Daily Market Report March 3rd, 2025
In one of the most surprising upside reversals seen in a while, the market turned a nice morning gain into what looked like another sickening downside reversal just as the not friendly meeting between the U.S. and Ukrainian presidents got underway, things then made one of the fantastic afternoon upside moves higher than what we have seen in a while.
As a result of this upside drama, the market turned what had been a rather dreary February showing into a much less final result.
For instance, the Dow had turned a 273 morning gain into a 139 point loss at 1:20pm and at that point it looked like here we go again to the downside. But at that moment, things turned around to a hard to believe upside moonshot to finally end with a closing advance of 601 to 43,840, and who is complaining about this move.
The S&P had undergone the same pattern with a 50 point advance turning right around to the downside of 25 at the same time when all of a sudden, it also reversed sharply to the upside and ended with a really astounding gain of 93 to 5954 led by most of the large technology former leaders and also by nice gains in the financials as well.
The Nasdaq also came along for these large moves in both directions, namely from nice higher starts to sudden brief downturns and then a sharp upside move to end ahead by 300 up to 18,849 also led by strong showings from recently weak technology stocks with NVDA which had gotten blasted to the downside the previous session, finally showing some strength in addition to TSLA, which also made a comeback from its absolute downside slaughter of almost 40%. The index still ended with its worst showing since last April.
The Russell 2000 Index of small stocks came along for the upside ride with a 23 point gain to 2163 on that financial strength while the VIX got blasted to the downside with a close at 19.63 on the better equity showing.
As a result of all this turbulence in the month that just ended, the Dow is still ahead for the year by 3%, the S&P is up by 1.2% while the Nasdaq is down for 2025 by 2.5%.
The S&P jumped by 1.6% to trim its loss for the month, enough to make it the worst only since December instead of April. It had dropped for five out of the prior six days after weaker than expected reports on the economy and worries about the President’s tariffs knocked the index off its all-time high set two weeks ago.
Much of the recent damage had focused on the market’s biggest winners of recent years, whose momentum seemed nearly impossible to stop at times. Stocks that flew in the frenzy around AI technology slumped sharply, for example.
Many of those beaten-down areas of the market jumped on Friday to recover some of their losses. NVDA, which has become one of the market’s most influential stocks, rose 4% following its 8.5% tumble Thursday and was the strongest force lifting the S&P. Bitcoin bounced back above $84,000 after falling below $79,000 during the morning.
Stocks rose following the famous P.C.E. report released in the morning that included both some encouraging and discouraging trends
Inflation across the country decelerated a bit to a gain of 0.3% and 2.5% year over year, and behaved pretty much exactly as economists expected, according to the measure that the Federal Reserve prefers to use. That’s good news for the entire market because it could give the Federal Reserve leeway to continue cutting its main interest rate at some point later this year.
That, in turn, could help the economy. The Fed has been keeping rates on hold so far this year after cutting them sharply late last year, in large part because of concerns about potentially stubborn inflation.
But Friday’s report also said that U.S. households pulled back on their spending during January, with a decline of 0.2% with a gain of 0.9% in personal incomes. That is potentially dangerous because their strong spending has been a major reason the U.S. economy has avoided a recession despite high interest rates.
Investors hope that all the talk about tariffs are merely a tool that the President is using to negotiate with other countries and that he will ultimately pull back on them, which would mean less pain for the global economy than initially feared.
But recent reports have nevertheless shown all the talk has already pushed U.S. consumers to brace for much higher inflation in the future. At some point, such worries could drive their behavior, which could drag on the economy even without tariffs.
Of course, much of January’s drop in spending by U.S. households could have been the simple result of painfully cold weather around the country and other anomalies. But it also followed several signals of slowing growth for the U.S. economy, which closed 2024 at a good pace.
Most stocks within the S&P rose on Friday, led by AES after the energy company reported profit for the latest quarter that blew past analysts’ expectations. The C.E.O. also said it is seeing strong demand from AI data centers and new U.S. manufacturing plants, and it gained 12%.
SIG rose after an investment firm, Select Equity Group, amassed a nearly 10% ownership stake in the retailer and said it is pushing the board to sell the company or find another way to boost its stock price.
They helped offset a drop for DELL, which reported stronger profit for the latest quarter than analysts expected but fell short on its revenue.
In the bond market, Treasury yields sank again following the data on consumer spending and inflation. The yield on the 10-year Treasury fell to 4.20% from 4.26% late Thursday. It is down sharply from last month, when it was approaching 4.80%, as worries have grown about where the U.S. economy is heading.
Earnings this week will see: tonight – OKTA; Tuesday – BBY, CRWD, JWN; Wednesday – ANF, CPB, Victoria’s Secret, ZSK; Thursday – BURL, COST, GPS, M.
Economic reports are: today – January construction spending; Wednesday – January factory orders; Thursday – January trade balance, weekly jobless claims; Friday – February jobs report for which the estimate is 160,000 and the unemployment rate remains at 4%.
By Don Selkin