MARKET WRAP

Equities and bonds both reacted to today’s hotter-than-expected PPI—but not in the way you might expect. Traders found enough silver linings in the details to anticipate a cooler PCE print in the coming weeks. The S&P 500 closed up +1.04%, the Nasdaq 100 gained +1.43%, and the Russell 2000 rose 1.10%. Meanwhile, the 10-year yield dropped back to 4.53%, essentially erasing yesterday’s CPI-driven move higher. The VIX is now hovering around 15 and could be setting stocks up for a slow grind higher to new highs should the news cycle stay out of the way. On today’s MRKT Call, we break down how inflation, tariffs, and geopolitical developments could impact the SPX’s current flag formation. And on the RiskReversal podcast, Rick Heitzmann of FirstMark Capital joins to discuss AI, CapEx trends in public and private markets, and much more. Enjoy!

MRKT MATRIX: February 13, 2025

Today’s Top Stories:

• Dow jumps as Trump holds off on new tariffs, Nvidia rallies (CNBC)

• Trump Moves to Impose Reciprocal Tariffs as Soon as April (Bloomberg)

• Don’t expect a 20% S&P 500 three-peat this year, Wells Fargo says (CNBC)

• Meta’s AI May Not Be as Good for Ad Growth as Investors Think (The Information)

• Apple’s Stock-Market Performance Is Increasingly Made in China (Bloomberg)

• State Dept. Plans $400 Million Purchase of Armored Tesla Cybertrucks (NYT)

• Musk Says xAI’s ‘Scary Smart’ Next Model Chatbot Coming in Weeks (Bloomberg)

• Musk Says He Will Pull Bid if OpenAI Remains a Nonprofit (WSJ)

• Baidu Plans to Make Its AI Chatbot Free (WSJ)

• DeepSeek gives China’s chipmakers leg up in race for cheaper AI (Reuters)

• As Buyers Fail to Show Up, More Homes Are Being Pulled From Sale (WSJ)

Today’s MRKT Call is Presented by CME Group

What’s Moving Macro: Tariffs, Inflation & Ukraine

Today’s MRKT Call kicks off with a dive into the market’s reaction to CPI and PPI. Guy highlights the concerning inflation data, even as traders look for reasons to anticipate a cooler PCE print in two weeks. From there, the conversation shifts to the situation in Ukraine and the recent tariff headlines, noting how markets have shown diminishing volatility in response to geopolitical news. Next, the S&P e-minis, discussing the flag pattern forming and what catalysts could spark a breakout or breakdown. The Nasdaq e-minis follow, with a look at how mega-cap tech stocks—many of which have been sluggish in 2025—are influencing the index. The discussion then moves to the U.S. 10-year yield’s moves over the past two days, along with TLT’s action relative to Fed Funds Futures. From there, it's a quick tour through the dollar, gold, and Bitcoin. The Call of the Day features DELL, while the Chart of the Day pits Applovin against Trade Desk—complete with “one dog goes one way, the other dog goes the other way.” To wrap up, audience questions about INTC and PEP.

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Today’s RiskReversal Podcast is Presented by Betterment and RBC

Why 2025 is the Year of Generative AI Adoption and Innovation

Dan Nathan and Rick Heitzmann, Founder and CEO of FirstMark Capital, discuss the latest trends in generative AI, CapEx spending in public and private markets, and market cap accrual. They delve into the impact of these trends on companies like Microsoft, Google, Amazon, NVIDIA, and Meta, emphasizing the role of open-source models and competitive pressures. They also explore the IPO backlog, the strategic importance of going public, and the implications for both startups and incumbents. Concluding with the current state of strategic M&A, they provide insights into the evolving regulatory landscape and its potential impact on future deals.

What’s Next?

Another day, another hotter-than-expected inflation print. But unlike yesterday, when traders shrugged off the hot CPI as a possible seasonal peak, today’s hot PPI gave them just enough in the details to start anticipating a lower-than-expected upcoming PCE (the Fed's preferred inflation gauge and a point about PPI/PCE that Powell made in yesterday’s testimony).

Another thing that made today’s action a bit different was how equities and yields moved in sync and actually stayed that way. Yesterday, we saw equities drop and yields spike on the CPI release, only for dip-buyers to step in and nearly push stocks into the green. Today, yields reversed lower, equities popped, and both held steady. The end result? Yields are right back where they were going into CPI, and equities are now slightly higher.

It’s classic “climb a wall of worry” behavior—something this market has consistently shown over the past few weeks. That said, one thing remains unchanged: the market’s inability to break to new highs. We’ve seen cautious optimism persist, with headlines that haven’t been enough to push the SPX back below 6000, but every time we get close to the prior highs, there’s been some news to knock it back down. We’ll see if this time is any different.

Looking ahead, traders aren’t expecting much volatility until the end of the month, with NVDA earnings (Jan 26) and PCE (Jan 28) on deck. If stocks keep grinding higher into the long weekend, we could see the VIX slip below 15 and the SPX press up against those previous highs. Until then, low-volatility, slow-grind days might remain the default—unless, of course, new tariff or geopolitical headlines hit the tape. One last reminder, there is significant overhead supply at the 6160-ish level in SPX so pencil that in as an additional potential resistance level term should equities make a new high.

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