: $96.97B, Market Cap: $78.64B

  • Williams (WMB): Expected EPS: $0.4704, Expected Revenue: $2.73B, Market Cap: $66.80B

  • The Trade Desk (TTD): Expected EPS: $0.5658, Expected Revenue: $759.05M, Market Cap: $58.88B

  • Dominion Energy (D): Actual EPS: $0.58 (Miss by 6.45%), Expected EPS: $0.62, Actual Revenue: $3.4B (Miss by 11.92%), Expected Revenue: $3.86B, Market Cap: $45.97B

  • Crown Castle (CCI): Expected EPS: $0.4488, Expected Revenue: $1.64B, Market Cap: $38.81B

  • Kraft Heinz (KHC): Actual EPS: $0.84 (Beat by 7.69%), Expected EPS: $0.78, Actual Revenue: $6.58B (Miss by 1.64%), Expected Revenue: $6.69B, Market Cap: $34.15B

  • Westinghouse Air Brake (WAB): Actual EPS: $1.68 (Miss by 3.45%), Expected EPS: $1.74, Actual Revenue: $2.58B (Miss by 1.90%), Expected Revenue: $2.63B, Market Cap: $32.27B

  • Martin Marietta Materials (MLM): Actual EPS: $4.79 (Beat by 3.23%), Expected EPS: $4.64, Actual Revenue: $1.63B (Miss by 1.21%), Expected Revenue: $1.65B, Market Cap: $30.97B

  • Tyler Technologies (TYL): Expected EPS: $2.44, Expected Revenue: $540.74M, Market Cap: $26.00B

  • Ventas (VTR): Expected EPS: $0.0567, Expected Revenue: $1.26B, Market Cap: $25.17B

  • Rollins (ROL): Expected EPS: $0.2342, Expected Revenue: $815.99M, Market Cap: $24.07B

  • FirstEnergy (FE): Expected EPS: $0.7133, Expected Revenue: $4.36B, Market Cap: $23.04B

  • Waters (WAT): Actual EPS: $4.10 (Beat by 1.74%), Expected EPS: $4.03, Actual Revenue: $873M (Beat by 1.89%), Expected Revenue: $856.84M, Market Cap: $21.91B

  • Biogen (BIIB): Actual EPS: $3.44 (Beat by 0.88%), Expected EPS: $3.41, Actual Revenue: $2.45B (Beat by 1.66%), Expected Revenue: $2.41B, Market Cap: $19.04B

  • Paycom Soft (PAYC): Expected EPS: $1.97, Expected Revenue: $481.16M, Market Cap: $11.23B

  • MGM (MGM): Expected EPS: $0.3881, Expected Revenue: $4.28B, Market Cap: $10.27B

  • IPG (IPG): Actual EPS: $1.11 (Miss by 5.13%), Expected EPS: $1.17, Actual Revenue: $2.43B (Miss by 3.95%), Expected Revenue: $2.53B, Market Cap: $9.89B

  • Albemarle (ALB): Expected EPS: -$0.6409, Expected Revenue: $1.35B, Market Cap: $8.97B

  • Generac (GNRC): Actual EPS: $2.80 (Beat by 11.11%), Expected EPS: $2.52, Actual Revenue: $1.23B (Miss by 1.60%), Expected Revenue: $1.25B, Market Cap: $8.38B

  • Paramount Global B (PARA): Expected EPS: $0.1987, Expected Revenue: $8.11B, Market Cap: $7.02B

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The performance of option ideas is provided "as is" without any warranties regarding accuracy, timeliness, or precision. The performance of each trade idea based on the initial premium or price level specified by the original author in the report. Trade idea performance will default to profitability at +40%, and the best performance will be shown. Otherwise, the latest data point will be used for the basis of performance calculation from our data provider.

Stock list performance is updated occasionally by calculating the average performance of the stocks in the stock list, based on the opening price on the first trading day after the stock list’s inception or the addition of each stock to the list.

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