THE WELL-TH NOTES

By 213 Strategic Partners on March 1, 2024

Weekly data-driven insights on the markets and economy

Fourth Week of February 2024

Earnings Beat. On Tuesday, the S&P 500 and Nasdaq rose 0.1% and 0.4%, respectively, while the Dow fell 0.3%. Macy’s shares rose 3.7% after announcing it would close around 150 struggling stores to recover from the prior quarter’s revenue miss. Lowe’s gained 1.5%, Zoom rose 6.8% and Him & Hers Health rose 42.8% after beating earnings expectations. Investors are looking ahead to the key inflation data to be released this week.[i]

Confidence Down, Yields Up. After a drop in durable goods orders and decline in consumer confidence, Treasury yields inched higher on Tuesday. The 10-year rose 1 bp to 4.3%, and the 2-year declined nearly 2 bps to 4.7%. The latest consumer confidence numbers dropped on concerns over a potential labor market slowdown and turbulent political climate. The Consumer Confidence Index declined to 106.7, lower than the downwardly revised 110.9 in January.[ii]

Peek at PCE. Economists expect the inflation report released Thursday to confirm that January was a setback in lowering inflation to the 2% target. The Fed’s preferred measure of inflation, Personal Consumption Expenditures, likely suggests that inflation rose 0.3% in the month of January, up from the 0.2% increase in December. Core inflation is expected to have risen 0.4%, double the 0.2% increase in December. If these predictions are correct, it would prove inflation is more stubborn than the Fed anticipated.[iii]

Murky Waters. Oil prices rose Tuesday amid uncertainty about the prospects for a cease-fire in the Israel-Hamas war. Some investors expect OPEC+ will extend its production cuts beyond March. The West Texas Intermediate contract for April rose $1.29, or 1.66%, to $78.87 a barrel. Brent April futures rose $1.12, or 1.36%, to $83.65 a barrel.[iv]

Bitcoin Course Correction. Bitcoin surged to a 2-year high on Tuesday, up 250% after crashing to lows in late 2022. Ethereum, XRP and the rest of the big crypto names have surged with it, pushing the crypto market over $2 trillion. Bitcoin was last up 4.7% at $57,232, while ether reached as high as $3,290 (its highest since April 2022).[v] A Fidelity analyst says bitcoin price is braced for a further $500 billion market capitalization increase and JPMorgan issues a shock crypto course correction.[vi]

Stay the Course. Fidelity has reported that retirement 401(k) account balances bounced back in 2023 to the highest level in nearly two years. The number of 401(k) millionaires grew 11.5% in 2023. The average 401(k) balance ended 2023 up 14% from a year earlier to $118,600. The average individual retirement account balance gained 12% year over year to $116,600 in the fourth quarter of 2023.[vii]

Healthcare Cybersecurity Check. Hackers working for the ‘Blackcat’ ransomware gang are behind the outage at UnitedHealth’s technology unit that has affected prescription deliveries for 6 days. A number of pharmacy chains, including CVS Health and Walgreens, have said the outage had indirect effects on their businesses. Hackers gained access to Change Healthcare’s information technology systems and have disrupted pharmacies across the United States. This issue is ongoing as of Monday.[viii]

With this growing trend of cybercrimes targeting healthcare institutions, the Ann & Robert H. Lurie Children’s Hospital of Chicago has also found itself affected by a separate cyberattack. The group is seeking a $3.4 million ransom while the hospital staff has been forced to resort to manual processes to provide patient care.[ix]

Stay Cool. Monday saw over 73 daily record temperatures set or tied and at least 5 monthly records set. Some of the cities that saw their hottest February day on record include Omaha (80 degrees), Des Moines (78 degrees), Minneapolis (65 degrees) and Abilene, Texas (94 degrees). Over 100 locations in more than 20 states were forecast to break records for the warmest low temperature on February 27.[x]

[i] Hakyung, Kim and Alex Harring, “Dow slides 100 points Tuesday as rally to record highs cools: Live updates,” CNBC, February 27, 2024, https://www.cnbc.com/2024/02/26/stock-market-today-live-updates.html. Accessed February 27, 2024.

[ii] Hakyung, Kim and Sophie Kinderlin, “U.S. Treasury yields inch higher as key inflation report looms,” CNBC, February 27, 2024, https://www.cnbc.com/2024/02/27/us-treasury-yields-investors-assess-the-state-of-the-economy.html. Accessed February 27, 2024.

[iii] Hyatt, Diccon, “What To Expect From the Fed’s Preferred Measure of Inflation This Week,” Investopedia, February 27, 2024, https://www.investopedia.com/pce-inflation-january-2024-preview-8600630. Accessed February 28, 2024.

[iv] Kimball, Spencer, “Oil prices rise as market monitors Gaza cease-fire talks, OPEC production cuts,” CNBC, February 27, 2024, https://www.cnbc.com/2024/02/27/crude-oil-prices-today.html. Accessed February 28, 2024.

[v] Lang, Hannah and Amanda Cooper, “Bitcoin scorches past $57,000 as big buyers flock in,” Reuters, February 27, 2024, https://www.reuters.com/technology/bitcoin-breaks-57000-big-buyers-circle-2024-02-27/. Accessed February 28, 2024.

[vi] Bambrough, Billy, “Fidelity Exec Suddenly Issues Huge $1.5 Trillion Prediction As ‘Parabolic’ Bitcoin Price Surge Boosts Ethereum, XRP And Crypto,” Forbes, February 26, 2024, https://www.forbes.com/sites/digital-assets/2024/02/26/fidelity-suddenly-issues-huge-15-trillion-prediction-as-parabolic-bitcoin-price-surge-boosts-ethereum-xrp-and-crypto/?sh=15fdde019b5f. Accessed February 28, 2024.

[vii] Dickler, Jessica, “401(k) millionaire ranks grew 11.5% in 2023. They are ‘poster children for staying the course,’ expert says,” CNBC, February 27, 2024, https://www.cnbc.com/2024/02/27/401k-millionaires-and-average-balances-rose-in-2023-fidelity-says.html. Accessed February 28, 2024.

[viii] Satter, Raphael and Christopher Bing, “US pharmacy outage triggered by ‘Blackcat’ ransomware at UnitedHealth unit, sources say,” Reuters, February 26, 2024, https://www.reuters.com/technology/cybersecurity/cyber-security-outage-change-healthcare-continues-sixth-straight-day-2024-02-26/. Accessed February 28, 2024.

[ix] Martin, Alexander, “Ransomware gang seeks $3.4 million after attacking children’s hospital,” The Record, February 27, 2024, https://therecord.media/lurie-childrens-hospital-chicago-ransomware-rhysida. Accessed February 28, 2024.

[x] Speck, Emily and Chris Oberholtz, “Soaring temperatures could shatter over 300 records to close out February,” Yahoo!News, February 27, 2024, https://news.yahoo.com/soaring-temperatures-could-shatter-over-171755382.html. Accessed February 28, 2024.