S&P 500 Hits Record High Amidst Inflation Data

Key Highlights:

* S&P 500 (^GSPC) reaches a record high as inflation data indicates positive outlook for Federal Reserve rate cuts.
* Nasdaq Composite (^IXIC) gains over 2.5%, S&P 500 adds 1.5%, Dow Jones Industrial Average (^DJI) rises 0.5%.
* Quiet economic news week ahead, with focus on Federal Reserve meeting minutes.
* Alibaba (BABA) and Walmart (WMT) headline earnings reports during shortened trading week.
* Number of companies outperforming S&P 500 rises to 48%, indicating broader market participation.

Inflation Data and Federal Reserve Expectations:

* Inflation data suggests possible slowdown in price increases, potentially leading to fewer rate cuts in 2025.
* Market prices in one or two interest rate cuts from the Fed, with economists speculating on a more dovish stance.
* Investors await minutes from the Fed's January meeting for insights into its plans.

Broader Market Rally:

* S&P 500 near record high, driven by a wider range of stocks.
* Only Meta (META) and Amazon (AMZN) among "Magnificent Seven" tech stocks outperforming the index.
* Participation of companies exceeding the index's gain surges to 48%.

AI Trade Continues:

* AI euphoria remains strong, with Palantir (PLTR) and Super Micro Computer (SMCI) leading the S&P 500.
* Aggressive moves in other AI stocks follow Nvidia's equity holdings disclosure.

Economic Calendar:

Monday:

* Markets closed for Presidents' Day

Tuesday:

* Empire Manufacturing (-1 expected)
* NAHB Housing Market Index (47 expected)
* Earnings: Devon Energy (DVN), Oxy (OXY), Toll Brothers (TOL)

Wednesday:

* MBA Mortgage Applications (2.3% prior)
* Housing Starts (-7% expected)
* Building Permits (-2.3% expected)
* FOMC Meeting Minutes
* Earnings: Carvana (CVNA), Cheesecake Factory (CAKE), Etsy (ETSY), Garmin (GRMN), Toast (TOST), Wingstop (WING)

Thursday:

* Initial Jobless Claims (213,000 prior)
* Philadelphia Fed Business Outlook (25.4 expected)
* Leading Index (0% expected)
* Earnings: Alibaba Group (BABA), Walmart (WMT), Block (XYZ), Booking Holdings (BKNG), Rivian (RIVN), Shake Shack (SHAK), Unity (U), Texas Roadhouse (TXRH), Dropbox (DBX)

Friday:

* S&P Global US Manufacturing (51.2 prior)
* S&P Global US Services PMI (52.9 prior)
* S&P Global US Composite PMI (52.7 prior)
* University of Michigan Sentiment (68.7 prior)
* No notable earnings releases