Buy Red / Blue Chips this Week or Wait ?
On Fri, 07 Mar 2025, US market experienced yet another day of volatile trading, that managed to close higher, capping off a tumultuous week.
Approximately 55% of NYSE stocks and 48% of Nasdaq stocks advanced.
New 52-week lows outnumbered new highs by 69 to 31 on the NYSE.
By the time market closed for the Day:
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DJIA: +0.52% (+222.64 to 42,801.72).
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S&P 500: +0.56% (+31.69 to 5,770.20). Fell below its closely-watched 200 day moving average.
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Nasdaq: +0.71% (+126.97 to 18,196.23). Index is in “correction territory”, having recoiled more than -10% from its December 2024 record high.
For the Week:
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DJIA: -2.50% (-1,098.77 to 42,801.72).
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S&P 500: -3.32% (-198.13 to 5,770.20).
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Nasdaq: -3.84% (-727.14 to 18,196.23).
Friday’s Catalysts.
The 2 key catalysts that helped turned US market around after midday were:
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US non-farm payroll report.
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Fed chair Mr Jerome Powell comments.
(1) Non-Farm payroll (NFP).
For February 2025, the number of jobs added was 151,000 vs analysts estimates of 159,000 vs January’s downwards revised 125,000 jobs. (see above)
Although it fell short of estimates by -8,000 jobs, comparatively speaking it was upped against January’s jobs numbers by +26,000 jobs. That calls for a “yay”, right !
(2) Unemployment.
Unfortunately, the same could not be concluded for US Unemployment report for February 2025. (see above)
US unemployment that started to fall & pause since July 2025, has edged up to 4.1% from January's 4.0%.
This is ‘worrisome’ coming in the midst of Trump’s massive Doge layoffs is not something to be brush off easily without concerns.
Overall,
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While the job growth was lower than expected, it still indicated a relatively resilient labour market.
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There are, however, concerns about potential challenges ahead due to trade policy uncertainties and federal government spending cuts.
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The NFP report suggests a modest softening in labour market conditions, although overall employment remains historically robust.
(3) Fed Chair’s Speech.
On Fri, 07 Mar 2025, Fed Chair, Mr Jerome Powell spoke at an event hosted by the University of Chicago Booth School of Business.
His remarks in his speech and Q&A session helped to soothe investors’ nerves, just in time before the start of communications blackout period for the Fed's FOMC March 18-19 policy meeting.
Powell's remarks "contain no big surprises but (i) provide an anxious market with reassurance on growth, (ii) while conveying an underlying somewhat dovish tone on policy.
What did Powell say:
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In a simple case where we know tariff's a one-time thing, the textbook would say look through it, with no need for the Fed to respond with tighter monetary policy.
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It's important to consider a few key points. (1) If inflation increases become a series of events and are larger than expected, that would be significant. (2) What really matters is how long-term inflation expectations change and (3) whether the inflationary effects are temporary or lasting.
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Recounted trade actions Trump undertook in 2018, during his first presidential term, far from being inflationary, they caused global growth to slow and led the Fed to cut interest rates instead.
What’s In-store This Week ?
With US non-farm payroll report released on Friday, this signals jobs & unemployment data (or worries) will swap places again with inflation data, and a host of other economic reports.
Economic reports:
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Tues, 11 Mar 2025 - NFIB Business Optimism Index.
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Tue, 11 Mar 2025 - Job openings and labour turnover surveys (JOLTs).
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Wed, 12 Mar 2025 - Consumer price index (CPI) **
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Wed, 12 Mar 2025 - Monthly US federal budget.
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Thu, 13 Mar 2025 - Producer price index (PPI) **
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Fri, 14 Mar 2025 - US consumer sentiments (prelim) for March 2025.
Legend:
The National Federation of Independent Business (NFIB) report measures sentiment & confidence of small business owners in the US. It is widely regarded as a leading economic indicator due to its ability to reflect the outlook and expectations of small businesses, that are critical drivers of the U.S. economy.
Meanwhile, the Monthly US federal budget is a financial report published by US Department of the Treasury, headed by Scott Bessent. It summarizes financial activities of the new Trump federal government and off-budget federal entities and serves as a key tool for understanding federal financial operations.
Going forward this will be an interesting report to read & see if what is reported is congruent to all monthly published, US economic reports.
Quarterly Earnings reports:
Below are selected listed companies that will be reporting their Q4 2024 earnings.
Will be interesting to find out as Q4 earning season tails off gradually….
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Mon, 10 Mar 2025 - $Oracle(ORCL)$.
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Tue, 11 Mar 2025 - $NIO Inc.(NIO)$.
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Wed, 12 Mar 2025 - $Adobe(ADBE)$.
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Wed, 12 Mar 2025 - $SentinelOne, Inc(S)$.
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Fri, 14 Mar 2025 - $Li Auto(LI)$.
Facts.
As of 9 Mar 2025, 491 of 500 S&P 500 companies (98.2%) have already reported their Q4 2024 earnings, leaving 9 more companies to report theirs. (see above)
Earnings vs Revenue.
Based on 491 companies that have reported their earnings and revenue (see above), at a glance it is easy to tell which are the “top” performing sectors for Q4 2024, where revenue has topped estimates:
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Technology - 83%. Companies like AAPL, MSFT and NVDA (by market cap).
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Healthcare - 80%. Companies like UNH, LLY and JNJ (by market cap).
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Comm. services - 74%. Companies like META, GOOG/GOOGL and NFLX (by market cap).
With all the chaos brought about by the 25% tariffs:
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Against China, Mexico and Canada - currently.
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Against the rest of the world - come April 2025.
Should investors start to adjust their portfolio and more importantly, where to? Top 3 sectors listed above or ??? ** Remember, on the run up to inflation report release, market is usually jittery.
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Do you think the economic reports will exert upwards or downwards pressure on the US market this week ?
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Do you think Chinese EV makers (NIO & Li Auto) will rise with their earnings reports?
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