executive Summary:
- US Equity Index closed down in February
- Soft economic reading and concern with hot inflation indicators
- 11 out of 11 larger-cap sectors see an increase in positive income-the highest in 3 years
- Vikas out of Washington dominate the headlines
Index display for February:
All major American equity indices declined in February. The S&P was positive for 500 years, while the same-charge index performed better than the official index. The underperforming sectors consisted of technology, consumer discretionary, communication and industrial, while consumer staples, real estate, energy and utilities performed well. Treasury saw low yields, the dollar index decreased slightly, gold increased slightly, and oil suffered its first monthly loss since November 2024.
Risk Bhavna dominated the market due to many recession narratives. Anxiety about growth and stability arose from softened economic readings and hot inflation measures. Trump’s business, immigration, tax and uncertainty about Ukraine policies were added to the market discomfort. Fed maintained a cautious stance amid a hot CPI report and widespread macro uncertainty. The development of trade war played an important role with Trump, announcing tariffs on Canada, Mexico and China, although they were delaying pending talks. Analysts highlighted the impacts of slow growth and inflation of Trump’s policies, and the consumer belief of February saw its biggest decline since August 2021.
Economic data for January showed mixed results, increasing the possibility of a hot CPI report recession and stability. Nonform parole and retail sales reports, along with softening of housing data, added to concerns. The ISM Services Index recalled expectations, while the ISM manufacturing index was strong. Fed Chair Pavel’s testimony stressed the need to work more on inflation and said that Trump’s comments would not have affected Fed Policy decisions. Despite the defensive tone, there were positive developments including a budget resolution, January core PCE inflation meeting, including the House GOP, slowing down or stopping the QT Middle Year after the fed signaling. The initial signs of the Ukraine peace deal were destroyed after a stressful meeting between Trump and Zelanski, resulting in no compromise.
Bullet Summary:
- Risk Strong due to:
- Soft economic readings and warm inflation indicators are concerned with development/stability.
- Uncertainty around Trump’s trade, immigration, tax and Ukraine policies.
- Retail sales pressure and increase in extended position.
- A cautious fed between a hot CPI report and macro uncertainty.
- An early signs of a Ukraine peace deal, although no deal was signed after a stressful meeting between Trump and Zelanski.
- Trade war development,
- Trump announced tariffs on Canada, Mexico and China, but they were delayed in pending talks.
- Analysts flagged down the effects of negative development and inflation from Trump’s policies.
- February Consumer Vishwas saw its biggest decline since August 2021.
- Economic data,
- The Hotter January CPI report raised the recession/stagflation fear.
- January non-form parole and retail sales report.
- Housing data showed soft.
- January ISM services recalled expectations, while ISM manufacturing was stronger.
- Labor market remains cold with February 22Ra Early unemployed claims coming to the highest level of 2025.
- The January core PCE was in-line with inflation expectations.
- Fed Chair Powell’s testimony of Congress,
- Emphasized the more work required on inflation.
- Trump’s comments will not affect Fed’s policy decisions.
- Fed officials noted the need to pending better clarity on inflation and tariffs.
Sector Performing Total Return for February:
Earning Comment:
According to the factset data, the Mixed Income Growth for Q4 S&P 500 EPS is 18.2% which is more than 11.9% expected. The mixed revenue growth rate is 5.3%. 97% of S&P 500 companies have reported, 75% have unanimously defeated EPS expectations, slightly below an average of one year and five years. Additionally, 63% have exceeded the expectations of selling consensus, above one year average but below the average of five years. Overall, companies are reporting more than 7.5% income from expectations, which is better at the average positive surprise rate of one year, but below the average of five years. Sales is 0.8% above expectations, which is below both a year and five -year positive surprise rates.
Results of sales and income by S&P sector:
Increase in comprehensive-based income for large caps:
Two-day value response after earning:
Fed Fund Futures are pricing in the possibility of 90+% in the march meeting,
10-year-old Treasury Continuous Maturity Minus 2-Year Treasury Continuous Maturity:
Sleep:
Oil:
Dxy:
looking ahead:
This week the market will be focused on Friday on the Nonform payroll report for February. Economists have predicted unemployment rate at 4% with 160,000 new jobs. Reading will come in the form of new and continuous unemployed claims, the year will continue to start. There will be several Fed Speak Headlines in the next week before the March 19 FOMC meeting, especially the Chicago booth’s 2025 US monetary policy platform will have the main speech of Kursi Powell at an economic perspective. Note that Q1’25 triple witch will be on 21 March.
Economic Calendar:
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