Stock Market Update – Thursday, March 6, 2025 Equities endured heavy selling pressure, with the S&P 500 shedding 1.8% and the Nasdaq 100 tumbling 2.8%, further entrenching both indices in negative territory for the year. A recent round of tariff exemptions, unveiled just three days ago, failed to rekindle risk appetite, as investor focus remains firmly fixed on tomorrow’s pivotal jobs report. The S&P 500 (SPX) tested its 200-day moving average, briefly dipping below before recovering to close near that key technical level.
In after-hours trading, Costco (COST) is slightly lower, while Broadcom (AVGO) is surging, though the session remains fluid.
Away From Stocks:
Treasuries posted a mixed performance, with two-year yields easing three basis points to 3.96%, while the 30-year bond edged higher to 4.58% from 4.57%.
WTI crude oil managed a flat close, halting its recent downward spiral.
Gold softened slightly, settling at $2,911 per ounce.
Bitcoin pulled back toward $89,000, continuing its volatile price action.
The VIX climbed toward 25, reflecting heightened market uncertainty ahead of key labor market data.
Market Catalysts: Jobs Report on Deck
With markets on edge, all eyes are on tomorrow’s Nonfarm Payrolls (NFP) report, where economists expect 160,000 new jobs and a 4.0% unemployment rate.
Bearish Sentiment Suggests Possible Market Turnaround:
Investor pessimism is very high for the second week in a row, according to the AAII (American Association of Individual Investors) data. Several indicators, including AAII, the Fear & Greed Index, and other surveys, show that negative sentiment has reached levels not seen since 2022.
Historically, extreme pessimism often comes before market turning points, but it doesn't guarantee an immediate bottom. Currently, there's no clear sign of "capitulation" (panic selling), which often marks market bottoms. Signs of capitulation include unusually high selling volume or high put/call ratios. However, markets can reverse without capitulation.
Sentiment Details:
AAII Sentiment Data (Last Week):
* 57% bearish (much higher than average)
* 19% bullish (very low optimism)
* Net spread: -38% (extremely negative)
Fear & Greed Index:
* Currently at 18 ("Extreme Fear"), indicating widespread risk aversion
* This index combines seven market indicators to gauge investor sentiment.
Historical Context and Market Implications:
Sentiment was last this negative after the 2021-2022 bear market. That period was followed by strong market gains as pessimism peaked. Historically, extreme fear in these indicators has been a "buy" signal, especially when the economy improves or the central bank steps in.
While negative sentiment isn't a guaranteed trading signal on its own, current low levels, combined with potential support from the Federal Reserve and changes in government spending, suggest the market might be nearing a turning point. The next few weeks will be important to see if this fear leads to market stabilization and recovery.
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Market Analysis: The upcoming February jobs report
The ADP employment report fell significantly short of expectations, adding only 77,000 jobs, well below consensus forecasts. This weak labor market data suggests that policy uncertainty and a slowdown in consumer spending are weighing on hiring activity. Given the sensitivity of financial markets to economic data, this report has amplified concerns about an economic slowdown, fueling volatility.