US stock futures took a breather on Monday after closing out a dizzying week at record highs, as investors braced for a looming inflation update that could put that rally to the test.
Futures on the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) wavered below the flatline on the heels of notching new closing highs. Contracts on the Nasdaq 100 (^NDX) were also little changed following a stellar week for tech stocks.
New inflation data in the coming days will test the staying power of the breakout rally that followed Nvidia’s (NVDA) results. A hotter-than-expected CPI report spooked the market and sparked a stock sell-off earlier in February, and investors are already weighing the chances of a surprise in Thursday’s PCE index reading.
Given the PCE index is the Federal Reserve’s preferred inflation gauge, the reading will factor into the ongoing debate on the timing of a rate cut, already pushed back.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
The inflation report is the highlight of this week’s data, with temperature checks on the consumer and manufacturing also on deck. What they say about the health of the US economy may determine whether the bullish mood in stocks continues.
Berkshire Hathaway (BRK-B) closed in on a $1 trillion market value after the Warren Buffett-led conglomerate posted a record annual profit for the second year in a row. In his annual letter to shareholders at the weekend, Buffett said Berkshire is “built to last” and paid tribute to the part played in that by his right-hand man Charlie Munger.
Elsewhere in corporate results, Domino’s Pizza (DPZ) shares popped in premarket after it lifted its dividend and beat fourth-quarter sales estimates.
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Key quotes from Buffett’s annual letter
Priced at $435 in the pre-market amid a 5% post-earnings bump, Berkshire Hathaway (BRK-B) finds itself on the Yahoo Finance trending ticker page. The company will inch closer to the $1 trillion market cap for the first time after closing at $905 billion on Friday.
Makes sense to me.
Buffett is cleaning up on his ahead-of-the-curve investments in Japan, is collecting gobs of dividends from Coca-Coca (KO) and American Express (AXP), and is sitting on a record $167.6 billion in cash. Sure Buffett struck a cautious tone to anyone invested in the railroad space (citing tough regulations and intensive capital investments needed), and to a lesser extent those in the energy patch.
But for me, this was one of Buffett’s best annual letters in a decade because of the sharp investing wisdom he shared to a world currently infatuated with AI stocks like Nvidia (NVDA).
A couple Buffett reminders to start the week:
“Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring.”
“At Berkshire, we particularly favor the rare enterprise that can deploy additional capital at high returns in the future. Owning only one of these companies – and simply sitting tight – can deliver wealth almost beyond measure.”
“Though the stock market is massively larger than it was in our early years, today’s active participants are neither more emotionally stable nor better taught than when I was in school. For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.”
“One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital.”
“We did not predict the time of an economic paralysis but we were always prepared for one.”
