Stock Market Update Monday March 3, 2025 Equities erased Friday’s gains, with the S&P 500 (SPX) turning negative year-to-date, as risk appetite deteriorated. An early rally attempt failed to gain traction, and selling pressure intensified following confirmation that scheduled tariffs will proceed as planned, compounded by disappointing manufacturing data and the Atlanta Fed’s GDPNow model forecasting a contraction in Q1 GDP.
S&P 500 (SPX): -1.8%
Nasdaq 100 (QQQ): -2.2%
Russell 2000 (IWM): -2.8%
Away From Stocks: Treasury's rallied, with yields declining across the curve:
2-year yield: 3.96% (-3 bps)
30-year yield: 4.45% (-6 bps)
WTI crude oil pulled back to $68 per barrel, reflecting growth concerns.
Gold rebounded to $2,894 per ounce, benefiting from flight-to-safety demand.
Bitcoin failed to sustain Monday’s "Trump pump," retreating from $86,200.
The VIX surged over three points, closing near 23, signaling increased volatility expectations.
Market Outlook: Is a Change on the Horizon?
We expect current market conditions to lead to a possible low point in stock prices in the coming weeks. This expected increase in stock prices is likely to be supported by renewed monetary assistance from the Federal Reserve and fiscal measures from the Trump administration, along with positive trends in cryptocurrency markets. However, it is crucial to remain patient and wait for buy signals from our proprietary algorithms for Bitcoin and the SPY, RSP, QQQ, IWM, and DIA ETF's before making any new investments. Our investment strategy emphasizes a disciplined approach, avoiding market timing and emotional decisions in favor of algorithm-based entry points.
Over the weekend, Trump posted about creating a U.S. crypto reserve, naming several cryptocurrencies like XRP, Solana, Cardano, Bitcoin, and Ethereum. This spurred a significant rally in the crypto market. However, we currently do not have buy alerts from our proprietary algorithm for any of these digital currencies. Our investment strategy prioritizes a disciplined approach, avoiding market timing and emotional decisions, and instead relies on algorithm-based entry points.
I want to discuss the upcoming week, as I anticipate it will begin with tariff-related news and concerns over the jobs report. However, we believe this will ultimately reveal support from both Trump and the Federal Reserve, leading to a positive outcome despite initial panic. For example, last Friday, stocks rose even in response to bad news, which is a rare occurrence and a good sign for markets to bottom. Remember, markets top on good news and bottom on bad news.
As you may know, we've been experiencing a downtrend for about nine trading days. On Friday, President Trump and Ukraine's President Zelensky held a press conference that turned into a heated exchange. Initially, stocks lost their gains after this event, but by the end of the day, the market rallied, surpassing the downtrend resistance. It seems the market is reevaluating the situation from Friday. For instance, NATO's Secretary General urged Zelensky to improve his relationship with Trump. Over the weekend, Trump shared commentary on Truth Social, highlighting that a joint mining operation under his leadership could enhance security, as any attacks on these operations would be viewed as attacks on U.S. interests.
This raises the question of whether the market has bottomed out despite the bad news. I want to point out that there are signs suggesting a potential decline in the February jobs report. The consensus predicts 160,000 new jobs, and this week is particularly busy with macroeconomic data. On Monday, we have the February ISM Manufacturing Index; on Wednesday, the February ISM Services Index, followed by Treasury Secretary Scott Besson speaking at the New York Economic Club. Much of the discussion will likely center on the support from Trump. Wednesday will also see the release of the February Beige Book, and on Friday, we will receive the non-farm payrolls report, with Powell speaking later that day.
There are indications of a growth scare, and if Friday's jobs report is weak, it could reinforce this concern and prompt the Fed to reconsider its stance. Currently, markets are anticipating three rate cuts this year, which exceeds the Fed's guidance of two cuts. The probability of a rate cut in May is currently at 20%, but this could rise significantly, bringing the Fed's support back into focus. This ties back to the White House's interest in lower interest rates, as they aim to avoid a recession. Lower rates benefit consumers and corporations by reducing financing cost.
The Trump administration wants to prevent the economy from reaching a stall speed, as a recession could have unpredictable depth. Therefore, I believe the focus on Trump's support will intensify this week, particularly if the jobs report is weak on Friday. While there will be several discussions from Fed officials, the market will primarily concentrate on Powell's remarks this Friday.
Macro News This Week:
Monday, March 3rd
9:45 AM ET: Feb F S&P Global Manufacturing PMI - 51.6e
10:00 AM ET: Feb ISM Manufacturing PMI - 50.8e
Wednesday, March 5th
9:45 AM ET: Feb F S&P Global Services PMI - 49.7e
10:00 AM ET: Feb ISM Services PMI - 52.7e
10:00 AM ET: Jan F Durable Goods Orders MoM - 3.1%e
2:00 PM ET: Mar Fed Releases Beige Book
Thursday, March 6th
8:30 AM ET: 4Q F Nonfarm Productivity QoQ - 1.2%e
8:30 AM ET: Jan Trade Balance - -129be
8:30 AM ET: 4Q F Unit Labor Costs - 3.0%e
12:00 PM ET: Treasury Sec. Scott Bessent at NY Economic Club
Friday, March 7th
8:30 AM ET: Feb Non-farm Payrolls - 160ke
9:00 AM ET: Feb F Manheim Used Vehicle Index
12:30 PM ET: Powell Speaks on the Economic Outlook
Bottom Line:
Today, our proprietary algorithm issued a sell alert for the S&P 500 Equal Weight RSP ETF, bringing the total to five indexes on sell alerts.
On February Monday 24, 2025, our proprietary algorithm issued a sell alert for the Russell 2000 IWM ETF on the daily chart, following a similar signal on the weekly chart last week Friday February 21, 2025. We also received a sell alert for the Dow Jones Industrial Average ETF DIA.
On February 26, 2025, our algorithm issued sell alerts for two major index-tracking ETFs: the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ), signaling a shift in market momentum.
Given current market conditions, we advise against initiating new equity positions until our algorithm confirms a renewed buy signal across major indices. Our next cycle pivot date is set for March 11, 2025, marking a point for potential market direction.
