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Kuby’s Commentary

Market Shakes off the Bears

Feb 12, 2024

Upside Surprise

On Friday, market participants received further encouraging data on inflation after the U.S. Bureau of Labor Statistics released its annual revisions to the Consumer Price Index (CPI). The report showed that core consumer prices rose 0.2% in December versus 0.3% originally reported. Easing inflation data, a resilient economy, and a solid earnings season so far have sparked this year’s market rally, which has seen the major averages tallying their fifth straight weekly gains. The S&P added 1.4% to close over 5000, the Nasdaq Composite jumped 2.3%, while small caps joined the party, with the Russell 2000 up 2.4%. The yield on both the 2-year and 10-year Treasury jumped 16 basis points to 4.60% and 4.19%, respectively.

Earnings season continued to provide upside surprises, as the S&P 500 index is reporting higher earnings for the fourth quarter today relative to the end of last week and relative to the end of the quarter. The blended earnings growth rate for the fourth quarter is now 2.9%, compared to an earnings growth rate of 1.6% last week and an earnings growth rate of 1.5% at the end of the fourth quarter (December 31).

Positive earnings surprises reported by companies in multiple sectors (led by the Financials and Industrials sectors) were the largest contributors to the increase in overall earnings for the index during the past week. Earnings growth is expected to accelerate in 2024 from 4% in the first quarter to double digits as the year progresses.

There was some softness in trading early in the week triggered by troubles at New York Community Bancorp (NYCB). Whereas we recognize the stress in the office segment of commercial real estate, particularly in New York City and San Francisco, and we are carefully listening for cracks in the multifamily segment where rents are softening, we believe most banks are in sound financial condition, and that NYCB has company-specific issues. Eric Kuby was quoted on this matter in Reuters last week.

The University of Chicago Maroons suffered a heartbreaking loss in Rochester Friday night, losing to the Yellowjackets 76-74. On Sunday in Atlanta, the Maroons fell to the Emory Eagles in another nail-biter.

No heartbreak for Taylor Swift, as Travis and the Chiefs won the Super Bowl in overtime. The 49ers, sadly, will have to “shake it off.”

Timing, Odds, & Scope

Earnings season will wind down with 62 S&P 500 companies scheduled to report results for the fourth quarter.

Inflation data will be once again in focus, with the consumer price index and producer price index reports due out. Other economic releases include the retail sales report, the Philadelphia Fed Index update, the Industrial Production report, and the latest University of Michigan consumer sentiment survey. Another round of not-too-hot and not-too-cold “Goldilocks” numbers could keep the bears at bay and the stock market rally rolling. If the data increases the timing, odds, and scope of interest rate cuts, then small caps should benefit disproportionally.

The stocks mentioned above may be holdings in our mutual funds. For more information, please visit

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