Good morning,

The stock market traded with cautious-looking price action in the first half of the week, but buying activity picked up in the second half. This left the Nasdaq Composite at a fresh all-time high by Friday’s close.

The S&P 500 and Dow Jones Industrial Average had already reached new record highs earlier this year. The fact that the Nasdaq was approaching its record close coming into the week contributed to a growing feeling among some investors that stocks were due for a pullback. This drove the early lackluster trading as participants waited on market-moving events.

Have a great week!

Irving Wilkinson, Editor

AlphaBetaStock.com

Table of Contents (Opens On Main Site)

Week In Review

Key Events Support Stocks

There were no major surprises in Thursday’s personal income and spending data, including the Fed’s preferred inflation gauge – the core personal consumption expenditures (PCE) price index. Disinflation continued, with core PCE rising 2.8% year-over-year, down from 2.9%. This reinforced expectations for Fed rate cuts later this year.

The Nasdaq’s gains were largely driven by mega-cap and semiconductor stocks, but many other names participated too. Small-caps outperformed, with the Russell 2000 gaining 3.0% on the week. The only S&P sector in the red was health care.

Treasury yields declined, providing further support. The 10-year yield settled at 4.18%, down from 4.26% last Friday. This move followed underwhelming demand at Treasury auctions earlier in the week.

Earnings Roundup

The quarterly earnings season continued, with strong reports from some influential names like Salesforce (CRM). Shares of the software firm jumped 8.2% after its earnings release.

However, the healthcare sector was weighed down by UnitedHealth Group (UNH) on news that the U.S. Department of Justice has opened an antitrust investigation into the company.

Bonds And Interest Rates

Treasury yields declined this week, acting as added support for the stock market. The 2-yr note yield sank 19 basis points to 4.53% and the 10-yr note yield settled eight basis points lower at 4.18%. This price action followed a disappointing $63 billion 2-yr note auction the $64 billion 5-yr note sale, and a solid $42 billion 7-yr note offering

Latest Economic Data

There were some concerning signals on the economic front. The ISM Manufacturing Index dropped to 47.8 in February, showing faster contraction in factory activity. New orders and production slowed.

However, inflationary pressures appeared to ease, with the prices paid index declining from 51.6 to 50.8. The employment component also fell but remained in expansion territory at 50.6.

Meanwhile, pending home sales unexpectedly plunged 4.9% month-over-month in January as higher mortgage rates continue to constrain housing affordability.

Overall, stocks shook off the mixed bag of data to close out a strong February. But with the major averages back near highs and Treasury yields declining, we could see some consolidation or a pullback in March as investors reassess portfolio exposures.

Key Takeaways For Investors:

The path forward promises to remain volatile. Investors should stay nimble, focusing on solid fundamentals and long-term perspectives. This is not the time for complacency, but opportunities exist for those taking a prudent approach.

Oil & Energy

The oil market continues to face both upside and downside risks, keeping prices rangebound between $79 and $83 per barrel. On the upside, tensions remain high in the Middle East. Crossing the Red Sea faces threats from Yemen’s Houthi rebels, while civilian casualties in Gaza complicate ceasefire talks. On the downside, oil inventories in the U.S. rose by around 4 million barrels last week.

Overall, crude prices gained about 2% this week. Brent crude trades around $83/barrel while WTI sits at $79/barrel. The market remains torn between prospects for rate cuts boosting demand and uncertainties around demand, especially from China.

Industrial metal prices were volatile this week as the latest economic data from China painted a mixed picture of metal demand. The official manufacturing PMI remained in contraction at 49.1, indicating shrinking activity. However, the Caixin PMI showed continued expansion at 50.9.

Copper trades around $8,400/tonne on the London Metal Exchange. Gold rebounded to $2,055/oz as bond yields eased, reducing the opportunity cost of holding non-yielding bullion.

Bitcoin had a blistering February with gains of 43%, its best month since December 2020. This week saw record inflows into Bitcoin Spot ETFs of $673 million on Wednesday alone, sending Bitcoin prices nearing the $62,000 mark. This renewed wave of optimism also lifted other major cryptocurrencies:

Speculation has clearly returned to the crypto market, with Bitcoin tapping into new investor interest through spot ETFs. If inflows continue, Bitcoin could challenge its all-time highs soon. But as always with crypto, high volatility remains a constant threat.

Calendar & Movers

Economic Reports

The headline economic event this week will undoubtedly be the U.S. jobs report for February, set for release on Friday, March 8th. Economists forecast that employment likely increased by 190,000 jobs during the month, while the unemployment rate is expected to hold steady at 3.7%.

Importantly, the month-over-month increase in average hourly earnings is anticipated to slow to +0.2% from the stronger +0.6% pace reported in January.

The jobs data will arrive just 12 days before the next Federal Reserve Open Market Committee meeting on March 20th. The Fed will be closely watching the wage growth and jobs numbers as it evaluates potential future rate hikes.

Earnings Season Winds Down

The earnings season is winding down dramatically, although there are still some big names on tap, especially in the tech and consumer sectors.

Key tech earnings reports expected include:

On the consumer side, heavyweights Target (TGT) and Costco (COST) will report earnings on Tuesday, March 5th and Thursday, March 7th respectively.

Additionally, the Morgan Stanley Technology, Media and Telecom Conference could spur some stock movements. Confirmed participants feature big tech names like Nvidia (NVDA), AMD (AMD), and Netflix (NFLX).

Cryptocurrencies Back In Focus

The cryptocurrency market could see renewed interest and activity again next week as buzz continues to build over the Bitcoin halving event expected to occur in April.

The halving event essentially cuts the reward for mining new bitcoin in half, and occurs approximately every four years. Some crypto enthusiasts believe the reduced bitcoin supply could boost prices over the longer term.

Notable Earnings Reports By Day

Here is a rundown of the major earnings reports to watch day-by-day next week:

Monday, March 4th

Tuesday, March 5th

Wednesday, March 6th

Thursday, March 7th

Friday, March 8th

There are certainly some market-moving events on tap this week between the jobs data, a major Fed meeting looming, big tech earnings, and the possibility of renewed crypto volatility. It should make for an interesting week for investors and traders to navigate.

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