Stocks Stabilize Ahead of Busy Week

The S&P 500 Index ($SPX) (SPY) is up +0.10%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is 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%. 

Stocks are stabilizing today following last Friday’s sharp losses of -1.71% in the S&P 500 index and -2.06% in the Nasdaq 100 index.  Stocks were undercut last Friday by negative economic data, led by the decline in the University of Michigan’s US Feb consumer sentiment index to a 15-month low of 64.7.  Also, the University of Michigan’s US Feb 5-10 year inflation expectations indicator rose to a 29-year high of +3.5%.

The Trump administration has launched fresh measures against China. The administration proposed fees on the use of commercial ships made in China, which caused Chinese shipping stocks to fall on Monday.  President Trump also issued a memorandum to the US Committee on Foreign Investment in the US that instructed the Committee to limit China’s ability to invest in key US sectors such as technology, food, farmland, minerals, natural resources, ports, and shipping terminals.

Stock investors are looking ahead to Nvidia’s earnings report after Wednesday’s close.  This week’s US economic calendar is also busy.  Tuesday’s Feb Conference Board US consumer confidence index is expected to show a -1.4 point decline to 102.7.  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 markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

The German Dax stock index is up +0.62% today after the conservative Christian Democrat party, led by Friedrich Merz, won a plurality in Sunday’s German election, beating the far-right Alternative for Germany (AfD) party. However, the centrist parties are expected to have difficulty building a ruling coalition.

Overseas stock markets are mixed.  The Euro Stoxx 50 is down -0.26%.  China’s Shanghai Composite Index closed down -0.18%. Japan’s Nikkei Stock 225 closed up +0.26%.

Interest Rates

March 10-year T-notes (ZNH25) are down -5.5 ticks.  The 10-year T-note yield is up +1.0 bp at 4.441%.  March T-note prices are being undercut by today’s small gain in stocks. 

T-note prices are also being undercut by higher government bond yields in Europe.  The 10-year German bund yield is up +2.2 bp at 2.492%. The 10-year UK gilt yield is up +2.3 bp at 4.594%.

Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the March 6 policy meeting.

US Stock Movers

Nvidia (NVDA) is up more than +2% and sits atop the Nasdaq 100 leaderboard on optimism ahead of its earnings report on Wednesday.

Apple (AAPL) is up +0.5% after saying it will hire 20,000 new employees in the US and invest in “American innovation,” spending at least $500 billion in the US over the next four years.  Apple said it will open a manufacturing plant in Houston to build AI servers.

Microsoft (MSFT) is down -1.4% after a report by TD Cowan that Microsoft has canceled some leases for US data center capacity, raising questions about whether it has secured too much capacity or that Microsoft might be less optimistic about AI demand.

Tesla (TSLA) is down -1%  despite Bloomberg’s report that the company will soon issue a software update for Chinese customers that offers increased driver-assistance capabilities.

Berkshire Hathaway (BRK.B) is up more than +2% on an earnings surge in Q4, driven in part by a large increase in insurance underwriting.

Nike (NKE) is up more than +5% on a rating upgrade by Jefferies to buy, which said Nike is poised for a strong recovery in coming quarters.

Domino’s Pizza Inc. (DPZ) is down by more than -6% on news of disappointing Q4 sales as US consumers curb their spending.

Robinhood Markets (HOOD) is trading slightly lower even though the company said the SEC closed its crypto investigation without any action.

Earnings Reports (2/24/2025)

Coterra Energy Inc (CTRA), Diamondback Energy Inc (FANG), Domino’s Pizza Inc (DPZ), ONEOK Inc (OKE), Public Storage (PSA), Realty Income Corp (O), SBA Communications Corp (SBAC).