March 7th Market Overview

Happy Friday.

Bit of a rollercoaster today—markets took a tank this morning but managed to climb back into the flat zone by close. The jobs report came in weaker than expected, and Powell's basically saying, "we're in no rush to cut rates until Trump's policy agenda becomes clearer."

Energy stocks are having a moment as Trump threatens Russia with sanctions over Ukraine. Despite today's recovery, we're still wrapping up the worst week since September. At least the VIX is finally cooling off a bit, giving us all a chance to breathe. If this tariff uncertainty keeps up much longer, I might need to invest in antacids instead of this kangaroo market.

Let's dig in...

Executive Summary

• Markets rebounded today but remain on track for worst week since September amid ongoing trade policy uncertainty
  

• February jobs report fell short with 151,000 positions added (vs. 170,000 expected) and unemployment ticking up to 4.1%
  

• Fed Chair Powell emphasized “no need to hurry” on rate cuts, citing need for “greater clarity” on Trump administration’s policy impacts
  

• Energy and Utilities sectors led gains as President Trump threatened new sanctions against Russia over Ukraine
  

• VIX fell 5.03%, indicating reduced market anxiety compared to earlier this week
  

Market Overview

Key Market Drivers

1. Jobs Report Misses Mark: February nonfarm payrolls showed 151,000 jobs added, below economists’ expectations of 170,000, while unemployment rose from 4% to 4.1%. The federal government shed 10,000 jobs as Musk’s Department of Government Efficiency (DOGE) initiatives begin impacting the labor market.

2. Tariff Policy Adjustments: President Trump paused tariffs on most imports from Mexico and Canada until April 2, providing temporary relief to markets. This move effectively walked back much of the original plan for levies on North American trading partners, though uncertainty persists about long-term trade policy direction.

3. Fed Signals Patience: Federal Reserve Chair Jerome Powell emphasized the central bank is “well positioned to wait for greater clarity” before cutting interest rates. Powell noted the administration “is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy and regulation.”

4. Geopolitical Tensions: Oil rallied after President Trump threatened banking sanctions and tariffs on Russia until a ceasefire and final peace settlement with Ukraine is reached. Media reports suggest Russia may be willing to discuss a temporary truce.

Stock Spotlight

• $MCD ( ▼ 1.14% ) : McDonald’s reached a record high as it rolls out technology upgrades across 43,000 locations, including AI-enabled drive-throughs and kitchen equipment.

• $AVGO ( ▲ 0.33% ) : Broadcom up after issuing a strong Q2 forecast that eased concerns about AI chip demand, with Morgan Stanley analysts calling the results “a relief.”

• $WBA ( ▼ 0.55% ) : Walgreens Boots Alliance jumped after announcing a deal to be acquired by Sycamore Partners worth up to $23.7 billion.

• $COST ( ▼ 0.25% ) : Costco fell after Q2 earnings missed expectations at $4.02 per share versus $4.11 estimate.

Big Name Updates

$NVDA ( ▲ 1.35% ) : Nvidia has shed approximately $1 trillion in market value since its January peak, dropping from $3.6 trillion to $2.6 trillion amid concerns about lofty valuations. Closing green by eod

$TSLA ( ▲ 0.7% ) : Tesla has now erased nearly all post-election gains, approaching its pre-election close of $251.44 as market enthusiasm wanes amid tariff concerns.

$BTC.X ( ▼ 1.49% ) : Bitcoin traded lower after Trump signed an executive order establishing a strategic Bitcoin reserve using approximately 200,000 coins from government seizures.

Other Notable Company News

Treasury Secretary Bessent acknowledged the economy could be “starting to roll a bit” but characterized this as a transition from the previous administration’s policies. He emphasized tariffs would create a “one-time price adjustment” rather than persistent inflation.

Nasdaq announced plans for 24-hour trading five days a week beginning in the second half of 2026, joining similar initiatives from Cboe Global Markets and NYSE.

Sector Watch

Bond Market

The 10-year Treasury yield climbed to 4.318% following the jobs report. The U.S. dollar headed for its worst week since 2022, down 3.6% as investors reassess economic conditions and policy direction.

Policy Watch

President Trump continued refining trade policy, pausing North American tariffs while threatening Russia with sanctions. Canada matched the delay in retaliatory duties, but Mexico has yet to respond directly.

Federal government employment fell by 10,000 in February as DOGE initiatives take effect, with total government job contributions dropping to just 11,000 last month from 44,000 in January.

What to Watch

1. Financial Sector Weakness: Financial stocks head for worst week since March 2023, with the sector down 6.8% and led by KKR (-18%ish), Capital One and Discover (both -15%ish).
   

2. Defense Stock Opportunity: Wells Fargo highlights “underappreciated” international demand for U.S. defense stocks, with 20% higher spending from top customers in 2024 and Northrop Grumman and L3Harris as top picks.
   

3. Fed Meeting Approaching: The March 18-19 policy meeting draws near with Powell signaling patience, making upcoming economic data particularly significant for rate expectations.

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Thanks for reading 🙂

- John