Coca-Cola, Kraft Heinz, consumer sentiment — What you need to know in markets on Friday

Myles Udland
Markets Reporter

Stocks are going up.

After last week’s stock market chaos sent the major U.S. averages down 4% — their biggest weekly drop since 2016 — stocks gained ground all four days this week.

On Thursday, each of the major averages added over 1% with the tech-heavy Nasdaq leading the way, rising 113 points, or 1.6%, while the Dow added 306 points, or 1.2%, and the S&P 500 gained 32 points, or 1.2%.

Treasury yields also remained near four-year highs, with the 10-year settling near 2.9% on Thursday while the dollar continued its slide, falling another 0.5% on Thursday.

On Friday, earnings reports will highlight the American eater, with Campbell’s Soup (CPB), Kraft Heinz (KHC), Coca-Cola (KO), and J. M. Smucker (SJM) all reporting results, as will agricultural giant Deere & Co. (DE).

A delivery van is painted with artwork for Classic Coca-Cola in downtown Pittsburgh on Thursday, Feb. 23, 2017. (AP Photo/Keith Srakocic)

And the economic calendar will also be busy with a third inflation reading this week coming with the January reading on import prices. We’ll also see data on housing starts and building permits, as well as the February report on consumer sentiment from the University of Michigan.

Markets are up, but they’re still unsettled

Stocks are going back up.

After bottoming during afternoon trading on Friday, February 9, the S&P 500 has gained about 5% and turned positive for the year.

And while investor sentiment is certainly going to improve when stocks go up, the size of the moves seen this week indicates that after all the damage done during the nine-day, 10% drop in the S&P, markets are still not settled.

Speaking on Yahoo Finance’s live show The Final Round on Thursday, Peter Tchir, head of macro strategy at Academy Securities said, “It’s been really difficult. The past few days, it seems, we’re moving 1% for no apparent reason.”

“I think we have to get some stability and get some frame of reference where we say, ‘This is what matters’,” Tchir added. “Right now, the only thing I see mattering is the volatility index. So as [the] VIX goes down, stocks go up. And when that reverts, we go the other way. So you really have a situation of the tail wagging the dog, which I’m uncomfortable with.”

The VIX is not meant to be predictive of the market’s future path but to coincide with it, making the trading that Tchir references so disorienting to investors. So at least in Tchir’s view, until this inverted dynamic rights itself, stocks look set to remain unsettled and move in big chunks. Even if that move is up and to the right.

And as for what Tchir thinks markets will worry about next, he sees concerns over the economy — not higher interest rates — as a potential point of tension.

“If you think about it, the one thing that’s been a mantra of everyone, including myself for the past few weeks, is, ‘[The stock market sell-off] is all technical, it doesn’t matter, because the fundamentals are good’,” Tchir said. “Anything that puts a little bit of a question on the fundamentals, I think that tests us back to the lows.”

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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