U.S. stock futures took a breather on Monday after capping a dizzying week at record highs, as investors braced for a looming inflation update that could test this rally.
Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) futures hovered below the flatline after hitting new closing highs. Nasdaq 100 (^NDX) contracts were also little changed after an excellent week for technology stocks.
New inflation data in the coming days will test the staying power of the breakout rally that followed Nvidia's (NVDA) results. A hotter-than-expected CPI report spooked the market and sparked a stock sell-off in early February, and investors are already weighing the chances of a surprise in the PCE index reading on Thursday.
Because the PCE index is the Federal Reserve's preferred measure of inflation, it will factor into the ongoing debate over the timing of a rate cut, which has already been postponed.
Read more: What the Fed's rate decision means for bank accounts, CDs, loans and credit cards
The inflation report is the highlight of this week's data, with consumer and manufacturing temperature checks also on board. What they say about the health of the U.S. economy could determine whether bullish sentiment in stocks continues.
Berkshire Hathaway (BRK-B) neared a market value of $1 trillion after the Warren Buffett-led company posted a record annual profit for the second straight year. In his annual letter to shareholders over the weekend, Buffett said Berkshire was “built to last” and acknowledged the role played by his right-hand man Charlie Munger.
Elsewhere in corporate results, shares of Domino's Pizza (DPZ) rose premarket after the company raised its dividend and beat fourth-quarter revenue estimates.
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Monday, February 26, 2024 at 1:30 p.m. GMTThe stunning statistics of a broad market rally
Driven by the excitement around AI stocks, the broader market continues to see some impressive successes.
Deutsche Bank's research team put some numbers behind all this before the opening bell today, and it's nothing short of astonishing:
The S&P 500 has now risen in 15 of the last 17 weeks. This has only happened once in the last 50 years, in 1989.
If the S&P 500 ends positive again this week, that would be 16 of 18 positive weeks. The last time this happened was in 1971, shortly before the end of the Bretton Woods system. Achieving 16 out of 18 positive weeks would also be a joint record since the index's inception, says Deutsche Bank.
The earnings lead Deutsche Bank to highlight some areas where the market rally appears vulnerable.
One in particular caught my attention before we hear from numerous Fed speakers this week and receive important information on the PCE index.
“Persistent inflation could be a problem for markets as it would mean central banks would have to keep interest rates high for longer. When the US CPI report for January actually showed an upward surprise, it caused the S&P 500 to fall -1.37% on the day “So that's a theme that markets are still sensitive to,” says Deutsche Bank strategist Henry Allen.
- Monday 26 February 2024 at 12:30 GMT
Important quotes from Buffett's annual letter
Berkshire Hathaway (BRK-B) was valued at $435 premarket and saw earnings rise 5% post-market. Berkshire Hathaway (BRK-B) finds itself on Yahoo Finance's trending ticker page. The company will approach $1 trillion in market capitalization for the first time after closing at $905 billion on Friday.
That makes sense to me.
Buffett is cleaning up his groundbreaking investments in Japan, collecting tons of dividends from Coca-Coca (KO) and American Express (AXP), and has a record $167.6 billion in cash. Of course, Buffett has struck a cautious tone toward anyone investing in the rail sector (citing strict regulations and the intensive capital investment required), and to a lesser extent those operating in the energy sector.
But for me, this was one of Buffett's best annual letters in a decade because he shared sage investing wisdom to a world currently fascinated by AI stocks like Nvidia (NVDA).
A few Buffett memories to start the week:
“Our goal at Berkshire is simple: we want to own all or part of it Enjoy good economies that are fundamental and lasting.”
“At Berkshire, especially us Favor the rare company that can deploy additional capital with a high return in the future. Owning just one of these companies – and just waiting – can lead to almost untold wealth.”
“Although the stock market is enormously larger than it was in our early years, Today's active participants are neither more emotionally stable nor better educated than when I was in school. For whatever reason, the markets today are far more casino-like than they were when I was young. The casino can now be found in many houses and attracts its residents every day.”
“An investment rule at Berkshire has not changed and will not change: Never risk permanent loss of capital.”
“We didn’t predict the timing of an economic paralysis, but we did were always prepared for you.”
Monday, February 26, 2024 at 1:30 p.m. GMT