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Stock Market News for Feb 11, 2021

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·5 min read
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U.S. stock markets closed mixed on Wednesday following profit booking of large-cap technology stocks by investors. However, all the three major stock indexes recorded fresh all-time highs in intraday trading buoyed by benign inflation and Fed Chairman's assurance of pursuing accommodative monetary policies until labor market returns to normalcy. The Dow ended in the green while both the S&P 500 and the Nasdaq Composite finished in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.2% to close at 31,437.80, marking a fresh closing high. Notably, 18 components of the 30-stock index ended in the green while 12 in red. The blue-chip index has recorded a new all-time high of 31.511.44 in intraday trading.

The Nasdaq Composite finished at 13,972.53, dropping 0.3% due to weak performance by large-cap tech stocks. The tech-heavy index terminated its five straight days of gains. In intraday trading, the tech-laden index recorded an all-time high at 14,109.12.

Tech behemoths like Apple Inc. AAPL, Microsoft Corp. MSFT and Cisco Systems Inc. CSCO fell 0.5%, 0.4% and 2.6%, respectively. Apple sports a Zacks Rank #2 ( Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, the S&P 500 fell marginally to end at 3,909.88. The broad-market index has recorded a new all-time high of 3,931.50 in intraday trading. The Energy Select Sector SPDR (XLE) surged 1.9% while the Consumer Discretionary Select Sector SPDR (XLY) lost 1%. Notably, five out of eleven sectors of the benchmark index closed in the red and six in green.

The fear-gauge CBOE Volatility Index (VIX) was up 1.7% to 21.99. A total of 18.33 billion shares were traded on Wednesday, higher than the last 20-session average of 16.5 billion. Advancers outnumbered decliners on the NYSE by a 1.11-to-1 ratio. On Nasdaq, a 1.30-to-1 ratio favored declining issues.

Consumer Price Index Remains Subdued

The Department of Labor reported that consumer price index (CPI) rose 0.3% in January in-line with the consensus estimate. December's data was revised downward from an increase of 0.4% to 0.2%. Year over year, CPI grew 1.4% in January well below the pre-pandemic level of around 2.3%.

The core CPI (excluding volatile food and energy prices) remained flat compared with the consensus estimate of a gain of 0.2%. Year over year, the core CPI increased 1.4%, well below the Fed's target rate of 2%.

Notably, a section of economists were concerned about a jump in household inflation rate owing to massive stimulus provided by the government and the Fed. Recent spike in crude oil and gas prices were some examples. Higher inflation may lead the central bank to readjust its benchmark interest rate.

Fed Assures Accommodative Monetary Policies

On Feb 10, the Fed chairman Jerome Powell said at the Economic Club of New York that the central bank will patiently pursue accommodative monetary policies as the labor market has a long way to go to achieve near full employment level that was prevailing at the onset of the global outbreak of the deadly coronavirus.

Although the unemployment rate has fallen from a pandemic period peak of 14.8% to 6.3% in January, more than 10 million workers are still without jobs. Benign inflation will enable the Fed to continue with record low interest rate of 0%-0.25% for a long period.

Economic Data

The Energy Information Administration reported that U.S. crude inventories fell by 6.6 million barrels for the week ended Feb 5. Consequently, the price of the U.S. benchmark WTI crude gained 0.6% to close at $58.68. In intraday trading the price touched $58.76, reflecting its 13-month high. Similarly, the price of the global benchmark Brent crude gained 0.6% to close at $61.47. In intraday trading the price touched $61.61, marking its 13-month high.

Stocks That Have Made Headline

Equinor Q4 Earnings Miss, Decline Y/Y on Lower Prices

Equinor ASA EQNR reported fourth-quarter 2020 adjusted loss per share of 18 cents against the Zacks Consensus Estimate of earnings of 18 cents. (Read More)

DCP Midstream Q4 Earnings Miss on Lower Guadalupe Profits

DCP Midstream LP DCP reported fourth-quarter 2020 adjusted earnings of 34 cents per unit, missing the Zacks Consensus Estimate of 47 cents. (Read More)

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