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Good morning. The US stock market closed today, Thursday, February 23rd. Today, the market was high at the open, but then the overall market sank into negative territory before rising again towards the close. There was a bit of volatility. Looking at the indices, the New York Dow was up 0.33%, the S&P 500 was up 0.53%, the NASDAQ was up 0.72%, and the Russell 2000 was up 0.71.
The strongest sector was technology, with NVDI's earnings announcement resulting in a significant rise of 14 for the first time in a while. Other sectors that were weak included energy and real estate. Sectors that were weak included utilities and communications. Looking at the foreign exchange, the dollar-yen briefly broke through 135,000 but then fell back down to 13,470.
Bitcoin was up 24,000. Energy prices are rising. It seems that demand may increase slightly due to decreasing inventories of gasoline and other fuels, with a barrel at $75 and $65. Looking at the heatmap, NVIDIA is up 14, and other stocks are rising along with it. GFAM, Microsoft, Apple, Amazon, and Tesla are also rising, although Google is down slightly.
Netflix is down 3.3, which I think is due to the announcement of price cuts worldwide. Looking at international yields, the 10th anniversary yield is 3.886, which is down a bit again. The 2nd anniversary yield is 4.61974. Looking at today's price movements, the blue area is the after-market after the market closed yesterday, and the slight rise here is due to NVIDIA's earnings announcement.
In the pre-market before the market opened today, it opened higher. It rose a bit after the market opened, but then dropped sharply. Tomorrow is the PC deflator and it's the weekend, so perhaps people are taking profits. However, it started rising sharply again around 2 AM Japan time. Ultimately, SPY is at 400, which is 4000 points on the S&P 500.
It's important that it doesn't fall below this level. I think it was a strong point that they were able to recover. Now, before we look at the news, on my channel I deliver breaking news videos every morning after the US stock market closes. I explain things carefully even for beginners in investing or those who don't know much about economics, so please subscribe to my channel, give me a thumbs up, and press the bell button, as it will motivate me.
Thank you. So, first up is NVIDIA. They announced their earnings after the market closed yesterday, and today their stock price has risen significantly by more than 10%. It has been traded as they exceeded market expectations. To briefly look at the details, EPS ( earnings per share) was 88C compared to the expected 81C, sales were 6.0 billion compared to the expected 6 billion, and sales for the next quarter are also 6.5 billion compared to the market expectation of 6.3 billion.
There was a strong view that the industry would be tough this year, but NBD has four pillars of business, and one of them is data centers. It has been traded that this has grown by 11% compared to the same month last year. I think so. Also, there was quite a lot of talk about AI during the earnings conference call.
They commented that AI will become a major factor in inflation, as exemplified by Microsoft's ChatGPT. They emphasized that NVIDIA chips will be necessary for that. Another thing about NVIDIA's business is gaming, and sales in this area have fallen considerably. This was the case for 2021 and 2022. However, I think the fact that it exceeded expectations was a strong point.
Now, regarding NVIDIA's price chart, the stock price rose today with a large trading volume. I think there is short covering and strong buying. However, one thing to be careful about is that in the past, after NVIDIA's earnings announcement, the stock price has risen initially, but then it has fallen considerably.
For example, last time, at the end of November, when the earnings announcement was made, the stock price rose for a few days before, but then it fell. Before that, in the latter half of August, the stock price rose initially, but then it fell. And also at the end of May. It did rise, but in the end it returned to its original position, and in the latter half of February, the stock also fell.
So today it has risen significantly by more than 10%, but as a reaction to that, the outlook for the entire industry is still uncertain for the year. Also, there is data that hedge funds have been increasing their holdings of NVIDIA stock recently, and as you can see in this graph, as of September 30, 2022, the holdings of hedge funds have increased, and they have increased again on December 31, 2022.
Looking at the movement of NVIDIA's stock price from September 30 and December 31 onwards, it seems that hedge funds started buying from around October, when NVIDIA's stock was at its lowest point, and it has been rising since January as well. It is possible that hedge funds bought even more at this time, and looking at the rise from October, individual investors may have NVIDIA has been swarming in, and once it has risen this high, there is a certain amount of profit-taking before the earnings announcement, or perhaps people are continuing to hold, but as a precaution they have hedged and taken a short position, and I think that the release of that hedge with the earnings announcement has caused short covering to work and the price has risen sharply.
Personally, I think the bottom will continue to be quite strong, although depending on the macroeconomic situation, there is a possibility that not only NVIDIA but also other reaction stocks and US stocks as a whole will be sold off, but if we do not consider that, then I think it will remain strong.
Also, yesterday I conducted a poll on my YouTube channel, and since NVIDIA's earnings were expected to exceed market expectations and start with a big rise, I asked everyone if they would buy NVIDIA or other reaction stocks. Among the answers, 4% said they would wait and see, which was the most common answer, 20% said they wanted to buy NVIDIA, 16% said they wanted to buy reaction stocks, and 24% said they would not touch reaction stocks this year.
1/4 of you are here, so let's add it up. It seems that most of my viewers are still waiting to see how things go and will not touch reaction stocks this year. So next, looking at today's economic indicators, first, at 10:30 Japan time, the revised real GDP figure was announced. The result was 2.7%, compared to the forecast of 3%, so GDP is a little weak.
Then, the revised PCE core deflator was released. The result was 4.3, compared to the forecast of 33.99%, so it's a strong number. The January PCE deflator will be announced tomorrow, and I think there may have been some position adjustments today in preparation for that. Looking at the comparison between the October-December period, inflation appears to be strengthening.
And then there's personal consumption. Looking at this compared to the previous period, the result was 1.4%, compared to the forecast of 2.1, so personal consumption is weak. The forecast for tomorrow's PCE deflator is 4.3, but if the result is stronger than that, the Fed will likely become more aggressive in raising interest rates, so I think volatility will increase.
Following this revised value, the stock market didn't move that much, but the exchange rate, the dollar-yen, did move. It moved in the direction of a weaker yen and stronger dollar, briefly breaking through 1305.30 yen, but in the end it came back down and has been steadily declining ever since, currently around 134.70 yen.
It has been getting bounced off the 135,000 level quite often in the last few days. What's attracting attention in the exchange rate is Governor Kuroda and the Bank of Japan's actions. Governor Kuroda made remarks at the G7 today. The Bank of Japan will continue its easing. He said that the current inflation is due to rising import prices and will soon peak, and that unless the pace of wage increases accelerates, inflation will remain below 2% in fiscal year 2024.
In other words, the reasons for inflation are completely different from those in Europe and the US. Prices in Japan have risen due to a weaker yen and stronger dollar, and soaring energy prices. However, if the yen continues to move in the direction of a stronger yen and weaker dollar, or energy If prices stabilize, and the Bank of Japan stops easing unless it achieves its 2% inflation target, I think the yen will appreciate to some extent.
However, Governor Kuroda does not intend to use that method. After Governor Kuroda retires in April, it will be interesting to see what methods the next governor takes. If they continue easing as Governor Kuroda did, I think the yen will continue to depreciate against the dollar. Attention is focused on personnel changes at the Bank of Japan, but personnel changes at the US Federal Reserve have also been attracting attention recently.
This is because current Fed Vice Chair Lael Brainard will retire from her position as Vice Chair as she is nominated to become the next chair of the National Economic Council (NEC). There are currently two strong candidates who have endorsed Brainard, and both of them are currently assisting Treasury Secretary Yellen.
It is possible that one of them will succeed Brainard. What is important is that the Vice Chair has voting rights, and Brainard has relatively Even among those considered dovish, the vote will change depending on whether they are endorsed as dovish or hawkish. For example, Senator Elizabeth Warren has been quite critical of Fed Chairman Powell, saying that interest rates should not be raised so rapidly, and therefore she wants a dovish person to be elected.
Also, there seems to be pressure from the White House and the Democrats to appoint a woman, a foreign national, or a Latino American. One of the two candidates has previously said that sustainable disinflation is impossible unless the wages of labor are eased, so if this person becomes vice president, it is thought that it will be a relatively high-flying move.
Fed appointments will continue to be something to watch. And next, Netflix's stock price fell today because it is cutting plan prices by up to 50%, and the targets are particularly low-income countries with relatively small subscriber numbers, such as Asia. This will also affect the 10 million subscribers in the US and the Middle East.
So why are they lowering prices in the first place? One of the problems with Netflix has been that one account can be used by other family members from different regions. For example, if you live in the US, you can share your account with family or friends outside the US, and they can watch for free.
To eliminate this, they have introduced relatively cheap plans with ads. So I think this price reduction is the second step in their countermeasures. Originally, Netflix had been gradually raising prices, and it was a bit more expensive than other streaming services, so there was some room to lower prices.
So I think the aim of lowering prices is to eliminate those who are doing such fraudulent things while also increasing the number of subscribers. However, lowering prices will inevitably limit sales growth to some extent, so I think that's one reason why the stock price was weak. However, it has recovered quite a bit after falling sharply at one point.
And one more thing, today's stock price Domino's Pizza's stock price has fallen sharply. During the COVID-19 shock, people couldn't go out, so Domino's Pizza, which offers delivery, was incredibly popular. However, there has been a slight backlash. The expected EPS per share was $3.94, but the actual result was $3.97, which was exceeded.
However, the sales forecast was $1.44 billion, but the actual result was $1.399 billion. Despite raising prices by 7% compared to the previous market price, sales have grown negatively. The reasons for this are the rising cost of food, increased labor costs, and a shortage of drivers. I think this is a pretty big factor.
Speaking of the restaurant industry, McDonald's announced its earnings about three weeks ago. Both its earnings per share and sales far exceeded expectations, so its stock price rose. I think the difference between McDonald's and Domino's Pizza is delivery. People eat hamburgers, but I do n't think they'll stop eating pizza, so the labor costs for delivery and the shortage of drivers, which makes deliveries take a very long time, are causing some customers to leave.
I think there was an impact, and the outlook for next term and beyond has been revised from the original 6% to 10% to 4% to 8%. Papa John's, another pizza chain in the same industry, is pretty tasty and I like it too, but their growth rate is still estimated at a rather low 2% to 4%. Layoffs continue to be rampant in the high-tech industry, while the situation of severe labor shortages in service industries like this is becoming increasingly apparent.
This imbalance needs to be properly corrected, and I think wage inflation is strong in the service industry. Today, individual company Evir's stock price rose significantly, and the overall market also rose after the opening, but then fell quite a bit. However, it has been rising sharply again since around 2pm.
I think this is partly profit-taking ahead of tomorrow's PC deflator and the weekend, but I think it will rise again from there, and it seems like there is some determination not to fall below the S&P 54000. That's all for today, thank you.
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