February 24th Market Overview

Happy Monday.

Catching our breath after Friday's bruising selloff, we're seeing a market divided today. Dow recovers some ground, tech continues their fallback. A legendary investor celebrates massive insurance gains, a defense tech darling extends its losing streak, and America's largest company makes a strategic $500 billion bet

 A personal ask from me - Consider checking out today's sponsor - it buys me a sip of coffee. It costs you $0, takes seconds, and keeps these insights coming daily (that's my pitch)

Let's dig in...

Market Overview

Key Market Drivers

1. Economic Data Concerns: February PMI readings showed contraction in the US services sector while consumer sentiment fell below expectations, raising questions about economic resilience
   

2. Earnings Season Focus: Upcoming reports from $HD, $LOW, and $NVDA will provide crucial insights into both consumer spending and AI demand
   

3. Trade Tension Escalation: President Trump signed a memo directing CFIUS to tighten restrictions on Chinese investments in key US sectors, stoking fears of retaliatory measures
   

Are oil & gas royalties right for you?

Klondike Royalties invites you to own a stake in the North Block of Alaska's Kitchen Lights Unit, with an estimated 300 million barrels of recoverable reserves. Our royalty-based model offers potential for steady returns without the complexities of direct asset ownership.

Show Me More

Read the Offering information carefully before investing. It contains details of the issuer’s business, risks, charges, expenses, and other information, which should be considered before investing. Obtain a Form C and Offering Memorandum at invest.klondikeroyalties.com.

Stock Spotlight

• $BRK.A: Shares jumped nearly 4% after reporting Q4 operating profit skyrocketing 71% to $14.5 billion, led by a 302% jump in insurance underwriting with cash holdings growing to $334.2 billion
  

• $PLTR: Tumbled 10% today, extending its losing streak to four consecutive days with a 23% drop over the past week as Bloomberg highlighted concerns about Pentagon budget cuts
  

• $HOOD: Gained after the SEC closed its investigation into the company’s crypto unit without taking enforcement action, potentially signaling a regulatory shift for the crypto industry
  

• $META: Slipped 1.9% and headed for its fifth straight day of losses, dropping nearly 10% since the streak began despite being up 14% year-to-date

Big Name Updates

• $AAPL: Announced a record $500 billion US investment, creating 20,000 jobs focused on AI and advanced manufacturing, widely viewed as positioning ahead of potential Trump tariffs
  

• $MSFT: Shed about 1% after TD Cowen reported the company cutting data center spending, though Jefferies contradicted this claim, stating Microsoft refuted any change to its data center strategy
  

• $NVDA: Rosenblatt reiterated buy rating, noting they expect a “modest beat and raise” in Wednesday’s earnings report while reporting that Nvidia secured 70% of TSMC’s advanced packaging for 2025
  

• $BABA: Morgan Stanley upgraded to overweight with $180 price target (from $100) as the company announced plans to invest $53 billion in cloud and AI infrastructure over three years

Other Notable Company News

• $SBUX: Announced cutting 1,100 corporate jobs as part of CEO Brian Niccol’s effort to simplify operations, emphasizing layoffs would not affect in-store teams or store hour investments
  

• $DPZ: Fell 1.9% after reporting Q4 earnings below expectations with US same-store sales increasing just 0.4% versus 1.1% analyst forecast
  

• $RIVN: Bank of America downgraded to underperform from neutral, lowering price target to $10 from $13 citing softer outlook and increasing competition
  

• $NKE: Jefferies upgraded to buy from hold, raising price target to $115 from $75, noting CEO John Hill’s efforts to address product and distribution issues

Sector Watch

Bond Market

10-year Treasury yield down 2.6 basis points to 4.394%. Bond traders now focus squarely on Friday's PCE inflation report for Fed policy signals. Bank of America maintains the Fed will hold rates steady for at least six months regardless of Friday's numbers, reflecting broader market consensus that near-term rate adjustments remain unlikely despite recent volatility.

Policy Watch

President Trump escalated trade tensions by directing CFIUS to block Chinese access to US capital and technology that could strengthen China's military capabilities.

This move carries significant implications:

• Bank of America warns PC manufacturers including $DELL, $HPQ, and $AAPL will likely raise prices by "at least 10%" due to tariffs
  

• UBS cautions that policy error risks are "creeping up," potentially triggering near-term market volatility
  

• On the geopolitical front, Trump suggested a Ukraine peace deal could emerge this week, with Zelenskiy indicating willingness to step down to secure peace
  

• German political shifts also merit attention, as opposition leader Merz won yesterday's election and plans to form a government within two months that could end debt limits and boost fiscal spending
  

What to Watch

1. Nvidia Earnings Wednesday:

   • Will Nvidia maintain its AI throne as chip demand meets supply constraints?

   • Key focus: Blackwell chipset production timeline - any delays could rattle markets

   • Data center spending commentary serves as crucial barometer for entire AI sector health
     

2. PCE Inflation Data Friday:

   • January PCE release becomes market pivot point after alarming CPI and PPI readings

   • Numbers above 3% would complicate Fed rate cut timeline expectations

   • Bond market likely to react immediately to any surprise in core components
     

3. Retail Earnings (Home Depot Tuesday, Lowe's Wednesday):

   • Home improvement giants reveal true state of consumer spending and housing market

   • Spring outlook comments matter more than backward-looking Q4 results

   • Listen for inventory levels as signal of retailer confidence in consumer spending
     

4. Trump Trade Policy Developments:

   • Tariff specifics could trigger immediate supply chain disruptions across tech sector

   • Watch for corporate guidance adjustments citing increased input costs

   • China retaliation risk grows with each new trade restriction announcement