The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.47%, the Dow Jones Industrials Index ($DOWI) (DIA) rose +0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell by -1.24%. March E-mini S&P futures (ESH25) fell -0.42%, and March E-mini Nasdaq futures (NQH25) fell -1.20%.
Tech stocks were weak again Tuesday, dragging the rest of the stock market lower. The Nasdaq 100 index on Tuesday fell -1.24%, adding to the losses of -2.06% last Friday and -1.11% on Monday. There was a risk-off tenor in the markets due to tariff risks and concern about the US economy with Tuesday’s sharp drop in US consumer confidence.
Some chip stocks also showed weakness on reports that the Trump administration is preparing new restrictions on chip sales to China. By contrast, the US stock market saw underlying support from Tuesday’s sharp -11 bp decline in the 10-year T-note yield.
Tuesday’s Feb Conference Board US consumer confidence index fell sharply by -7.0 points to an 8-month low of 98.3, much weaker than expectations for a decline to 102.5. The -7.0 point drop was the largest drop in 2-1/2 years and was the third consecutive monthly decline.
Cryptocurrency prices fell sharply with the risk-off tenor in the markets. Bitcoin (^BTCUSD) fell more than -6%, and Ether (^ETHUSD) fell more than -5%, adding to Monday’s loss of -6%. In addition to the risk-off environment, the crypto sector was hurt by last week’s news of the massive $1.5 billion Ether hack of the Bybit crypto exchange, and a memecoin scandal involving Argentina President Milei.
The Trump administration plans to tighten chip controls on China and is also pressuring European and Asian countries to tighten restrictions on selling chips and chip-making equipment to China, according to a report Tuesday by Bloomberg. The administration is also considering sanctions on specific Chinese companies to restrict China’s ability to build a domestic chip industry for supporting AI and military capabilities.
President Trump on Monday afternoon, at a joint press conference with French President Macron, said that US tariffs on imports from Mexico and Canada will go ahead “on time, on schedule.” Mr. Trump delayed the tariffs by a month until March 4 due to new border measures implemented by both Canada and Mexico. Mr. Trump on Monday also said he plans to go ahead with the “reciprocal tariffs” that he previously said would be ready by April 1. Separately, President Trump recently issued a memorandum to the US Committee on Foreign Investment in the US (CFIUS) instructing the Committee to limit China’s ability to invest in key US sectors such as technology, food, farmland, minerals, natural resources, ports, and shipping terminals.
US home prices showed solid increases in December. The Dec S&P Corelogic US home price index rose +0.52% m/m and +4.48% y/y, slightly stronger than expectations of +0.40% m/m and +4.41% y/y, and was stronger than Nov’s revised report of +0.44% m/m and +4.35% y/y. Meanwhile, the Dec FHFA US house price index rose +0.4% m/m and +1.4% y/y, which followed Nov’s revised report of +0.4% m/m and +0.9% y/y.
Stock investors are looking ahead to Nvidia’s earnings report after Wednesday’s close. This remainder of this week’s USeconomic calendaris busy. Thursday’s US Q4 GDP report is expected to show an increase of +2.3% (q/q annualized), with a +4.1% increase in personal consumption. Friday’s Jan PCE price index report, the Fed’s preferred inflation measure, is expected to ease slightly to +2.5% y/y from December’s +2.6%, and the core index is expected to ease to +2.6% y/y from December’s +2.8%. The expected Jan PCE reports of +2.5% nominal and +2.6% core would leave those measures at or above their 3-3/4 year lows posted in 2024 of +2.1% and +2.6%, respectively, and well above the Fed’s +2% inflation target.
The markets are discounting the chances at 3% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets Tuesday closed lower. The Euro Stoxx 50 fell -0.11%. China’s Shanghai Composite Index closed down -0.80%. Japan’s Nikkei Stock 225 closed down -1.39%.
Interest Rates
March 10-year T-notes (ZNH25) rose +22 ticks. The 10-year T-note yield fell by -10.8 bp to 4.293%. March T-note prices fell on Tuesday’s weak US consumer confidence report and on increased safe-haven demand tied to weakness in tech stocks and cryptocurrencies.
T-note prices were undercut by supply overhang as the Treasury sold $70 billion of 5-year T-notes on Tuesday. On Wednesday, the Treasury will sell $28 billion of floating-rate 2-year T-notes and $44 billion of 7-year T-notes.
European bond yields fell on Tuesday. The 10-year German bund yield fell -2.0 bp to 2.458%. The 10-year UK gilt yield fell -5.5 bp to 4.509%.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
All the Magnificent Seven stocks closed lower on Tuesday. Tesla (TSLA) was the largest loser of the Magnificent Seven, with a loss of more than -8% on reports that Tesla sales in Europe in January tanked by -45% y/y while overall European EV sales rose +37%.
Some chip stocks traded lower Tuesday on reports that the Trump administration is planning new restrictions on chip sales to China. Also, Nvidia (NVDA) fell more than -3% and showed volatility ahead of its earnings report after Wednesday’s close. Marvell Technology (MRVL) and Intel (INTC) fell by more than -5%.
Crypto stocks traded lower on Tuesday with the sharp sell-off in cryptocurrencies. MicroStrategy (MSTR) fell more than -11%, MARA Holdings (MARA) fell more than -10%, and Coinbase (COIN) and Riot Platforms (RIOT) fell more than -6%.
Restaurant stocks were in the spotlight after the National Restaurant Association Tuesday urged President Trump in a letter to exempt food and drinks from tariffs, which could total as much as $12 billion and cut profits for small restaurant owners by as much as 30%. Darden Restaurants (DRI), Texas Roadhouse (TXRH), and Wingstop (WING) rose by more than +1%, but the Cheesecake Factory (CAKE) fell -1.2%.
Home Depot (HD) rose more than +2% after management said it expects comparable sales to rise +1% in the fiscal year through January 2026, although the company expects continued consumer caution on large home improvement projects.
Zoom Communications (ZM) fell by more than -8% after negative management guidance.
Eli Lilly (LLY) rose more than +2% after the pharma company cut prices for its obesity drug Zepbound
To combat competition.
Krispy Kreme (DNUT) plunged -22% after disappointing revenue guidance.
Earnings Reports (2/26/2025)
Verisk Analytics Inc (VRSK), NRG Energy Inc (NRG), Lowe’s Cos Inc (LOW), TJX Cos Inc/The (TJX), Invitation Homes Inc (INVH), Agilent Technologies Inc (A), APA Corp (APA), Universal Health Services Inc (UHS), Synopsys Inc (SNPS), eBay Inc (EBAY), NVIDIA Corp (NVDA), FirstEnergy Corp (FE), Salesforce Inc (CRM), Paramount Global (PARA).
