February 27th Market Overview

Happy Thursday

The blood bath continues. Indices turned sharply south today as trade policy developments rattled investors and $NVDA dropped 7.4% despite strong earnings.

Higher-than-expected jobless claims added to the caution.

Let's dig in...

Market Overview

Key Market Drivers

1. Tariff Announcements: Trump declared 25% tariffs on Mexico and Canada effective March 4, with China facing an additional 10% levy, citing inadequate drug control at borders.
   

2. Economic Data Concerns: Jobless claims rose to 242,000 vs. 225,000 forecast, following disappointing consumer confidence and retail sales data.
   

3. Earnings Season Mixed Signals: $NVDA's earnings beat expectations but showed declining gross margins and smallest revenue beat in two years.
   

4. Fed Policy Outlook: Cleveland Fed’s Hammack indicated rates will remain steady until clearer signs of sustainable inflation reduction emerge.
   

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Stock Spotlight

• $NVDA (▼ 7.4%): Beat Q4 estimates but investors focused on declining gross margins and smallest revenue beat in two years. Revenue increased 78% for quarter and 114% for full year, reaching $130.5 billion. Bank of America’s Vivek Arya maintained $200 target, calling stock “compellingly valued.”
  

• $PLTR (▼ 5.0%): Down 12% this week after 15% decline last week, marking first back-to-back weeks with 10%+ drops since August 2022. Still up 17% in 2025.
  

• $FCX (▼ 1.5%): Upgraded to “buy” by Jefferies, citing improved cash flow and potential tariff benefits. Price target raised to $48 from $40.
  

• $EBAY (▼ 8% pre-market): Slumped after Q1 revenue guidance missed expectations ($2.52-2.56B vs. $2.59B analyst estimate).
  

• $GEV (JP Morgan focus list): Added after 13% decline since last Thursday. JP Morgan sees substantial earnings growth potential regardless of tech sector spending.

Big Name Updates

• $AMZN: Unveiled rebuilt Alexa with generative AI, adding real-time conversation and booking features. Also introduced “Ocelot” quantum computing chip, potentially reducing costs by 90%.
  

• $MSFT: Lobbying for easier AI chip export rules, warning current restrictions could push allies toward China for AI infrastructure.
  

• $NVDA: Multiple analyst reiterations/raises post-earnings: UBS maintained $185, Morgan Stanley raised to $162 from $152, Bernstein increased to $185 from $175.
  

• $COF: CFPB dismissed enforcement lawsuits initiated during Biden administration, reducing regulatory pressure.

Other Notable Company News

• $SNOW (▲ 9% after hours): Beat Q4 expectations with EPS of $0.30 vs. $0.17 forecast. Revenue up 27% to $987M. Announced expanded Microsoft partnership and pending OpenAI collaboration.
  

• $CRM (flat after hours): Mixed Q4 results with earnings beat ($2.78 vs. $2.61) but revenue miss ($9.99B vs. $10.04B). Several analysts lowered targets.
  

• $SMCI: Barclays reinstated coverage with Equal Weight rating ($59 target), noting “competitive moat is shrinking.”
  

• $VZ: FAA may cancel $2B contract as Starlink tests begin.
  

• $RDDT: CEO stated platforms may eventually let “users choose their own algorithms.”

Sector Watch

Bond Market

Cleveland Fed President Hammack indicated rates will hold “for some time,” requiring “broad-based evidence that inflation is sustainably returning to 2 percent before adjusting policy further.”

Traders await Friday’s personal consumption expenditures price index release, the Fed’s preferred inflation gauge.

Policy Watch

CFPB dismissed several enforcement lawsuits from the Biden era, including actions against $COF, Rocket Homes Real Estate, and Berkshire-owned Vanderbilt Mortgage.

The agency has dramatically scaled back under acting Director Russell Vought, working with Elon Musk’s Department of Government Efficiency.

India reportedly weighing tariff cuts on cars and chemicals as Trump’s duties loom.

What to Watch Out For

1. PCE Inflation Data (Friday):

   • Fed’s preferred gauge will influence rate decision outlook

   • Higher reading could reduce chances of near-term cuts

   • Focus on both headline and core inflation trends
     

2. Tariff Implementation Details:

   • Industry-specific impacts as March 4th deadline approaches

   • Potential exemptions that might soften economic blow

   • Corporate response announcements and supply chain adjustments
     

3. Housing Market Data:

   • January pending sales hit historic low (70.6, down 4.6%)

   • NAR cited “elevated prices and higher mortgage rates”

   • Early indicators for spring buying season
     

4. Blackwell Chip Rollout:

   • $NVDA's architecture delivered $11B in Q4 revenue

   • GTC conference will showcase Blackwell Ultra

   • Potential margin expansion and competitive responses
     

5. AAII Sentiment Indicator:

   • Bull-bear sentiment at -41.2, most bearish since Sept 2022

   • 60% bearish despite S&P 500 only 3% off all-time highs

   • Extreme bearish sentiment often precedes rebounds