Morning in New York: quotes are looking downward

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

The key macroeconomic events of the upcoming session will be the publication of the February New York Empire Manufacturing Index and ADP private sector employment statistics. These indicators will allow to clarify the assessment of the current phase of the economic cycle and adjust expectations regarding further steps of the Fed. The consensus assumes the growth of Empire Manufacturing to 8.7 points after January's 7.7. This indicates a gradual recovery in the sector. From ADP data the market expects a moderate growth from 6.5 thousand jobs last week, which should confirm the stability of the labor market.

Investors will carefully analyze the balance between the stability of the economy and the risk of a renewed strengthening of inflationary pressures. The official report of the US Department of Labor for January showed signs of stability. Exchange players expect to see confirmation that the dynamics of hiring remains balanced - without overheating, which could force the Fed to maintain tight monetary conditions longer than most participants of the investment community expect. In the event of a moderate reading, the market is likely to maintain its baseline forecast, which assumes a gradual easing of monetary policy in 2026. Noticeably stronger data may temporarily increase caution in assessing the timing of a rate cut.

Before the start of the main trading session , Medtronic (MDT), Vulcan Materials (VMC), Energy Transfer (ET), Builders FirstSource (BLDR), DTE Energy (DTE), Labcorp (LH) and Watsco (WSO ) will report quarterly results. Palo Alto Networks (PANW), Kenvue (KVUE), Hecla Mining (HL), Cadence (CDNS), EQT Corporation (EQT), Devon Energy (DVN) and MKS Instruments (MKSI) will report after the market close.

Futures on S&P 500 show restrained negative dynamics. We assess the balance of risks for the upcoming session as negative with moderate volatility.

- Shares of Warner Bros. Discovery (WBD) are adding about 1% in the Feb. 17 premarket after reports of the board's plans to reopen talks to sell the company to Paramount Skydance. Investors are assessing the likelihood of a more favorable deal structure emerging than the current arrangements with Netflix. Paramount Skydance (PSKY) is up about 2%, reflecting speculative interest in potential consolidation in the media sector.

- BHP Group (BHP) is up about 1% after posting strong half-year results. Underlying earnings came in at $6.2 billion, beating consensus, helped by record iron ore output and favorable pricing environment in the copper market. Investors were positive on the strength of cash flow and the company's ability to benefit from continued demand for raw materials amid strong infrastructure investment during the energy transition.

- Shares of Wheaton Precious Metals (WPM) are losing about 2% after announcing a major pre-financing agreement to pre-finance silver shipments from BHP's $4.3 billion Antamina project. The company is increasing its stake in future silver shipments to 67.5% from the mine. Exchange players are cautious about the size of the initial payment, as well as its impact on the issuer's short-term liquidity and debt burden.

- Quotes of Disney (DIS) before the start of the main trading corrects by 0.5%, despite the news of ByteDance's intention to prevent unauthorized use of the company's intellectual property in tools for creating videos using artificial intelligence. The situation intensifies the debate around copyright protection in an era of generative technology and underscores Disney's desire to more actively monetize its own franchises in the digital environment.

In connection with the Presidents' Day celebrated in the USA on February 16, American stock exchanges were closed. Trading on February 13 ended mostly in the plus, part of the day's growth was lost by the close. S&P 500 added 0.05%, Nasdaq 100 rose by 0.18%, Dow Jones rose by 0.1%, and Russell 2000 - by 1.18%.

The main positive driver was inflation and labor market data, which contributed to the expansion of the rally in cyclical and defensive assets while the correction in the technology sector continued.

The shares of the "Magnificent Seven" were mostly declining. Nvidia (NVDA: -2.21%) and Apple (AAPL: -2.27%) exerted the most noticeable pressure on the indices.

The utilities sector (XLU: +2.76%), which benefited from the decline in government bond yields, became the leaders of growth. The financial sector (XLF: -0.08%) closed in a symbolic minus on the background of decline in quotations of large banks and insurers.

The general consumer price index (CPI) for January increased by 0.2% mom in line with the consensus. The core index in annual terms slowed down to the minimum for almost five years 2.5%, confirming the realization of the scenario of "soft landing" of the economy.

Against this background, bond quotations went up. The rally in precious metals also resumed: gold rose above $5000 on February 13, and silver added 3% at once.

The week as a whole was characterized by a transformation in the perception of AI. The technology is turning from an unconditional growth driver into a risk factor for a wide range of both consumers and traditional software producers. Concerns about the automation of tasks in the next year and a half and the revision of barriers to entry into business have led to increased volatility in the shares of companies whose activities may be significantly transformed by AI.

- Japan's Sumitomo Forestry announced the acquisition of homebuilder Tri Pointe Homes (TPH: +26.8% at the close of trading on February 13) for approximately $4.5 billion in cash at a 28.5% premium to the closing price on February 12. The deal, which is expected to close in the second quarter, confirms the continued interest of foreign investors in the U.S. housing market.

- Solaris Energy Infrastructure (SEI: +10%) has secured a major contract with Hatchbo to lease equipment to provide power to data centers with more than 500 MW of capacity. This contract confirms the company's status as one of the key beneficiaries of the strengthening demand for energy infrastructure for cloud computing.

- Despite a net loss in the fourth quarter due to a revaluation of its crypto portfolio, Coinbase (COIN: +16.5%) recorded operating performance and revenue in its stablecoin segment above average market expectations. Analysts note that amid the stock's strong oversold performance since the beginning of the year, investors are focusing on the platform's ability to remain profitable in the face of increased volatility.

- A cut in advertising budgets of major retailers due to higher import tariffs put pressure on Pinterest's (PINS: -16.9%) results. Its revenue and EBITDA for the fourth quarter fell short of consensus, although the number of active users exceeded forecasts. Investors reacted negatively to the cautious full-year profitability guidance, which signaled difficulties in monetizing the platform in Europe.

- Against the backdrop of strong adoption of generative AI in the travel industry by competitors, including recent announcements from PayPal and Mindtrip, Expedia Group (EXPE: -6.4%) securities came under pressure, although its financial results beat forecasts and the company also announced a dividend increase. The market continues to perceive the accelerated introduction of AI as a long-term risk to the business model of traditional online travel agencies.

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