Stock Indexes Settle Higher on Strength in Tech

The S&P 500 Index ($SPX) (SPY) on Wednesday closed up +0.81%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.63%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.41%.  March E-mini S&P futures (ESH26) rose +0.81%, and March E-mini Nasdaq futures (NQH26) rose +1.41%.

Stock indexes rallied on Wednesday, with the S&P 500 posting a 1.5-week high and the Nasdaq 100 posting a 2-week high.  Strength in AI-infrastructure companies, software stocks, and chipmakers led the broader market higher.  Stocks have carryover support from Tuesday, when AI startup Anthropic PBC eased AI disruption concerns after saying its new AI tools for its Claude Cowork agent software will integrate rather than displace existing systems.  Also, optimism that Nvidia’s earnings results, released after Wednesday’s close, will show strong demand for its AI processors remains high.  Bloomberg estimates Nvidia’s Q4 revenue to be $65.91 billion. 

In Tuesday night's State of the Union address, President Trump doubled down on his commitment to tariffs.  President Trump’s new 10% global tariffs went into effect on Tuesday after the Supreme Court struck down his global “reciprocal” tariffs last Friday. Mr. Trump subsequently threatened to raise the global tariff rate to 15%, and an administration official said the White House is working on a formal order to implement that higher rate, but the timeline for its implementation has not been finalized.  Mr. Trump is applying the 10% baseline levy under Section 122 of the 1974 Trade Act, which allows the president to impose the charge for 150 days without congressional approval. 

Geopolitical risks remain a negative for stocks.  Tuesday evening, President Trump said Iranian officials are "again pursuing their sinister nuclear ambitions," boosting speculation that the US may be preparing a military strike on Iran in the coming days.  US-Iran nuclear talks are scheduled to resume on Thursday in Geneva, and Iranian Foreign Minister Araghchi said he saw a “good chance” of a diplomatic solution to the standoff over his country’s nuclear program.  Last Friday, President Trump said that he’s considering a limited military strike on Iran to ramp up pressure on the country to strike a deal over its nuclear program, and that he thought 10 to 15 days was “pretty much” the “maximum” he would allow for negotiations to continue.

US MBA mortgage applications rose +0.4% in the week ended February 20, with the purchase mortgage sub-index down -4.7% and the refinancing mortgage sub-index up +4.1%.  The average 30-year fixed rate mortgage fell -8 bp to a nearly 3.5-year low of 6.09% from 6.17% in the prior week.

St. Louis Fed President Alberto Musalem said Wednesday that the fed funds rate is near neutral and well-positioned to balance risks to employment and inflation.

The market’s focus this week will be on corporate earnings results and economic news.  After Wednesday’s close, Nvidia will release its earnings results.  On Thursday, initial weekly unemployment claims are expected to climb by +10,000 to 216,000.  On Friday, the Feb MNI Chicago PMI is expected to slip -1.8 to 52.2. 

Q4 earnings season is nearing its end, with more than 90% of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 74% of the 453 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 2% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets settled higher on Wednesday.  The Euro Stoxx 50 rose to a new record high and closed up +0.93%.  China’s Shanghai Composite climbed to a 3.5-week high and closed up +0.72%.  Japan’s Nikkei Stock 225 rallied to a new all-time high and closed up +2.20%.

Interest Rates

March 10-year T-notes (ZNH6) on Wednesday closed down by -4 ticks.  The 10-year T-note yield rose +1.9 bp to 4.048%.  T-notes were under pressure on Wednesday from strength in stocks, which curbed safe-haven demand for government debt.  Also, weak demand for the Treasury’s $70 billion auction of 5-year T-notes undercut T-note prices, as the auction had a bid-to-cover ratio of 2.32, below the 10-auction average of 2.37. 

European government bond yields were mixed on Wednesday.  The 10-year German bund yield was unchanged at 2.701%.  The 10-year UK gilt yield rose +1.1 bp to 4.317%.

The German Mar GfK consumer confidence index unexpectedly fell -0.5 to -24.7, weaker than expectations of an increase to -23.0.

Swaps are discounting a 2% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

US Stock Movers

AI-infrastructure stocks and chipmakers rallied on Wednesday to support gains in the broader market. Western Digital (WDC) closed up more than +7%, and Seagate Technology Holdings (STX) closed up more than +6%.  Also, Applied Materials (AMAT) closed up more than +4%, and Marvell Technology (MRVL) closed up more than +3%.  In addition, Nvidia (NVDA), ARM Holdings Plc (ARM), KLA Corp (KLAC), and Micron Technology (MU) closed up more than +2%.

Software stocks were stronger on Wednesday, boosting the overall market.  Thomson Reuters (TRI) closed up more than +10%, and Intuit (INTU) closed up more than +6%.  Also, Datadog (DDOG) closed up more than +5%, and Palantir Technologies (PLTR), Cadence Design Systems (CDNS), Salesforce (CRM), and CrowdStrike (CRWD) closed up more than +3%.  In addition, Microsoft (MSFT) and Atlassian (TEAM) closed up more than +2%, and Autodesk (ADSK), Adobe Systems (ADBE), and ServiceNow (NOW) closed up more than +1%. 

Cryptocurrency-exposed stocks rallied sharply on Wednesday as Bitcoin (^BTCUSD) surged more than +7%.  Coinbase Global (COIN) closed up more than +13%, and Strategy (MSTR) closed up more than +8%.  Also, MARA Holdings (MARA) closed up more than +6%, and Galaxy Digital Holdings (GLXY) closed up more than +5%.  In addition, Riot Platforms (RIOT) closed up more than +3%.

Homebuilding stocks retreated on Wednesday on disappointment that President Trump failed to mention any new policy initiatives to bolster the housing market in Tuesday evening’s State of the Union speech.  Lennar (LEN) and PulteGroup (PHM) closed down more than -4%, and DR Horton (DHI) closed down more than -5%.  Also, KB Home (KBH) closed down more than -2%, and Toll Brothers (TOL) closed down more than -1%. 

Alcoholic beverage producers moved lower on Wednesday after Diageo Plc, the maker of Guinness beer and Johnnie Walker whiskey, cut its sales guidance due to further weakness in the US market.  Brown-Forman Corp (BF.B) closed down more than -7%, Molson Coors Beverage (TAP) closed down more than -4%, and Constellation Brands (STZ) closed down more than -3%. 

Circle Internet Group (CRCL) closed up more than +35% after reporting Q4 total revenue and reserve income of $770 million, stronger than the consensus of $747 million.

Cava Group (CAVA) closed up more than +26% after forecasting full-year restaurant comparable sales will climb +3% to +5%, stronger than the consensus of +2.75%. 

Axon Enterprise (AXON) closed up more than +17% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 adjusted EPS of $2.15, well above the consensus of $1.56. 

Albemarle (ALB) closed up more than +4% to lead lithium producers higher after Zimbabwe suspended exports of lithium concentrates and raw minerals. 

Oracle (ORCL) closed up more than +1% after Oppenheimer upgraded the stock to outperform from perform with a price target of $185.

Oddity Tech Ltd (ODD) closed down more than -49% after saying it expects its revenue for the first quarter of 2026 to decline -30% year-over-year.  

GoDaddy (GDDY) closed down more than -14% to lead losers in the S&P 500 after forecasting full-year revenue of $5.20 billion to $5.28 billion, the midpoint below the consensus of $5.28 billion. 

CoStar Group (CSGP) closes down more than -8% to lead losers in the Nasdaq 100 after forecasting Q1 adjusted EPS of 16 cents to 19 cents, weaker than the consensus of 25 cents.

MercadoLibre (MELI) closed down more than -8% to lead losers in the Nasdaq 100 after saying it is heavily investing to build its own agentic AI tools, spurring concerns that the heavy spending on AI will pressure its margins. 

Lowe’s (LOW) closed down more than -5% after forecasting 2027 adjusted EPS of $12.25 to $12.75, below the consensus of $13.00. 

Kinsale Capital Group (KNSL) closed down more than -2% after BMO Capital Markets downgraded the stock to underperform from market perform with a price target of $348. 

Earnings Reports(2/26/2026)

AES Corp/The (AES), Autodesk Inc (ADSK), Block Inc (XYZ), Coterra Energy Inc (CTRA), Dell Technologies Inc (DELL), EMCOR Group Inc (EME), Hormel Foods Corp (HRL), Intuit Inc (INTU), J M Smucker Co/The (SJM), Monster Beverage Corp (MNST), NetApp Inc (NTAP), Public Service Enterprise Group (PEG), Qnity Electronics Inc (Q), SBA Communications Corp (SBAC), Sempra (SRE), Solventum Corp (SOLV), Viatris Inc (VTRS), Vistra Corp (VST), Warner Bros Discovery Inc (WBD), Zscaler Inc (ZS).