Markets Stabilize After Last Week’s Volatility
Stocks Steady Following Losses Driven by Weak Economic Data
The S&P 500 Index ($SPX) (SPY) is up +0.10%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.13%, while the Nasdaq 100 Index ($IUXX) (QQQ) has dipped slightly, down -0.06%. March E-mini S&P futures (ESH25) are up +0.24%, and March E-mini Nasdaq futures (NQH25) are up +0.12%.
Today, stocks are finding stability following significant declines last Friday, which saw the S&P 500 drop -1.71% and the Nasdaq 100 fell -2.06%. Market conditions worsened due to disappointing economic indicators, particularly a drop in the University of Michigan’s US February consumer sentiment index, which fell to its lowest level in 15 months at 64.7. Inflation expectations for the next 5-10 years also surged to +3.5%, a 29-year high.
New Trade Measures Impact Markets
The Trump administration has introduced new measures targeting China, proposing fees on the use of commercial ships made in the country. This has caused Chinese shipping stocks to fall on Monday. Additionally, President Trump directed the US Committee on Foreign Investment to restrict Chinese investments in critical US sectors such as technology, farmland, and natural resources.
Investors Await Key Earnings Reports
Investors are eagerly anticipating Nvidia’s earnings report, scheduled to be released after Wednesday’s market close. This week’s economic calendar is also packed with important data: The Conference Board’s US consumer confidence index is expected to show a decline of -1.4 points to 102.7 on Tuesday, while Thursday’s US Q4 GDP report is projected to reflect a +2.3% quarterly growth, alongside a +4.1% rise in personal consumption. Furthermore, Friday’s January PCE price index report, which measures inflation, is expected to decline slightly to +2.5% year-on-year from December’s +2.6%.
The markets currently place a 2% chance on a -25 basis point rate cut at the upcoming FOMC meeting scheduled for March 18-19.
International Markets Show Mixed Trends
Across the Atlantic, the German DAX stock index is up +0.62% following election results where the conservative Christian Democrat party, under Friedrich Merz, gained a plurality, besting the far-right Alternative for Germany (AfD) party. However, forming a ruling coalition may prove challenging for centrist parties.
Overall, international markets are mixed today: the Euro Stoxx 50 fell -0.26%, China’s Shanghai Composite Index declined -0.18%, while Japan’s Nikkei Stock 225 rose +0.26%.
Interest Rates Overview
March 10-year T-notes (ZNH25) have decreased by -5.5 ticks, with the yield climbing +1.0 basis point to 4.441%. Gains in stocks have contributed to this decline, along with rising government bond yields in Europe where the 10-year German bund yield is at 2.492%, up +2.2 basis points, and the 10-year UK gilt yield stands at 4.594%, up +2.3 basis points.
Swaps are now pricing in a 98% likelihood of a -25 basis point rate cut by the European Central Bank at their policy meeting on March 6.
Notable Moves in US Stocks
Nvidia (NVDA) is leading the Nasdaq 100 with a more than +2% increase due to positive sentiment ahead of its upcoming earnings report. Meanwhile, Apple (AAPL) has risen +0.5% after announcing plans to hire 20,000 new employees in the US, committing over $500 billion to American innovation over the next four years, and establishing a new manufacturing facility in Houston for AI servers.
However, Microsoft (MSFT) fell -1.4% following a report from TD Cowan suggesting the company has canceled some data center leases, raising questions about its AI demand outlook. Tesla (TSLA) decreased -1%, even with news of an upcoming software update in China to enhance driver-assistance features.
Berkshire Hathaway (BRK.B) rose over +2% on the back of strong Q4 earnings propelled by increased insurance underwriting. In contrast, Nike (NKE) gained more than +5% after Jefferies upgraded its rating, indicating a promising recovery ahead.
Domino’s Pizza Inc. (DPZ), however, fell by more than -6% after reporting disappointing Q4 sales amid a decrease in consumer spending.
Lastly, Robinhood Markets (HOOD) experienced a slight decline despite the SEC concluding its crypto investigation without further action.
Upcoming Earnings Reports
Earnings reports scheduled for February 24, 2025, include Coterra Energy Inc (CTRA), Diamondback Energy Inc (FANG), Domino’s Pizza Inc (DPZ), ONEOK Inc (OKE), Public Storage (PSA), Realty Income Corp (O), and SBA Communications Corp (SBAC).
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy
here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
