A softer inflation read in the January CPI gave equities an early boost and pushed yields lower today. The CPI increased +0.2% vs. +0.3% estimated and +2.4% YoY vs. +2.5% expected with the core-CPI in line. Yields ticked lower with the rate on the 10-year treasury falling to 4.055% after starting the week at 4.241%. Earnings were mixed with Applied Materials (AMAT), Arista Networks (ANET) and Airbnb (ABNB) beating estimates, while Expedia (EXPE), and Pinterest (PIN) dropped after disappointing. The major averages rallied into the afternoon with every sector green but rolled over late on comments from the Fed's Goolsbee saying he doesn't know how restrictive Fed policy is as Services inflation is not tame in the CPI and he needs to see more progress in inflation before calling for rate cuts. The major averages were able to bounce off their lows late led by strength in Utilities (XLU), jumping +2.76% and a new high, followed by REITs (XLRE), Healthcare (XLV) and Materials (XLB). Financial (XLF) and Communication Services (XLC) were the weak links. The DJIA recovered late to close with a 48.95-point (+0.10%) gain at 49500.93, while the S&P 500 tacked on 3.41 points (+0.05%) and settled at 6836.17. The NASDAQ was down for a fourth consecutive session losing 50.48 points (-0.22%) and closing at 22546.67. The lower yields helped the small cap Russell 2000 gain +1.18%.

Breadth was positive with advancing issues beating declining issues 2.7:1 on the NYSE and 1.9:1 on the NASDAQ. Advancing volume was 64% on the NYSE and 68% of the NASDAQ. The VIX eased 0.22 (-1.06%) and closed at 20.60. Crude oil prices slipped 0.22 (-0.35%) and the March contract closed at $62.63 a barrel. Gold prices jumped $102.50 (+2.07%) and finished at $5054.70 an ounce. Bitcoin (BTC) closed the session at $68,950.

It was a mixed market this week that ended with the different indexes mostly lower. The rotation out of technology shares left the NASDAQ down for a fifth consecutive week and the S&P 500 lower for a second straight week. The market sectors finished mixed with defensive groups powering ahead with Utilities (XLU) surging +7.27% followed by strength in REITs (XLRE), Materials (XLB), Energy (XLE) and Consumer Staples (XLP). Financial (XLF) was the weakest sector down -4.81% seeing a selloff on perceived disruption from AI to wealth management firms. The NYSE is closed on Monday for President's Day, but we'll get another round of earnings and economic data from manufacturing and housing.

Earnings releases to watch for on Tuesday include: Leidos Holdings (LDOS), Medtronic (MDT), LGI Homes (LGIH), Builders First Source (BLDR), Vulcan Materials (VMC), Celanese (CE), FirstEnergy (FE), Devon Energy (DVN) and Toll Brothers (TOL).

Tuesday's Market Moving Economic Calendar: Retail Sales, Business Inventories and Housing Market Index.

Don't forget to read the MarketEdge Weekly to get a deeper review of what happened this week and what the market looks like going forward.

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