The S&P 500 Index ($SPX) (SPY) today is down -0.19%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.08%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.16%. March E-mini S&P futures (ESH25) are down -0.20%, and March E-mini Nasdaq futures (NQH25) are down -0.15%.
Stock indexes gave up opening gains today and turned lower on fears of stagflation in the US economy after manufacturing activity last month barely expanded and the ISM prices-paid index soared to a 2-1/2 year high. Stock indexes are also under pressure due to the weakness in the Magnificent Seven technology stocks. Nvidia is down more than -4%, Amazon.com is down more than -1%, Microsoft is down -0.6% and Apple is down -0.2%.
Trade concerns are also weighing on stocks. President Trump has said he will implement 25% tariffs on US imports from Canada and Mexico on Tuesday, while tariffs on imports from China will double to 20% from 10%.
Stocks are seeing support from some positive corporate news. Intel is up more than +3% to lead chip makers higher after Reuters reported that Nvidia and Broadcom are running manufacturing tests that indicate the companies are moving closer to determining whether to commit manufacturing contracts to Intel. Also, Allegro MicroSystems is up more than +18% after Bloomberg reported the company is drawing takeover interest from ON Semiconductor. In addition, Capri Holdings Ltd is up more than +7% after Bloomberg reported that Prada SpA is close to buying Versace from Capri Holdings for $1.6 billion.
US stocks have carryover support from today’s rally in European stocks to a new record high. Also, signs of strength in China’s manufacturing activity bolstered global growth prospects and supported stocks after the China Feb manufacturing PMI rose +1.1 to 50.2, stronger than expectations of 49.9.
The US Feb ISM manufacturing index fell -0.6 to 50.3, weaker than expectations of 50.7. The Feb ISM prices paid sub-index rose +7.5 to a 2-1/2 year high of 62.4, stronger than expectations of 56.0.
US Jan construction spending fell -0.2% m/m, weaker than expectations of -0.1% m/m and the biggest decline in 4 months.
The price of Bitcoin (^BTCUSD) is up more than +6% at a 1-week high, and other cryptocurrencies rallied after President Trump said in a social media post Sunday that his January executive order on crypto “directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes Bitcoin, Ether, Solana, XRP, and ADA tokens.” However, many details of Mr. Trump’s plan are still unknown, including how much the government will buy and how the purchases will be funded.
Market attention this week will focus on Wednesday’s Feb ISM services index (expected to fall -0.1 point to 52.7). On Friday, Feb nonfarm payrolls are expected to rise by +160,000, and the Feb unemployment rate is expected to remain unchanged at 4.0%. Meanwhile, Feb average hourly earnings are expected to remain unchanged from Jan at +4.1% y/y. Also, on Friday, Fed Chair Powell will give the keynote speech on the economic outlook at Chicago Booth’s 2025 US Monetary Policy Forum.
The markets are discounting the chances at 7% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets today are mixed. The Euro Stoxx 50 rallied to a record high and is up +1.79%. China’s Shanghai Composite Index fell to a 2-1/2 week low and closed down -0.12%. Japan’s Nikkei Stock 225 closed up +1.70%.
Interest Rates
June 10-year T-notes (ZNM25) today are up +5 ticks. The 10-year T-note yield is down -1.0 bp to 4.199%. June T-notes today recovered from early losses and rallied to a 2-3/4 month high, and the 10-year T-note yield fell to a 2-3/4 month low of 4.180%. T-note prices are seeing support from today’s weaker-than-expected US ISM and construction spending reports.
However, gains in T-notes were limited by inflation concerns after the Feb ISM prices paid sub-index jumped to a 2-1/2 year high. T-notes are also being weighed down on negative carryover from weakness in European government bonds. In addition, T-note prices are being undercut by inflation concerns as the Trump administration’s new tariffs begin Tuesday on US imports from Canada, Mexico, and China.
European bond yields today are moving higher. The 10-year German bund yield rose to a 1-week high of 2.520% and is up +8.9 bp to 2.495%. The 10-year UK gilt yield climbed to a 1-week high of 4.602% and is up +8.4 bp to 4.566%.
Eurozone Feb CPI rose +2.4% y/y, stronger than expectations of +2.3% y/y. Feb core CPI rose +2.6% y/y, stronger than expectations of +2.5% y/y.
The Eurozone Feb S&P manufacturing PMI was revised upward by +0.3 to 47.6, stronger than expectations of no change at 47.3.
Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
Intel (INTC) is up more than +3% to lead chip makers higher after Reuters reported that Nvidia and Broadcom are running manufacturing tests that indicate the companies are moving closer to determining whether to commit manufacturing contracts to Intel. Also, Lam Research (LRCX) and ASML Holding NV (ASML) are up more than +3%. In addition, KLA Corp (KLAC), Microchip Technology (MCHP), and NXP Semiconductors NV (NXPI) are up more than +2%. Finally, Advanced Micro Devices (AMD), Analog Devices (ADI), Qualcomm (QCOM), and Texas Instruments (TXN) are up more than +1%.
AppLovin (APP) is up more than +4% to lead gainers in the Nasdaq 100 after it modified the current limit of its share repurchase program, which had about $1.77 billion remaining.
Cryptocurrency-exposed stocks are climbing today, with the price of Bitcoin rising more than +6% to a 1-week high. As a result, MicroStrategy (MSTR), Coinbase Global (COIN), Bit Digital (BTBT), MARA Holdings (MARA), and Riot Platforms (RIOT) are up more than +1%.
Casino stocks with exposure to Macau are climbing today after Macau Feb gaming revenue rose +6.8% y/y, well above the consensus of +0.8% y/y. As a result, Las Vegas Sands (LVS) is up more than +5% to lead gainers in the S&P 500. Also, Wynn Resorts Ltd (WYNN) is up more than +4%, and MGM Resorts International (MGM) is up nearly +1%.
Capri Holdings Ltd (CPRI) is up more than +6% after Bloomberg reported that Prada SpA is close to buying Versace from Capri Holdings for $1.6 billion.
Allegro MicroSystems (ALGM) is up more than +21% after Bloomberg reported the company is drawing takeover interest from ON Semiconductor.
Chipotle Mexican Grill (CMG) is up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $70.
Nvidia (NVDA) is down more than -4% to lead losers in the Dow Jones industrials, the Nasdaq 100, and the Magnificent 7 Tech stocks. Also, Amazon.com (AMZN) is down more than -1%, Microsoft (MSFT) is down -0.74% and Apple (AAPL) is down -0.26%.
Super Micro Computer (SMCI) is down more than -5% to lead losers in the S&P 500 on signs of insider selling after an SEC filing showed SVP Kao’george sold $3.62 million of shares last Wednesday.
Humana (HUM) is down more than -2% after maintaining its full-year adjusted EPS forecast of about $16.25, below the consensus of $16.44.
Kroger (KR) is down more than -1% after CEO McMullen resigned over “personal conduct,” and the company said a special board committee is investigating the matter.
AES Corp (AES) is down more than -1% after Seaport Global Securities downgraded the stock to sell from neutral with a price target of $7.
Earnings Reports (3/3/2025)
Fortrea Holdings Inc (FTRE), Gitlab Inc (GTLB), Okta Inc (OKTA).
