U.S. equity markets are rebounding from losses earlier in the week on easing geopolitical tensions in Eastern Europe after Russia’s Ministry of Defense announced it was scaling back forces along the Ukraine border. The Dow, S&P 500, and Nasdaq are all higher.
- Russia’s Ministry of Defense announced it was scaling back forces along the Ukraine border and stocks rose globally.
- Crude oil prices fell from recent highs, and energy companies also slumped.
- Uncertainty remains as Russian military maneuvers continued, and bond yields rose further.
Shares of Carnival Corp. (CCL), Norwegian Cruise Line Holdings Ltd. (NCLH), Delta Airlines Inc. (DAL), and other travel-related companies are among the S&P 500's leading stocks, gaining as pandemic-related restrictions ease. Shares of Restaurant Brands International Inc. (QSR) are also climbing 3.6% on its better-than-expected results (more below).
Inflation Expectations vs. Reality
Yesterday, the Federal Reserve Bank of New York reported that consumers’ short-term and medium-term inflation expectations declined last month, as those surveyed by the Federal Reserve Bank of New York grew more optimistic.
However, a report from the Bureau of Labor Statistics also showed wholesale inflation surged higher than economists expected in January, with producers likely to pass those higher costs on to consumers (more below).
Bond yields are rising, with the yield on the 10-year Treasury note climbing above 2%.
Most major cryptocurrencies are trading higher, with the price of Bitcoin rising over 3.4%, now above $44,000. The price of Ether is climbing 5.3%, near $3,100.
Quick Hits: Editor's Picks
Chart of the Day: Pumped Producer Prices
Consumers weren't the only ones paying higher prices in January, as inflation also hit businesses harder than expected, according to the Bureau of Labor Statistics' latest report on wholesale inflation.
The Producer Price Index (PPI) rose 1% in January, and 9.7% from last year. Both rates were significantly higher than economists had anticipated, though the annual rate was slightly lower than the 9.8% 12-month gain in December.
The report captures inflation for U.S. producers, and with companies passing on inflation costs by raising prices, the rise could be a sign of more price increases to come for consumers.
Stock of the Day: Restaurant Brands International (QSR)
Surging online sales helped the owner of Burger King to better-than-expected earnings and revenue in the fourth quarter. Restaurant Brands International reported revenue rose 13.8% to $1.55 billion, with earnings per share of $0.74. Both were more than analysts’ forecasts.
The company said for the full year, digital sales soared to $10 billion from $6 billion in 2020, making up 30% of global system-wide sales.
In the quarter, Burger King same-store sales were up 11.3%, as its restaurants faced fewer closures because of COVID-19, and an increase in the number of locations. Same-store sales at Tim Hortons rose 10.3%, missing estimates as stricter COVID-19 restrictions in its main market of Canada limited growth. Restaurant Brands also purchased the Firehouse Subs chain in mid-December, and over the two-week period same-store sales were up 14.7%.
Shares of Restaurant Brands International are climbing 3.6% today, though they're 2.5% lower in 2022.