Stock Market Week February 10 – What to Expect
This article offers a strategic analysis for the stock market week of February 10. With these powerful insights, I aim to equip my investment community with actionable trading strategies tailored to today’s dynamic economic landscape. What to expect? Powerful Insights.
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Key Points
Tariff Dynamics Continue to Influence Stock Market Performance
The ongoing tariff situation is set to impact the stock market this week. Let’s revisit the current landscape concerning tariffs on imports from Canada, Mexico, and China.
Last week, the United States and Canada agreed to defer the implementation of tariffs until March 4, 2025. The proposed tariffs include a 25% ad valorem duty on all goods, excluding energy and energy resources, which will face a 10% ad valorem duty. Similarly, tariffs on Mexican imports have been postponed until March 4, 2025, with a rate of 25% ad valorem on all goods.
The United States imposed a 10% ad valorem tariff on all Chinese imports starting February 4, 2025. In retaliation, China has enacted its tariffs, including a 15% duty on U.S. coal and LNG and a 10% tariff on other products such as crude oil and agricultural machinery.
The delay of tariffs on Canadian and Mexican goods contributed to a positive stock market response. The S&P 500 concluded the previous week with a gain of 0.94%, the Nasdaq 100 Index also rose by 0.94%, and the Russell 2000 jumped by 2.03% over the past five trading days. Meanwhile, the Dow Jones Industrial Average Index remained nearly unchanged, with a slight increase of 0.08%.
Despite temporary reprieves in tariff application, the market anticipates continued high volatility. Tariffs on China are expected to persist long-term, fueling inflation concerns. These factors will maintain the stock market’s heightened vulnerability.
Analyzing Bearish Patterns in the iShares Russell 2000 ETF
Bearish trends are evident upon examining the iShares Russell 2000 ETF’s daily technical charts. In the past week, selling volume has notably increased, climbing from an average of 188.35 million shares to 191.16 million shares. The performance of small-cap stocks is expected to fluctuate within the range defined by the 50—and 100-day moving averages, influenced by macroeconomic data releases and announcements from former President Trump. Key resistance and support levels are identified at 229.0 and 225.2, respectively.
Understanding the Effects of U.S. Tariffs on China
The imposition of tariffs on Chinese goods is set to significantly affect consumer prices in the U.S. throughout Q2 2025 and into the latter half of the year. Here’s a detailed analysis of the anticipated outcomes:
Q2 2025 Insights
Implications for the Second Half of 2025
As of February 10, 2025, there is a significant likelihood of an increase in U.S. inflation. The Federal Reserve Bank of Cleveland’s most recent data highlights a rise in inflation expectations, with the 10-year anticipated inflation rate now at 2.43%. Nonetheless, the latest projections suggest that U.S. annual inflation could potentially reach 3.0% should additional tariffs be enforced.
Change Since January 1, 2025 On January 1, 2025: At the start of the year, inflation expectations were marginally lower, with predictive models estimating rates between 2.4% and 2.9%. As of now, the probability of inflation escalating has surged from 43% at the beginning of January 2025 to 92%.
Key Insights from Fed Chair Powell’s Upcoming Testimony
As the week unfolds, financial markets are poised for heightened activity, particularly around Federal Reserve Chair Jerome Powell’s much-anticipated testimony. While Monday is expected to be a calm trading day, anticipation is building for increased volatility on Tuesday and Wednesday.
On February 11, 2025, Chair Powell will present before the Senate Banking Committee, followed by his appearance before the House Financial Services Committee on February 12. This semiannual address is a pivotal component of the Federal Reserve’s obligation to report on monetary policy and economic conditions.
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Expectations from Powell’s Address:
Market Outlook: Key Economic Indicators and Investor Sentiment
Wednesday, February 12: Anticipation builds as the U.S. prepares to release Consumer Price Index (CPI) figures. Market analysts predict a slight uptick in Core CPI from 0.2% to 0.3% on a month-over-month basis for January 2025. Year-over-year CPI is expected to remain stable at 2.9%. Any unexpected inflationary pressures could trigger a stock market selloff.
Thursday, February 13: Attention shifts to U.S. initial jobless claims, forecasted to rise marginally from 219,000 to 221,000. Additionally, January’s Producer Price Index (PPI) data will be closely examined.
Friday, February 14: The focus will be on U.S. retail sales growth for January. No change is expected compared to the 0.4% month-over-month growth observed in December 2024.
Investor Sentiment Analysis:
Investor sentiment towards the U.S. economy and stock market remains mixed. The latest American Association of Individual Investors (AAII) Sentiment Survey reveals that approximately 33.33% of investors hold a bullish outlook, suggesting moderate optimism for stock price increases over the next six months.
CNN’s Fear & Greed Index reflects a balanced market sentiment. This index, which evaluates investor emotions using various indicators, recently reported a fear level of about 39% as of February 7.
Ki-Wealth Research highlights an increase in individual investor pessimism, with growing caution regarding the short-term stock market outlook. Our analysis incorporates a weighted combination of market sentiment factors, including the VIX (30-day volatility index), put-call ratio, stock market breadth, and fund flows.
The S&P 500 Index continues to exhibit a bullish trend, yet investors should pay particular attention to the 6,001.3 level, corresponding to the 50-day moving average. Should the Index fall below this threshold, it may decline further to the next support level at 5,905.7, aligning with the 100-day moving average. Given the prevailing uncertainty in the stock market, a cautious, observant approach is advisable. Maintaining liquidity is crucial, as cash should be strategically allocated during significant market downturns. Pursuing stocks that have recently reached new highs is not advisable, mainly if these stocks appear overvalued by market metrics.
The Nasdaq 100 Index might exhibit weakness due to recent cautious projections for 2025 from tech giants such as Alphabet, Amazon, and Microsoft. However, if the Index maintains the level of 22,074, it could indicate a sustained bullish trend. On the downside, investors should monitor the 21,278.9 level closely. Meanwhile, Nvidia stock may experience heightened trading activity, potentially rallying in the short term ahead of its earnings report scheduled for release after market close on February 26.
Earnings For The Week
Monday: MCD, MNDY, ON, ALAB, VRTX
Tuesday: SHOP, KO, HUM, BP, AN, SMCI, UPST, DASH, LYFT, FRSH, ET, GILD
Wednesday: VRT, CVS, GNRC, BIIB, TDDT, APP, HOOD. BROS, TTD, ALB, CSCO, ASPN
Thursday: DDOG, CROX, DE, CYBR, DUK, COIN, TWLO, DKNG, ABNB, PANW, ROKU, WYNN
Friday: MRNA, ENB