The S&P 500 Index ($SPX) (SPY) Wednesday closed up +0.01%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.22%. March E-mini S&P futures (ESH25) are up +0.09%, and March E-mini Nasdaq futures (NQH25) are up +0.31%.
Stock indexes on Wednesday posted modest gains ahead of quarterly earnings results from Nvidia. Positive corporate news boosted the overall market as Axon Enterprise closed up more than +15% after reporting better-than-expected Q4 net sales and forecasting full-year revenue above consensus. Also, Super Micro Computer closed up more than +12% after it filed its 10-K for the period ending June 30 to meet a deadline for submitting outstanding financial reports to regain compliance and stay listed on the Nasdaq exchange. In addition, Intuit rose more than +12% after reporting stronger-than-expected Q2 net revenue.
Stocks found support Wednesday after House Republicans passed a budget blueprint on Tuesday night calling for deep cuts to programs such as Medicaid, paving the way for $4.5 trillion in tax cuts. The House passage is the first step in the reconciliation process that allows Republicans to bypass Senate Democrats on legislation related to taxes and spending, but it does not guarantee an extension of the expiring 2017 Trump tax cuts. The Senate plans to make changes to the House blueprint before passing it, which could raise new objections among House Republicans. The House passed the budget plan 217 to 215, and the blueprint would raise the US debt limit by $4 trillion, avoiding a potential default this summer. Congress has until December 31 to extend expiring individual and business tax cuts enacted in 2017.
Copper prices (HGH25) jumped more than +1% Wednesday to a 1-1/2 week high after President Trump Tuesday evening signed an executive order directing the Commerce Department to examine possible tariffs on US copper imports.
On the negative side for stocks was weakness in health insurance companies after the Wall Street Journal said Republican Senator Grassley is pushing for greater oversight of Medicare Advantage plans. Also, Wednesday's US economic news disappointed after Jan new home sales fell -10.5% m/m to 657,000, weaker than expectations of 680,000.
Hawkish comments Wednesday from Atlanta Fed President Bostic were negative for stocks when he said, "We need to be in a restrictive posture" on interest rates to put downward pressure on inflation.
US weekly MBA mortgage applications fell -1.2% in the week ended February 21, with the purchase mortgage sub-index up +0.2% and the refinancing mortgage sub-index down -3.6%. The average 30-year fixed rate mortgage fell -5 bp to 6.88% from 6.93% in the prior week.
The remainder of this week's US economic calendar is busy. Thursday's US Q4 GDP report is expected to show an increase of +2.3% (q/q annualized), with a +4.1% increase in personal consumption. Friday's Jan PCE price index report, the Fed's preferred inflation measure, is expected to ease slightly to +2.5% y/y from December's +2.6%, and the core index is expected to ease to +2.6% y/y from December's +2.8%. The expected Jan PCE reports of +2.5% nominal and +2.6% core would leave those measures at or above their 3-3/4 year lows posted in 2024 of +2.1% and +2.6%, respectively, and well above the Fed's +2% inflation target.
The markets are discounting the chances at 3% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets on Wednesday settled mixed. The Euro Stoxx 50 closed up +1.47%. China's Shanghai Composite Index closed up +1.02%. Japan's Nikkei Stock 225 fell to a 4-month low and closed down -0.25%.
Interest Rates
March 10-year T-notes (ZNH25) Wednesday closed up +10.5 ticks. The 10-year T-note yield fell -4.4 bp to 4.251%. March T-notes Wednesday climbed to a 2-1/2 month high, and the 10-year T-note yield fell to a 2-1/2 month low of 4.245%. T-notes Wednesday shook off early losses and garnered support from a rally in European government bonds. Also, Wednesday's US economic news was bullish for T-notes after Jan new home sales fell more than expected. In addition, a decline in inflation expectations supported T-note prices after the 10-year breakeven inflation rate tumbled to a 7-week low Wednesday at 2.359%. T-notes maintained their gains on strong demand for the Treasury's $44 billion auction of 7-year T-notes that had a bid-to-cover ratio of 2.64, above the 10-auction average of 2.61.
T-notes on Wednesday initially moved lower after House Republicans passed a budget blueprint late Tuesday evening calling for tax cuts that will keep the US budget deficit high. Supply pressures also weighed on T-notes as the Treasury on Wednesday sold $28 billion of floating-rate 2-year T-notes and $44 billion of 7-year T-notes.
European bond yields moved lower on Wednesday. The 10-year German bund yield dropped to a 1-1/2 week low of 2.421% and finished down -2.5 bp to 2.433%. The 10-year UK gilt yield fell to a 1-1/2 week low of 4.470% and finished down -0.6 bp to 4.502%.
The German Mar GfK consumer confidence index unexpectedly fell -2.1 to an 11-month low of -24.7, weaker than expectations of an increase to -21.6.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
Chip stocks rose Wednesday to recover some of Tuesday's sharp losses. Broadcom (AVGO) closed up more than +5%, and Micron Technology (MU) closed up more than +4%. Also, Nvidia (NVDA) closed up more than +3% to lead gainers in the Dow Jones Industrials ahead of its earnings report after Wednesday's close. In addition, Marvell Technology (MRVL), Intel (INTC), and ASML Holding NV (ASML) closed up more than +2%. Finally, Applied Materials (AMAT), KLA Corp (KLAC), and Lam Research (LRCX) closed up more than +1%.
Axon Enterprise (AXON) closed up more than +15% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 net sales of $575.1 million, better than the consensus of $566.6 million, and forecasting full-year revenue of $2.55 billion-$2.65 billion, the midpoint above the consensus of $2.56 billion.
Super Micro Computer (SMCI) closed up more than +12% after it filed its 10-K for the period ending June 30 to meet a deadline for submitting outstanding financial reports to regain compliance and stay listed on the Nasdaq exchange.
Intuit (INTU) closed up more than +12% after reporting Q2 net revenue of $3.96 billion, stronger than the consensus of $3.83 billion.
ZoomInfo Technologies (ZI) closed up more than +23% after reporting Q4 adjusted EPS of 26 cents, better than the consensus of 23 cents, and forecast full-year adjusted EPS of 95 cents-97 cents, stronger than the consensus of 92 cents.
Workday Inc (WDAY) closed up more than +6% after reporting Q4 revenue of $2.21 billion, better than the consensus of $2.18 billion.
General Motors (GM) closed up more than +3% after it said it plans to raise its quarterly dividend and boost its share buyback program to $6 billion.
Freeport-McMoRan (FCX) closed up more than +3% after copper prices jumped more than +2% to a 1-1/2 week high when President Trump signed an executive order that may lead to tariffs on US copper imports.
Grocery Outlet (GO) closed down more than -30% after forecasting full-year adjusted EPS of 70 cents-75 cents, well below the consensus of 95 cents.
Health insurance stocks were under pressure Wednesday after the Wall Street Journal said Republican Senator Grassley is pushing for greater oversight of Medicare Advantage plans. As a result, Centene (CNC) closed down more than -7% to lead losers in the S&P 500. Also, Molina Healthcare (MOH) closed down more than -6%, and Universal Health Services (UHS) closed down more than -4%. In addition, HCA Healthcare (HCA) and Elevance Health (ELV) closed down more than -3 %, and Cigna Group (CI) closed down more than -2%.
Keysight Technologies (KEYS) closed down more than -6% after reporting Q1 orders of $1.26 billion, below the consensus of $1.30 billion.
AppLovin (APP) closed down more than -12% to lead losers in the Nasdaq 100 after Culper Research and Fuzzy Panda published short reports against the company.
Maplebear (CART) closed down more than -12% after forecasting Q1 adjusted Ebitda of $220 million-$230 million, weaker than the consensus of $237.1 million.
Zeta Global Holdings (ZETA) closed down more than -13% after forecasting Q1 revenue of $253 million-$255 million, below the consensus of $256.1 million.
Extra Space Storage (EXR) closed down more than -4% after forecasting 2025 core FFO/share of $8.00 to $8.30, the midpoint below the consensus of $8.30.
Henry Schein (HSIC) closed down more than -4% after reporting Q4 net sales of $3.19 billion, below the consensus of $3.28 billion.
Earnings Reports (2/27/2025)
AES Corp/The (AES), Autodesk Inc (ADSK), Dell Technologies Inc (DELL), Edison International (EIX), EOG Resources Inc (EOG), Erie Indemnity Co (ERIE), Evergy Inc (EVRG), Hormel Foods Corp (HRL), HP Inc (HPQ), J M Smucker Co/The (SJM), Monster Beverage Corp (MNST), Mosaic Co/The (MOS), NetApp Inc (NTAP), Norwegian Cruise Line Holdings (NCLH), Solventum Corp (SOLV), Teleflex Inc (TFX), Viatris Inc (VTRS), Vistra Corp (VST), Warner Bros Discovery Inc (WBD).
