Stock Market Analysis for February 21, 2025

As we approach the market opening for February 21, 2025, we reflect on significant events that shaped the previous week and analyze trends for the upcoming days.

Key Events Impacting the Market Last Week

1. Federal Reserve Meeting: The Fed held its policy meeting on February 13, where it announced an interest rate hike of 25 basis points. This continues their fight against inflation, which remains stubbornly over the 3% target. The tone was cautiously optimistic, suggesting further hikes could occur quarterly if inflation persists.

2. Earnings Reports: Several major companies reported their Q4 earnings last week. Notably, tech giants like Apple and Microsoft exceeded earnings expectations, which helped lift tech stocks by 2% overall. However, concerns over supply chain disruptions due to geopolitical tensions in Eastern Europe were noted.

3. Economic Data Releases: Positive labor market indicators were released, showing unemployment at a historic low of 3.5% but coupled with higher consumer prices, leading to mixed reactions from investors. The Consumer Price Index (CPI) data indicated a 0.4% month-over-month increase in January.

Predictions for the Coming Week

Looking ahead, analysts anticipate this week’s market volatility, especially with upcoming economic indicators like the February Non-Farm Payroll data due on February 23rd. A strong labor report could lead to further rate hike speculation, while a weaker report might provide relief to the market.

Recommendations

• Buy:

• SPDR S&P 500 ETF Trust (SPY): Given the overall bullish sentiment from the recent earnings reports, SPY presents a good long-term investment opportunity.

• NVIDIA Corporation (NVDA): With strong growth prospects in AI and gaming, NVDA could outperform, especially as tech continues to rebound.

• Sell:

• General Electric (GE): GE’s recent earnings missed expectations, and ongoing supply chain issues could further pressure profit margins.

• Energy Select Sector SPDR Fund (XLE): Speculative pressure in crude oil markets driven by geopolitical tensions may impact energy stocks negatively.

Major News of the Day

As of today, the major headlines include:

• Oil prices continue their downward trend due to increased U.S. production levels.
• A Senate committee is scheduled to hold a hearing on the ongoing investigations into the tech sector’s anti-competitive practices.

In conclusion, while the market showed resilience last week, vigilance towards upcoming economic data—particularly around employment—will be critical in shaping investors’ strategies as we move forward.