Morning in New York: focus on the Fed's Minutes

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

In the center of attention of the participants of the upcoming trades will be the statistics of industrial production for December (consensus: +0.4% month-on-month, the same as a month earlier). The sector is a source of support for the economy: since November 2025, the indicator has been growing at an average rate of 0.4% per month, which is confirmed by the positive dynamics of business activity indices from ISM. Continued strong demand and positive dynamics of the industry will strengthen the confidence of stock exchange players in the sustainability of the economy. At the same time, it may become an additional argument for the Fed in favor of keeping rates at the current level.

The publication of the minutes of the Fed's January meeting ("Minutes" of the FOMC) may cause an emotional market reaction. The main intrigue for investors lies in the motivation of Christopher Waller, a member of the regulator's Board of Governors, who voted for a rate cut. The market will closely analyze the discussion to see how much the regulator is willing to tolerate "modest" inflation while maintaining strong consumer demand. Given the stability of the labor market and absence of unemployment growth, the release is likely to hint at a pause in monetary easing.

Before the main session opens, Analog Devices (ADI), Moody's (MCO), Verisk Analytics (VRSK), Insulet (PODD), Teck Resources (TECK), Global Payments (GPN) and Garmin (GRMN) will report quarterly results. Carvana (CVNA), Booking Holdings (BKNG), DoorDash (DASH), Coeur Mining (CDE), Pan American Silver (PAAS), CRH PLC (CRH) and Occidental Petroleum (OXY ) will report at the postmarket.

The Booking Holdings (BKNG) report is of heightened interest to exchange players in terms of protecting sales funnels from AI travel planners and possible pressure on commissions.

Futures on American stock indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming session as neutral with increased volatility. In the absence of new macroeconomic drivers before the release of the minutes of the last Fed meeting, consolidation is likely.

- Shares of Palo Alto Networks (PANW) are losing about 7% in the premarket amid the release of quarterly earnings. Despite beating consensus on adjusted earnings, for the current fiscal quarter, the company forecasts earnings in the range of $0.78-0.8 per share, compared to the market average guidance of $0.92. Nevertheless, management emphasizes the long-term outlook, noting that AI developments are creating "new classes of risks" that should support strong demand for the company's security platforms in the future.

- Quotes of Cadence Design Systems (CDNS) before the start of the main trading rose by almost 6%. The company presented a strong report and gave a forecast for 2026, which was above Wall Street's expectations. The main driver remains the rush for tools to create sophisticated semiconductors focused on artificial intelligence and cloud computing. Investors positively assessed the growth of operating margin and expansion of the order book.

- Celanese (CE) securities reacted to the publication of quarterly reports by 6% growth. Investors are encouraged by the fact that the company's profit exceeded analysts' forecasts despite the ongoing pressure in the industrial sector. Additional support was provided by management comments on gradual recovery of demand in key segments and successful implementation of the cost reduction program, which should contribute to margin expansion in 2026.

- Similarweb (SMWB) stock is down more than 22% amid the release of its financial results, as the company's revenue forecasts for the current quarter and full year came in well below Wall Street analysts' expectations. Despite growth in the number of corporate clients, the pace of monetization is slowing and competition in the sector is intensifying.

- Caesars Entertainment (CZR) is up 4% on the premarket as the casino operator's revenue increased and it attributes the decline in profits to a high base effect, with a one-time gain of more than $350 million in the same period last year. Management characterized the deteriorating conditions in Las Vegas as a temporary cyclical phenomenon, emphasizing the resilience of its operating performance.

Trades on February 17 on the U.S. stock exchanges ended mixed. S&P 500 added 0.1%, Dow Jones grew by 0.07%, NASDAQ 100 decreased by 0.13%, and Russell 2000 showed zero change.

In the "Magnificent Seven" the most active purchases were observed in shares of Apple (AAPL: +3.17%), NVIDIA (NVDA: +1.18%) and Amazon (AMZN: +1.19%). The rest of the companies in this group traded without a pronounced trend.

The financial sector (XLF: +1.06%) was the leader of the growth: banks and insurers gained back higher credit margins on the back of steady data and Fed comments. Non-cyclical consumer goods producers (XLP: -1.46%) were the outsiders due to pressure on defensive stocks and cautious guidances of some industry representatives.

Macroeconomic statistics gave mixed signals. The Empire State's New York Business Activity Index for February was below expectations, although the new orders and employment components showed improvement. The NAHB Homebuilder Confidence Index unexpectedly fell to its lowest level since September, indicating persistent problems with housing affordability and high builder costs. New job openings from ADP totaled 10.25k over the past four weeks, supporting the soft landing scenario for the economy while encouraging the Fed to be cautious.

The rhetoric of the Fed representatives remained balanced. Head of FRB Chicago Austan Goolsbee allowed several rate cuts this year, provided that inflation continues to slow down. Member of the Board of Governors of the Fed Michael Barr believes it is necessary to continue to monitor statistical data before returning to the easing of monetary policy.

These statements caused mixed dynamics of treasury securities with flattening of the curve and growth of yields on its short end within 2-3 bp. The sharp correction in gold (-2.8%) and silver (-5.7%) prices reflected the weakening demand for protective assets.

- Danaher (DHR: -2.9% at the close of trading on Feb. 17) is buying medical device maker Masimo (MASI: +34.2%) for $180 per share in cash, implying a nearly $10 billion deal at a premium of about 40% to the last close. Management plans the acquisition will expand Danaher's diagnostics segment and improve earnings per share already in the first full year after the takeover. In turn, investors are wary of the growing debt burden and see integration risks.

- Zim Integrated Shipping Services (ZIM: +25.5%) will be acquired by Germany's Hapag-Lloyd for about $4.2 billion ($35 per share). This implies a premium to the February 17 close of about 57%. ZIM management said the deal is expected to close by the end of 2026 and should maximize value for shareholders. Hapag-Lloyd sees the merger as an opportunity to strengthen its position on key global routes.

- Norwegian Cruise Line Holdings (NCLH: +12.2%) has hit local highs after confirming reports that activist Elliott Investment Management has consolidated more than 10% of its capital and intends to seek a board reshuffle and improve the cruise operator's operational efficiency. With the company's securities lagging behind its competitors, Elliott sees significant upside. According to media reports, the investor is advancing a strategy, the implementation of which should double the target share price in the medium term.

- General Mills (GIS: -7%) worsened its FY 2026 earnings outlook, citing a challenging macroeconomic environment, weak consumer demand and a slowing recovery in production volumes. Management noted that heightened volatility and changing consumer behavior are making it difficult to return to sustainable growth. This heightened market concerns about the performance of the consumer discretionary sector, whose shares have the status of defensive instruments.

- Vulcan Materials (VMC: -7.8%) reported last quarter earnings and revenue below estimates. The company's management cited unfavorable geographic and product mix as a factor of pressure on prices, and also presented adjusted EBITDA guidance for the current year below consensus. Analysts noted an increase in the issuer's unit costs for extraction and processing of inert materials.

This article was AI-translated and verified by a human editor