Market Analysis for February 17, 2025

Current Market Summary

As we approach the market open, stocks are looking to rebound following a tumultuous week influenced by geopolitical tensions and a mixed batch of economic indicators. The S&P 500 closed down 1.5% last week, primarily due to fears surrounding escalating tensions between Russia and Ukraine and its potential impact on the global economy.

Key Events Impacting the Market

1. Geopolitical Tensions: Renewed concerns regarding the Ukraine conflict are weighing heavily on market sentiment. Investors are worried about the potential for increased sanctions against Russia and how this might affect energy prices.
2. Inflation Data: Last week’s CPI report indicated that inflation remains sticky, with prices rising just 0.3% month-over-month and an annual rate of 5.2%. This has led to speculation surrounding the Federal Reserve’s next moves on interest rates.
3. Corporate Earnings: Several major corporations are set to release their Q4 2024 earnings reports next week, including Tech giants like Apple and Microsoft. Analysts are expecting mixed results, particularly from sectors heavily affected by inflation.

Upcoming Events to Watch

• Federal Reserve Meeting: Investors will be looking forward to the Federal Reserve’s comments on interest rates and inflation following their two-day meeting on February 21-22.
• Economic Indicators: Next week’s release of leading economic indicators (LEI) and PMI Manufacturing data will provide insight into the economic outlook and potential Fed responses.

Stock Picks

• Buy Recommendations:

• Vanguard S&P 500 ETF (VOO): A long-term hold given its diversified exposure and historical resilience.

• NVIDIA Corporation (NVDA): With the continued growth in AI and cloud computing, NVIDIA’s stock is poised for upside.

• Sell Recommendations:

• Exxon Mobil Corporation (XOM): Given the geopolitical tensions impacting oil prices and potential fluctuations in demand, it may be prudent to take profits.

• Zoom Video Communications, Inc. (ZM): As hybrid work models evolve and competition increases, Zoom’s growth has tempered. Consider reallocating to more robust sectors.

Conclusion

As we head into next week, market participants will be closely monitoring developments regarding inflation and the geopolitical landscape. A cautious approach is recommended for investors in the current climate, emphasizing quality and resilience in stock selection.