Federal Reserve officials discussed the effects of potential changes in trade from proposed Trump tariffs and weighed the administration's efforts to slow illegal immigration and deport potentially millions of working age adults on the economy. They also reportedly discussed the inherent difficulty in discerning whether changes would be persistent or temporary regarding inflation, employment, and the general economy, minutes from the Federal Open Market Committee's January 28-29 meeting showed.
Essentially, the FOMC members couldn't make heads or tails of Trump or his directives other than to guess about their effectiveness, so they took a wait and see approach, deciding to keep the federal funds rate at current levels, indicating a preference for holding off on rate cuts in the near term.
From the minutes, Wall Street's coven of watchful witches bubbled up a brew that was somehow positive, sending stocks from their doldrums to another gloriously positive finish and a record close on the S&P 500. The main beneficiary was, as usual, NASDAQ, which ended positive for the fifth straight session. The S&P has closed higher eight of the past 11 sessions. Only the NYSE Composite remained lower for the day.
After the close Wednesday, a few more earnings reports trickled in, notable Cheesecake Factory (CAKE), which posted solid Q4 and full year 2024 figures. for the quarter, revenue: came in at a record $921 million against analyst expectations for $913.2 million and adjusted EPS (non-GAAP) was $1.04 versus estimates of $0.91. While the restaurant chain's quarter was solid, shares are down between one and two percent in pre-market trading, likely on a pure valuation play. The stock just hit its highest level since June, 2021, even though its dividend yield is nearly two percent and p/e ratio not excessive, in the high teens.
Also reporting after the Wednesday close was Carvana (CVNA). Even though the company beat estimates top and bottom line, the stock is being slaughtered pre-open, down seven percent. Shares recently reached their highest level in three years, but the company's margins are so tight, valuation appears to be the main issue.
On revenues of $3.55 billion for the quarter ended December 2024 the company earned $369 million, or 56 cents per share.
Reporting Thursday morning, Wayfair (W) showed a quarterly loss of $128 million or $1.02 per share on revenue of $3.1 billion, which was just slightly higher than year-ago revenue. Apparently, that's good enough, as shares are flying eight percent higher pre-market.
The kicker was Walmart (WMT), the nation's largest retailer. The company reported another solid quarter, beating estimates, but their guidance was dour, sending shares sharply lower prior to the open. Walmart is trending down six to eight percent a half hour before the bell.
Weekly jobless claims continued to trend near multi-decade lows. 219,000 initial claims were filed in the most recent week. Paradoxically, continuing claims were near 2.0 million, close to four-year highs.
With the open dead ahead, stock futures are slumping. Dow: -155; NASDAQ: -55; S&P: -18.
Gold hit a high of $2,972 earlier in the morning, but has come down off that number. Silver is trending around $33.50. WTI crude got a boost on Wednesday and that trend continues into Thursday, with a barrel going for around $72.50.
The market is teetering close to all-time highs. The Shiller PE ratio hit 38.75 as of Wednesday's close, surpassing the post=pandemic high in October, 2021 (38.58).
At the Close, Wednesday, February 19, 2025:
Dow: 44,627.59, +71.25 (+0.16%)
NASDAQ: 20,056.2, +14.99 (+0.07%)
S&P 500: 6,144.15, +14.57 (+0.24%)
NYSE Composite: 20,228.20, -12.19 (-0.06%)
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