Clothing Giants Lead Market Surge as Earnings Season Kicks Off and Bitcoin Booms
Clothing Giants Lead Market Surge as Earnings Season Kicks Off and Bitcoin Booms
By:JJ Kinahan
Investors await Powell's Testimony and jobs data amid uncertainty over a possible cut in interest rates
- The retail sector is surging buoyed by strong earnings as investors eye clothing retailers' quarterly performance.
- Bitcoin is climbing, benefiting from stretched equity valuations as investors seek alternative assets.
- Economic focus is intensifying with Powell's testimony, jobs data and limited expectations for a March interest rate cut.
Stocks kicked off March with a strong start, as the S&P 500 rose by nearly 1% and the Nasdaq Composite climbed over 1%. The day's gains were led by familiar names, with Nvidia (NVDA) up 3.7%, Advanced Micro Devices (AMD) rising 5%, and Super Micro Computer (SMCI) gaining 4.6%.
Advancing issues outnumbered decliners, with options volume notably robust, exceeding its recent average by 20% according to the Cboe. This week promises more earnings reports with those from clothing retailers arousing particular interest. There will also be a slew of economic data to digest.
Target (TGT) is set to report earnings before the market opens tomorrow, followed by Nordstrom (JWN) after the close. Abercrombie and Fitch (ANF) will report on Wednesday morning, and Gap (GPS) and Costco (COST) will announce earnings after Thursday's market close.
The clothing sector's performance is of particular interest, given the significant gains witnessed in stocks like Nordstrom, which has surged around 50% since November. Abercrombie's substantial growth, with shares more than quadrupling since last year, reflects broader strength in the retail market, often overlooked amid headlines dominated by AI, bitcoin and concern about inflation.
Macy's (M) is attracting attention as Arkhouse Management and Brigade Capital Management raise their bid to acquire the company, offering $24 per share, up from $21, valuing Macy's at $6.6 billion. Additionally, Deckers Outdoor Corp. (DECK) and Super Micro Computer, Inc. are set to join the S&P 500, underscoring ongoing index reshufflings.
On the economic front, Federal Reserve Chair Jerome Powell's testimony before Congress, along with the JOLT (Job Openings and Labor Turnover Survey) report on job openings and the February employment report, will be closely watched. Market expectations for a rate cut in March are minimal, with a mere 26% probability, rising slightly to 70% for June, according to the CME Group.
Meanwhile, Bitcoin (BTC) continues to make waves, trading above $65,000 in premarket trading. The cryptocurrency's ascent is seen as a reflection of stretched equity valuations, with fund managers seeking alternative investment avenues amid limited choices. Consequently, a pullback in bitcoin prices may hinge on a corresponding downturn in equities.
As investors navigate market dynamics, adherence to long-term investment strategies remains paramount. Despite the noise surrounding headline-grabbing assets like bitcoin, prudent decision-making aligned with individual financial objectives is essential.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
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