February 26th Market Overview

Happy Wednesday.

The tariff sledgehammer shattered today's early hope, pushing the S&P 500 to its fifth consecutive loss. The market is holding its breath for Nvidia's earnings after the bell – a test that could either reignite the AI narrative or confirm the market's deepening anxiety about growth prospects in an increasingly uncertain trade landscape.

Come on NVDA “you can do ittttttttt”


Let's dig in...

Market Overview

Key Market Drivers

1. Trade Policy Escalation: Trump’s cabinet meeting comments confirmed Canada/Mexico tariffs while announcing new potential 25% EU tariffs, significantly increasing global trade tension risks.
   

2. Tech Momentum Fading: Key AI names showing weakness - $NVDA down 2% YTD despite today’s pre-earnings bounce; “Trump trades” (crypto, small caps, industrials) reversing all post-election gains.
   

3. Economic Data Misses: January new home sales (657k vs 671k expected) added to recent disappointments including retail sales and consumer confidence, raising economic slowdown concerns.
   

4. Positioning Ahead of Catalysts: Market positioning turning defensive before $NVDA earnings and additional economic data; real estate outperforming (+1.2% WTD) as defensive rotation continues.
   

Zillow's Co-Founder Wishes They Did This Before The IPO

Spencer Rascoff co-founded Zillow, scaling it into a $16b real estate giant.

But everyday investors couldn’t invest until after the IPO, missing early gains.

"I wish we had done a round accessible to retail investors prior to Zillow's IPO," Spencer said.

Now he’s doing just that. Spencer has teamed up with another Zillow exec to launch Pacaso. Pacaso’s co-ownership marketplace is disrupting the $1.3t vacation home market. And unlike Zillow, you can invest in Pacaso as a private company.

With $100m+ in gross profits and rapid international expansion, Pacaso is scaling fast. Investors like SoftBank, Maveron, and more are already on board. Join them as a Pacaso shareholder.

Invest in Pacaso stock here.

_{Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. There’s no guarantee that Pacaso will file for an IPO.}

Stock Spotlight

• $NVDA: ▲ 3.3% ahead of earnings. Secured 70% of TSMC's 2025 advanced packaging capacity. Rosenblatt expects "modest beat and raise" with Blackwell shipments on track for Q4.

• $CART: ▼ 11.86% on Q4 revenue miss ($883M vs $891M) and weak Q1 guidance. Adjusted EBITDA forecast $220-230M vs $237.1M expected. Worst day since IPO.

• $TSLA: ▼ 4.76% breaking below $300 support (first time since Nov 7). Market cap now under $1T, down 30% since Trump inauguration.

• $GO: ▼ 27.83% on earnings miss and restructuring. Announcing layoffs and store opening cuts. Deutsche Bank downgraded to hold citing "deeper challenges."

• $BUD: ▲ 7.70% on Q4 beat. EPS $0.88 vs $0.69 expected; revenue $14.84B vs $14.18B. Best day since October 2021.

Big Name Updates

• $GM: ▲ 3.83% on 25% dividend hike to $0.15/share and $6B buyback ($2B in Q2).

• $LOW: ▲ 2.19% beating Q4 estimates. EPS $1.93 vs $1.84; revenue $18.55B vs $18.3B.

• $SMCI: ▲ 12.60% after submitting delayed financials ahead of Nasdaq deadline, avoiding delisting risk.

• $BABA: ▲ 3.63% on Morgan Stanley upgrade to overweight ($180 PT from $100) and $53B AI/cloud investment announcement.

• $CPNG: ▲ 5% on Deutsche Bank upgrade to buy. Korean e-commerce growth 21% despite tough market.

Other Notable Company News

• $HOOD: SEC closed Robinhood Crypto investigation without action.
  

• $SNOW: Bernstein raised PT to $161 from $154 ahead of earnings.
  

• $PLTR: Bloomberg highlighted Pentagon budget cut risks impacting valuation.
  

• $LLY: Bernstein upgraded to Outperform ($1,100 PT) citing Zepbound/Mounjaro upside as semaglutide shortage resolves.
  

• $NKE: Jefferies upgraded to Buy from Hold (PT $115 from $75) on product/distribution improvements under CEO H

Sector Watch

Bond Market

10-year Treasury yield fell 4.6 bps to 4.252%. Treasury yields down ~50 bps from mid-January peaks as economic concerns outweigh inflation worries. Liz Ann Sonders (Charles Schwab) notes "policy uncertainty has filtered into soft data," impacting capital expenditure intentions.

Policy Watch

Trump stated "I'm not stopping the tariffs" on Mexico and Canada, confirming they will proceed with "no exceptions." He announced expansion to include 25% tariffs on EU goods. His justification: "We've been taken advantage of as a country for a long period of time. We've been tariffed, but we didn't tariff." Implementation timeline remains unclear.

What to Watch

1. Nvidia Earnings (After Close):

   • Data center growth rate vs analyst expectations

   • Gross margin guidance amid AI chip competition

   • Blackwell production schedule confirmation

   • Commentary on DeepSeek competitive threat

   • Guidance for 2025 amid reports of secured TSMC packaging capacity
     

2. Trade Policy Implementation:

   • Specific timelines for Canada/Mexico tariffs

   • EU reaction to proposed 25% tariffs

   • Sector vulnerability (autos, agriculture, manufacturing)

   • Corporate responses to new trade landscape
     

3. Technical Levels/Positioning:

   • S&P 500 testing five-day losing streak support

   • $TSLA behavior at sub-$300 level

   • "Trump trades" unwinding (crypto, small caps, industrials)

   • Defensive sector rotation continuation