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Coffee With Greta: Stocks Slide After More Hot Inflation Data


DJIA Futures: -282 (-0.8%) 

SPX Futures: -49 (-1.2%)

NASDAQ Futures: -186 (-1.5%)

Good morning friends!

Futures are dropping after the release of more hot inflation data. 

Let’s get right to it!

Wholesale Inflation Runs Hot

Wholesale inflation pressures came in way hotter than expected in January.

The Bureau of Labor Statistics’ producer price index jumped 0.7% monthly and 6% year over year. 

That was sharply higher than economists’ expectations for a 0.4% monthly gain and the largest jump since June. 

Energy prices saw the largest gain, surging 5% monthly.

The core PPI also rose more than expected, up 0.5% monthly vs 0.3% expected. 

This data is bad news for traders hoping for a Fed pivot soon as PPI is a leading indicator for consumer prices in the months ahead. 

Housing Starts Tumble

U.S. home construction slowed more than expected in January. 

The Census Bureau reported housing starts dropped 4.5% last month to a seasonally adjusted annual rate of 1.31 million units vs 1.35 million expected. 

That’s the lowest annual rate since June of 2020 and starts were down 21.4% year over year. 

Single-family starts fell 4.3% while multi-family starts dropped 5.4%.

Building permits were relatively unchanged for the month, up just 0.1% to a seasonally adjusted annual rate of 1.34 million units vs 1.35 million expected. 

That signals the slowdown in building will continue. 

Weekly Jobless Claims Fall Unexpectedly

Weekly jobless claims fell unexpectedly last week, remaining under 200,000 for the fifth straight week. 

The Labor Department reported 194,000 Americans filed initial claims for unemployment benefits. 

That was down by 1,000 from the previous week and better than expectations for an increase to 200,000. 

Continuing claims meantime rose by 16,000 to 1.70 million in the week ending February 4.

Roku Rallies After Earnings Beat, Strong Guidance

Roku (ROKU) shares are up 9.2% ahead of the open after beating Q4 expectations on the top and bottom line and issuing strong guidance. 

Here’s how the streaming giant’s results compared to analysts’ expectations: 

  • Loss per share: $1.70 vs $1.72 expected
  • Revenue: $867 million vs $803 million expected

Roku said it had 70 million active streaming accounts during the quarter, up from 65.4 million in Q3 and better than 69 million expected. 

Streaming hours also jumped to 23.9 billion from 21.9 billion in Q3 and higher than 23.2 billion expected. 

Roku forecast Q1 revenue of $700 million beating analysts’ estimates of $692 million.

Cisco Tops Earnings Estimates, Hikes Guidance

Cisco (CSCO) shares are 3.2% higher in premarket trade after topping fiscal Q2 expectations and hiking its full-year guidance. 

Here’s how the computer networking company’s results compared to analysts’ expectations:

  • Adjusted EPS: $0.88 vs $0.86 expected
  • Revenue: $13.59 billion vs $13.43 billion expected

Total revenue jumped 7% year over year and the CEO said “demand remains stable.”

Cisco expects fiscal Q3 adjusted EPS of $0.96 to $0.98 and 11% to 13% revenue growth. 

That topped analysts’ outlook for adjusted EPS of $0.89 and 6% revenue growth to $13.58 billion. 

The company also lifted its 2023 guidance, now expecting $3.73 to $3.78 in adjusted EPS and 9$ to 10.5% revenue growth.  

In Case You Missed It

  • Homebuilder sentiment improved by the largest amount in more than a decade this month. The National Association of Homebuilders’ sentiment index jumped 7 points to 42. That was better than expectations for 37. Anything below 50 is still considered negative but it's the highest reading since September and largest monthly gain since June 2013. Sentiment about current sales conditions rose 6 points to 46, 6-month sales expectations jumped 11 points to 48, and buyer traffic improved by 6 points to 29. Builders are feeling more confident about the market as buyer demand picks up heading into spring.

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