Today in the Market (2/17/2023)

Good Evening! On Friday, U.S. equities closed mixed as investors pointed to a persistent risk-off tone, with the oil sector underperforming.

The S&P 500 decreased by 0.28%, while the Dow Jones increased by 0.39%, recouping early session losses. The Nasdaq Composite fell 0.58%.

FRIDAY SURGE

On its fourth-quarter results call, DraftKings (DKNG) highlighted a narrower-than-anticipated deficit in 2023 and a road to profitability by 2024, causing its shares to surge on Friday morning.

  • Revenue: $855 Million vs. $798.64 Million Expected
  • Earnings Per Share: ($0.53) vs. ($0.59) Expected

What will their focus be for 2023? DraftKings CEO Jason Robins said on Friday’s earnings call that “We are more focused than ever on expense management. Since our previous earnings call in November, we have made surgical decisions backed by strong analysis about our expenses and action items.”

The reason? The increasing legalization of sports betting contributed to DraftKings’ expansion (Which is covered more here!), which is currently available in 21 states for retail or online wagering. Due to the elimination of California’s launch in 2023, DraftKings’ 2023 profitability will become more concentrated as the operator saves on launching expenditures in a key state.

A LOOK INTO 2023

Goldman Sachs and Bank of America anticipate the U.S. Federal Reserve to increase interest rates three more times this year, bringing the terminal rate up to a range of 5.25% to 5.50%.

What evidence for these predictions? They raised their projections in response to evidence indicating sustained inflation and a robust job market. According to statistics released on Thursday, producer prices increased in January by the largest margin in seven months, while a Labor Department report revealed an unexpected decline in the number of Individuals submitting new claims for unemployment benefits last week.

It is not only the banks… A majority of economists questioned by Reuters before the release of the most recent statistics anticipated that the Fed will raise rates at least twice more in the coming months, with the possibility of more increases. None of them anticipate a rate reduction this year.

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