To The Moon

We saw the stock market experienced some sell-off after we saw the inflation data came in hotter than expected, it accelerated for a fourth consecutive month in January.

This raised questions about the outlook for interest rates this year, which have the investors worried that stubborn inflation, as measured by the Consumer Price Index, might mean the Fed could keep interest rates higher for longer.

The DJIA fell 0.5%, while the S&P 500 shed 0.27%. The NASDAQ finished the session modestly with only 0.03% higher. The indexes were different from a mixed session on Tuesday in which the Dow advanced and the Nasdaq ticked lower.

Inflation accelerated for a fourth consecutive month in January. The Consumer Price Index rose 3% in January, its biggest increase since June. Core inflation, which excludes volatile food and energy prices, accelerated to 3.3%. The data came shortly before Fed Chair Jerome Powell appeared before members of the House of Representatives, part of the central bank's biannual update to Congress.

Only Two S&P 500 Sectors In The Green

We saw only teow S&P 500 sectors managed to close in the green, gains from Coca-Cola (KO), Walgreens Boots Alliance (WBA) and Walmart (WMT) helped to keep the consumer staples sector with 0.23% gains, all three stocks have risen more than 1%.

And the gains from Netflix (NFLX) helped to keep the communication services in a modest 0.04% gain. We do have other stocks rising on earnings reports included Doordash (DASH), up 4%, and AI lender Upstart Holdings (UPST), up 31%.

Meanwhile, Lyft (LYFT) shares tumbled 7% on its disappointing results, while Zillow Group (Z) slid 9% and data center infrastructure stock Vertiv Holdings (VRT) lost nearly 10%. Burger King parent Restaurant Brands International (QSR) gave up early gains to close down 1%.

Big tech stocks were mixed. Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG), and Amazon (AMZN) were all down about 1%, while Meta Platforms (META), Broadcom (AVGO). and Apple (AAPL) rose.

Gains from Intel (INTC), $Palantir Technologies Inc.(PLTR)$ and $SUPER MICRO COMPUTER INC(SMCI)$ which rose nearly 3% after the AI server maker reported underwhelming second-quarter results, has helped the information technology sector to narrow the loss to only 0.05%.

I would think PLTR could continue its uptrend as the market navigate the accelerated inflation.

Tesla (TSLA), which slid more than 6% on Tuesday (10 Feb), added more than 2%. This has also helped the consumer discretionary sector to lose only 0.30%.

CVS Health (CVS) stock soared 15% after topping revenue and profit estimates, this has also help the health care sector to narrow the loss to only 0.11%.

Note Yield Went Higher On Accelerated Inflation

We saw the 10-year Treasury yield, which is highly sensitive to expectations for inflation and Fed policy, jumped to 4.63% from 4.53% (Tuesday close).

Investors had already scaled back their expectations for interest rate cuts amid uncertainty about Trump's trade policies and the effect tariffs could have on prices, but Wednesday's report amplified concerns about resurgent inflation.

The CME fedwatch shows that the probability of a rate cut in March 2025 is only a merely 2.5% as compared to 17% one week ago, but will this probability surged again now that we saw an accelerated inflation.

I guess we need to watch this closely to see how trade policies will influence the Fed decision on inflation management hence the interest rate direction.

Stocks To Watch

The top performance in the S&P 500 Wednesday came from shares of $CVS Health(CVS)$ , which surged 14.9% after the pharmacy operator and health insurance provider topped fourth-quarter sales and profit estimates. CEO David Joyner, who took the reigns of CVS amid a strategic reshuffling in October, noted strong growth in the pharmacy and consumer wellness business as the company navigates a challenging environment in the health care benefits segment.

Shares of $Alibaba(BABA)$ listed in the U.S. extended their rally into Wednesday amid reports that the Chinese tech and e-commerce giant is partnering with Apple (AAPL) to create artificial intelligence features for Apple products in China.

So is there any opportunities for getting into BABA, from the technicals we are seeing a strong uptrend where BABA bulls have successfully trade above the 12-EMA, but something we might need to understand is RSI is currently showing overbought, which could be either a good news or maybe a short-term selloff might be coming.

But we should be seeing some strong buying to continue from the traders and investors.

Apple (AAPL) saw its shares edge higher following news of an AI partnership with China's Alibaba (BABA), with the stock up more than 1%. Intel was up some 6%, extending its year-to-date gains after a brutal 2024.

Tesla (TSLA), Intel (INTC), and Palantir (PLTR) were recently among the top gainers in the S&P 500, which was more broadly edging lower. The tech-focused Nasdaq Composite was ticking lower, but its retreat was less pronounced than that of the other leading indexes.

Summary

I think the market might be coming back with some rotations, where we can see that inflation have accelerated and this might affect some of the interest rate sensitive stocks. So for now, the strategy to stay in good quality stocks as well as some nice growth stocks should help our portfolios.

Appreciate if you could share your thoughts in the comment section whether you think market could be coming back positively to react to accelerated inflation.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.