The Daily Breakdown looks at the decline in consumer confidence ahead of the final Q4 GDP reading and the latest PCE inflation results.
Wednesday’s TLDR
- GE hits 52-week highs
- GME rallies on earnings
- Confidence continues to wane
What’s happening?
Investors may be focused on tomorrow’s final GDP reading for Q4 and the PCE inflation report on Friday morning. Or they may be waiting to see how the tariff situation evolves on April 2nd, when the next batch of tariffs are set to go into effect.
But yesterday’s consumer confidence reading underscored a troubling trend: Confidence continues to wane.
Yesterday’s reading came in below economists’ expectations for a fifth straight month, dating back to the first miss in late November. In fact, yesterday’s reading was the lowest figure since January 2021.
While consumer confidence is not a direct line to GDP, inflation, and other “hard data” measures of the economy, it’s a figure that investors would ideally like to see strength in.
That didn’t stop stocks from rising again on Tuesday as markets continue to rebound off the lows. But it’s a reminder that, despite a recent bounce, not everyone is feeling great about the current environment.
Now though, investors will look to see if markets can continue to bounce. The S&P 500 and Dow are now back above their 200-day moving averages, while the Russell 2000 and Nasdaq 100 are still below theirs — and just barely for the latter.
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The setup — General Electric
General Electric was one of 11 S&P 500 stocks to make new 52-week highs yesterday, joining other firms like Berkshire Hathaway, RTX Corp, Cardinal Health and a few others.
The stock was not immune to the market’s pullback over the past month, as GE fell about 10% from its highs before finding support near $190. It’s been quite a turnaround story for this firm, which lost around 80% of its value from early 2017 to late 2018 and was subsequently removed from the Dow.
Now up more than 600% from its lows, long-term investors are still hoping for more upside.
In the short-term, active investors will want to see GE hold above the $210 area, which is where the stock ran out of steam in February. Longer term though, as long as shares hold up above $200, bulls will likely view that as constructive price action.
Analysts expect roughly 13% revenue growth this year and 26% earnings growth — with both figures expected to climb double-digits in 2026, as well.
Options
This is one area where options can come into play, as the risk is tied to the premium paid when buying options or option spreads.
Bulls can utilize calls or call spreads to speculate on a rebound, while bears can use puts or puts spread to speculate on more downside should support break.
For those looking to learn more about options, consider visiting the eToro Academy.
That being said, investors can be neutral on GE and choose to do nothing with the stock. Remember, you don’t have to be involved with every stock all the time.
What Wall Street is watching
GME – Shares of GameStop are popping in pre-market trading, up more than 15% after the firm reported earnings after yesterday’s close. Despite a 28% decline in Q4 revenue, shares appear to be rallying on the news that the GameStop board of directors has approved an investment policy to add Bitcoin as a treasury reserve asset. Check out GameStop’s chart.
CHWY – Chewy stock is also on the move this morning, rallying close to 5% after it reported its Q4 results. The company beat on earnings and revenue expectations and provided guidance that was in-line or above Wall Street’s expectations.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.