Executive Summary:
- U.S. stock index closed in February
- Growth/stagnation will worry, economic readings and inflation indicators are softer
- 10 out of 10 of 11 large sectors can see positive revenue growth – most in 3 years
- Washington’s development continues to take over the headlines
February index performance:
All major U.S. stock indexes fell in February. The S&P 500 remained positive this year, while the equivalent weighted index outperformed the official index. Underperforming sectors include technology, consumer discretion, communications and industry, while consumers’ staple food, real estate, energy and utilities perform well. Treasury yields are low, the U.S. dollar index has fallen slightly, and golden color has surfaced, with oil’s first monthly loss since November 2024.
Risk sentiment dominated the market due to several bearish narratives. Concerns about growth and stagnation have caused measures to read and inflation higher. Uncertainties in Trump’s trade, immigration, taxation and Ukrainian policies have increased market uneasiness. The Fed has maintained a cautious stance amid hotter CPI reports and broader macro uncertainty. Developments in the trade war played a major role in Trump’s announcement of tariffs on Canada, Mexico and China, although these issues have been postponed, awaiting negotiations. Analysts highlighted the slowdown in Trump policy growth and inflationary impacts, with consumer confidence falling in February the biggest drop since August 2021.
Economic data in January showed different results, with reports from CPI hotter, which raised concerns about recession and stagnation. Softer non-agricultural wage and retail reports, and softening of housing data. The ISM Service Index missed expectations, while the ISM Manufacturing Index was stronger. The congressional testimony of Fed Chairman Powell stressed the need for more work on inflation, noting that Trump’s remarks would not affect the Fed’s policy decisions. Despite a defensive tone, positive developments have been made, including housing through budget solutions for the Republican Party, with core PCE inflation in January hitting expectations and treasury support as the Fed signal lowered or suspended QT. Early signs of a peace deal in Ukraine are dashed after a tense meeting between Trump and Zelensky failed to reach a deal.
Bullet summary:
- Adventure emotions because:
- Growth/stagnation will worry about economic reading and hotter inflation indicators.
- Uncertainty in Trump’s trade, immigration, taxation and Ukrainian policy.
- Increase retail sales pressure and expand positioning.
- Cautious feed in case of hotter CPI reports and macro uncertainty.
- Early signs of a peace deal in Ukraine, although no agreement was signed after a tense meeting between Trump and Zelensky.
- The development of trade war:
- Trump announced tariffs on Canada, Mexico and China, but they were postponed before negotiations.
- Analysts mark the negative growth and inflationary impact of Trump’s policy.
- In February, consumer confidence was the biggest drop since August 2021.
- Economic data:
- The hotter CPI report in January caused fear of recession/stagnation.
- The non-agricultural wage and retail sales report was softer in January.
- The shell data display softened.
- January ISM services missed expectations, while ISM manufacturing was even stronger.
- On February 22, the labor market continued to cool downND The initial unemployment claims were filed at the highest level in 2025.
- The core PCE inflation in January combines with expectations.
- Fed Chairman Powell’s Congressional Testimony:
- More work is emphasized for inflation.
- Trump’s comments will not affect the Fed’s policy decisions.
- Fed officials pointed out that it is necessary to remain restrictive and wait for better clarity on inflation and tariffs.
Total returns for industry performance in February:
Income Comments:
According to Factset data, the mixed earnings growth rate of S&P 500 EPS in the fourth quarter was 18.2%, higher than expected 11.9%. The mixed income growth rate was 5.3%. Of the 97% of the 500 companies reported, 75% beat consensus EPS expectations, slightly below the one-year and five-year average. Additionally, 63% of people exceeded consensus sales expectations, slightly above the one-year average but below the five-year average. Overall, the company reported earnings 7.5% higher than expected, above the one-year average positive surprise rate, but below the five-year average. Sales were 0.8% higher than expected, down from a year- and five-year positive surprise rate.
Sales and revenue results for the Standard & Poor’s industry:
Big Hat’s based on wide revenue growth:
Price reactions for two days after the issuance of revenue:
Fed Fund Futures Pricing at March Meeting at More than 90% Opportunity:
10 years of constant maturity of the Ministry of Finance minus 2 years of constant maturity of the Ministry of Finance:
Gold:
Oil:
DXY:
Looking forward:
The market will focus this week on February’s non-agricultural wage report. Economists predict that the unemployment rate will remain 4% and add 160,000 new jobs. Readings will begin as new unemployment statements continue to rise to this year. Next week ahead of the FOMC meeting on March 19, there will be many Fed headlines next week, most notably Powell’s keynote speech on the economic outlook at the Chicago Booth 2025 U.S. Monetary Policy Forum. Please note that the Q1’25 Triple Witch will take place on March 21.
Economic Calendar:
The information contained herein is for informational and educational purposes only and nothing in this article should be interpreted as investment advice on a specific security or overall investment strategy. All information contained in this article is obtained by Nasdaq sourced from Nasdaq to ensure accuracy and reliability. However, all information is provided “as is” without any warranty of any kind. It is highly recommended to provide advice from securities professionals.
