Morning in New York: Inflation statistics will set the tone of trading

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

In the focus of attention of the participants of the forthcoming trades will be the publication of the January report on consumer inflation in the USA (CPI). This data will help clarify the benchmarks for the Fed's rate moves in the coming months. The consensus expects the core and total indices to grow by 0.3% month-on-month and 2.5% year-on-year. Freedom Broker's forecast model suggests that inflationary pressures will be more moderate with the overall CPI rising 0.19% m/m and the core CPI rising 0.24% m/m. These results would be broadly in line with the trend of recent months, leaving room for two or more Fed rate cuts in 2026.

Investors will take into account the residual seasonality factor, which caused core inflation to accelerate to 0.4% mom in January 2024-2025. Thus, if the actual CPI growth turns out to be in the range of 0.3-0.4% mom, it is likely to be interpreted as a one-off spike rather than a break in the disinflationary trend. In such a scenario, the market is likely to only postpone the discussion of a more pronounced easing of Fed policy, but not abandon it completely.

The most significant bullish signal will be the growth of core CPI within 0.2% m/m. This will confirm the continuation of the dynamics of October and December, reinforcing expectations of a faster rate cut. On the contrary, a higher result will support the regulator's cautious rhetoric and may temporarily limit the growth potential of risk assets due to a shift in market benchmarks regarding the resumption of monetary policy easing.

Moderna (MRNA), Cameco Corporation (CCJ), Enbridge (ENB), TC Energy Corporation (TRP), Advance Auto Parts (AAP), Magna International (MG), and Wendy's Company (WEN) will present quarterly results prior to the main session.

Futures on S&P 500 demonstrate moderately negative dynamics. We assess the balance of risks for the upcoming session as neutral with increased volatility. Yesterday's jump of the VIX volatility index above 20 points indicates a change of trend. The AI sector has turned from a growth driver into a source of margin pressure and a catalyst for sell-offs. A consolidation of the broad market index above 6900 points will be the first signal of stabilization and revision of valuation towards neutral. However, if the CPI growth exceeds forecasts even with seasonality, a break of 6800 level will increase panic and open space for correction.

- Arista Networks (ANET) shares soared more than 10% in the premarket after posting a strong quarterly report and an upbeat outlook for 2026. Arista continues to benefit from a rush of demand for networking equipment from cloud data center operators. Investors were positive on the growth in orders related to AI infrastructure expansion, confirming the company's status as a key beneficiary of the technology cycle.

- Applied Materials (AMAT) is up about 12% on the back of better-than-expected financial results and strong guidance for the current quarter. The largest U.S. chip equipment maker recorded a recovery in demand in the memory segment and a steady stream of orders for tools to produce advanced logic microprocessors.

- Quotes of Rivian (RIVN) reacted to the release of quarterly reports by more than 20%. Although the company remains unprofitable, investors were encouraged by the progress in reducing operating expenses and the 2026 production plan, which was more optimistic than consensus. Management's ability to maintain output volumes while slowing cost growth was the main driver of the positive reaction.

- DraftKings (DKNG) securities are losing about 15% ahead of the start of mainstream trading due to its own 2026 EBITDA guidance falling short of Wall Street expectations. While the company's fourth-quarter financials beat average market benchmarks, investors were alarmed by the lack of growth in unique monthly players and increased competition in the forecasting sector. Stagnation in key operating metrics and a downward revision of the company's long-term financial targets caused a negative reaction.

- Airbnb (ABNB) is up more than 4% in the premarket on the back of a strong report, with bookings up 9.8% YoY in the fourth quarter and revenue guidance for early 2026 beating analysts' average expectations. Management emphasized the success of its flexible payment strategy and accelerated growth in emerging markets such as India and Brazil. Despite the underperformance on net income, investors focused on the company's plans to incorporate AI into its search algorithms and the robust demand for travel ahead of the year's major sporting events.

Trades on February 12 on American stock exchanges ended in a noticeable minus. S&P 500 lost 1.57%, Nasdaq 100 fell by 2.04%, Dow Jones declined by 1.34%, Russell 2000 fell by 2.01%. The main driver of the correction was the reversal of sentiment around the AI sector. It turned from a growth catalyst into a market risk factor, which caused the VIX volatility index to jump above 20 points.

The shares of the "Magnificent Seven" also supported the general negative trend. The most active were sell-offs of Apple securities (AAPL: -5%). This was caused by concerns related to the delayed launch of new Siri AI features and increased antitrust pressure from the Federal Trade Commission (FTC).

The utilities sector (XLU: +1.48%) emerged as the top gainer, driven by capital flows into defensive assets and a rally in the bond market. The list of outsiders was led by the technology industry (XLK: -2.63%) due to renewed pressure on software and semiconductor manufacturers, as well as concerns about business profitability caused by Cisco's results.

The published macro statistics was moderately negative. The number of initial applications for unemployment benefits amounted to 227 thousand, while the consensus was 223 thousand. Secondary housing sales in January plummeted by 8.4% mom, to the minimum since September 2024 at 3.91 million, with the average benchmark at 4.1 million. The market reacted to the weak statistical data and general uncertainty by accelerated transfer of funds into debt instruments. Yields on "long" US Treasury bonds fell by 8-9 bp, which was further supported by very strong demand at the auction of 30-year treasuries.

Additional pressure on risk appetite was exerted by the geopolitical and domestic political agenda in the US. Investors are concerned about a possible Saturday shutdown of the Department of Homeland Security (DHS) and the risks of new trade tariffs, which, according to FRB New York estimates, will fall 90% on US consumers and companies. Fears of AI-induced unemployment and a sell-off in commodities (gold: -2.92%, WTI crude: -2.8%) only reinforced the defensive mindset of traders ahead of the release of consumer inflation data.

- Quotes of cloud provider Fastly (FSLY: +72.3% at the close of trading on February 12) showed a record high: its results for the fourth quarter and outlook for 2026 significantly exceeded analysts' expectations thanks to the influx of traffic from AI agents and high achievements in the network security segments.

- With the successful completion of a consultation with the U.S. Food and Drug Administration (FDA), Viking Therapeutics (VKTX: +6.8%) announced the launch of a final phase 3 trial of an oral drug for the treatment of obesity in the third quarter.

- Shares of biotech company Novocure (NVCR: +19.4%) rose on the back of the FDA's earlier-than-expected approval of its Optune Pax device for the treatment of pancreatic cancer.

- Thanks to a successful holiday season and the success of the HEYDUDE brand, Crocs ' quarterly results (CROX: +19.0%) exceeded market expectations. Investors were positive about the double-digit growth in international sales and the optimistic earnings forecast for 2026, which was above consensus.

- Baxter International (BAX: -16%) reported a sharp decline in margins for the quarter, and its earnings came in 18% below forecasts despite revenue growth across all business segments. Investors were also disappointed by the company's 2026 guidance, which calls for earnings 14% below average market expectations.

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