A daily market update from FS Insight — what you need to know ahead of opening bell.
“Only when we’re drowning do we understand how fierce our feet can kick.” — Amanda Gorman
Chart of the Day
Good morning!
There’s a new sheriff tariff in town. And it’s become Wall Street’s nightmare.
Consumer confidence has tumbled. A measure of prices paid by manufacturers for input materials has jumped to the highest level since 2022. Meanwhile, the S&P 500 has erased all of its post-election gains, wiping out $3.5 trillion in value. The broad-based index declined as much as 2% Tuesday but recovered some of those losses to finish the day down 1.2%.
Investors and strategists are worried that an all-out trade war could force corporations to raise prices for goods and services, dragging down the U.S. economy’s biggest spending engine—the consumer. As a result, they’re making large downward revisions to earnings estimates.
Analysts surveyed by FactSet lowered their first-quarter earnings estimates for companies in the S&P 500 by 3.5% during the first two months of the year. That is above the 10-year average of 2.6% and 20-year average of 3.1%.
Corporates are reducing guidance, too. Target didn’t share specific figures but said on Tuesday that it expects “to see meaningful year-over-year profit pressure in its first quarter relative to the remainder of the year.”
When a big-box retailer flashes a warning signal, investors tend to listen. And Target is far from the only one. Best Buy CEO Corie Barry said that price increases are “highly likely” after tariffs. Walmart’s outlook last month also disappointed investors.
Lower estimates reflect strategists’ worries that a corporation won’t fare well on earnings, which is concerning because many consider earnings to be the true driver of returns.
But at the same time, it is worth noting that lower estimates can make it easier for the companies to beat expectations in case the geopolitical environment recovers, making earnings look better than initially expected.
For now, it looks like tariffs are all that corporations are thinking about. Mentions of tariffs in earnings call transcripts are at the highest level since the end of 2019 for both the S&P 500 and its small-cap peer Russell 2000.
The fact that executives seem confident in their ability to navigate through tariffs like they did back in 2018 does help alleviate some of the worries. Plus, we’re already coming off the back of a strong earnings season. Companies in the S&P 500 are on course to report fourth-quarter earnings of 17.8%, the highest gain since the end of 2021.
Maybe corporations can pull off the feat again.
Catch Up With FS Insight
We are seeing signs of investor panic, and while many want to exit the market, the “rule of 10 best days” strongly argues against market timing.
TECHNICAL
Given the degree of counter-trend exhaustion seen developing in VIX along with SPY, QQQ, and TNX, a reversal looks to be near.
CRYPTO
We dive into the latest developments from AAVE, as it introduces new value accrual mechanisms for its token. Plus, we’ll discuss what to expect for crypto ahead of tomorrow’s Services PMI report.
News We’re Following
Breaking News
Markets and economy
- Private employers added just 77,000 jobs in February, far below expectations, ADP says CNBC
- German borrowing costs soar by most since 1997 on ‘historic’ debt deal FT
- European Central Bank to make ‘last easy rate cut’ as tariffs, higher fiscal spending loom CNBC
Business
- The billionaire elite who answered Donald Trump’s call on Panama Canal FT
- Abercrombie & Fitch shares fall after star retailer posts weak guidance for year ahead CNBC
- The Day Trump’s Tariff Threats Became a Reality for America Inc. WSJ
Politics
- Trump Celebrates His Disruption but Slides Over Its Costs NYT
- Combative Trump declares ‘America is back’. Here’s what his voters made of it RT
Overseas
- Putin Played a Long Game. It’s Starting to Pay Off. WSJ
- Greenland’s leader says the island ‘is ours’ as Trump vows to acquire the territory AP
Of Interest
- Concert Ticket Prices Are Soaring, and Busting Gen Z’s Budgets NYT
- Lewis Hamilton’s move to Ferrari is having a cultural impact far beyond Formula 1 AP
| Overnight |
| S&P Futures +40
point(s) (+0.7%
) Overnight range: +18 to +55 point(s) |
| APAC |
| Nikkei +0.23%
Topix +0.3% China SHCOMP +0.53% Hang Seng +2.84% Korea +1.16% Singapore +0.2% Australia -0.69% India +1.15% Taiwan +1.22% |
| Europe |
| Stoxx 50 +2.37%
Stoxx 600 +1.5% FTSE 100 +0.54% DAX +3.5% CAC 40 +2.18% Italy +2.25% IBEX +2.04% |
| FX |
| Dollar Index (DXY) -0.65%
to 105.06 EUR/USD +0.62% to 1.0692 GBP/USD +0.23% to 1.2825 USD/JPY -0.23% to 149.45 USD/CNY -0.01% to 7.2632 USD/CNH +0.15% to 7.264 USD/CHF -0.25% to 0.8872 USD/CAD -0.05% to 1.4388 AUD/USD +0.14% to 0.6281 |
| Crypto |
| BTC +2.64%
to 89809.56 ETH +2.97% to 2242.78 XRP +1.8% to 2.5182 Cardano +6.66% to 1.0072 Solana +2.56% to 149.33 Avalanche +6.05% to 21.21 Dogecoin +2.91% to 0.2049 Chainlink +7.59% to 16.09 |
| Commodities and Others |
| VIX -2.55%
to 22.91 WTI Crude -1.6% to 67.17 Brent Crude -1.08% to 70.27 Nat Gas -2.46% to 4.24 RBOB Gas -1.67% to 2.158 Heating Oil -1.67% to 2.249 Gold -0.09% to 2915.14 Silver +1.03% to 32.31 Copper +4.89% to 4.749 |
| US Treasuries |
| 1M -0.8bps
to 4.3095% 3M +0.7bps to 4.2911% 6M -0.8bps to 4.2344% 12M -3.2bps to 4.0274% 2Y -1.1bps to 3.9799% 5Y -0.3bps to 4.0418% 7Y flat at 4.1457% 10Y +0.7bps to 4.2517% 20Y +1.2bps to 4.5837% 30Y +1.1bps to 4.549% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 2.4bps to -33.2
bps 10Y-2 Y Spread widened 2.0bps to 27.0 bps 30Y-10 Y Spread widened 0.4bps to 29.5 bps |
| Yesterday's Recap |
| SPX -1.22%
SPX Eq Wt -1.62% NASDAQ 100 -0.36% NASDAQ Comp -0.35% Russell Midcap -1.52% R2k -1.08% R1k Value -1.92% R1k Growth -0.61% R2k Value -1.51% R2k Growth -0.66% FANG+ +0.14% Semis +1.0% Software -0.2% Biotech +0.62% Regional Banks -3.5% SPX GICS1 Sorted: Tech +0.01% Comm Srvcs -0.4% Energy -0.86% Healthcare -0.93% REITs -1.21% SPX -1.22% Materials -1.38% Cons Disc -1.67% Utes -1.71% Cons Staples -1.78% Indu -1.96% Fin -3.54% |
| USD HY OaS |
| All Sectors -1.8bp
to 339bp All Sectors ex-Energy -3.2bp to 314bp Cons Disc -1.8bp to 310bp Indu -3.6bp to 255bp Tech -1.5bp to 338bp Comm Srvcs -0.8bp to 528bp Materials -0.9bp to 300bp Energy +4.4bp to 338bp Fin Snr -4.9bp to 281bp Fin Sub -4.4bp to 220bp Cons Staples -6.9bp to 306bp Healthcare -0.6bp to 368bp Utes -6.7bp to 240bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 3/5 | 9:45AM | Feb F S&P Srvcs PMI | 49.7 | 49.7 |
| 3/5 | 10AM | Feb ISM Srvcs PMI | 52.5 | 52.8 |
| 3/5 | 10AM | Jan F Durable Gds Orders | 3.1 | 3.1 |
| 3/6 | 8:30AM | 4Q F Nonfarm Productivity | 1.2 | 1.2 |
| 3/6 | 8:30AM | Jan Trade Balance | -128.8 | -98.431 |
| 3/6 | 8:30AM | 4Q F Unit Labor Costs | 3.0 | 3.0 |
| 3/7 | 8:30AM | Feb AHE m/m | 0.3 | 0.5 |
| 3/7 | 8:30AM | Feb Unemployment Rate | 4.0 | 4.0 |
| 3/7 | 8:30AM | Feb Non-farm Payrolls | 160.0 | 143.0 |
| 3/10 | 11AM | Feb NYFed 1yr Inf Exp | n/a | 3.0 |
| 3/11 | 6AM | Feb Small Biz Optimisum | n/a | 102.8 |
| 3/11 | 10AM | Jan JOLTS | n/a | 7600.0 |