Market News 26 FEB
Stock Markets Under Pressure
On Tuesday, U.S. stock markets closed mixed: the S&P 500 lost 0.47%, the Dow Jones added 0.37%, and the Nasdaq 100 dropped 1.24%. The primary driver of the market downturn was the ongoing weakness in the technology sector, which remains under pressure due to rising macroeconomic risks and political tensions.
The Nasdaq 100 continues its negative trend, following a 2.06% decline on Friday and a 1.11% drop on Monday, losing another 1.24% on Tuesday. Investors are growing increasingly concerned about potential new restrictions on semiconductor sales to China by the U.S. government.
Tesla shares plummeted over 8% after reports revealed a 45% decline in its European sales in January, despite the overall European EV market growing by 37%.
Nvidia also faced pressure, falling more than 3% ahead of its earnings report. Intel and Marvell Technology dropped 5%, reflecting investor nervousness about chipmakers’ prospects amid potential export restrictions.
Macroeconomic Concerns: Weak Consumer Sentiment
Investor sentiment took a hit after the Conference Board released data showing that U.S. consumer confidence dropped sharply to 98.3 points, an eight-month low. The 7-point decline was the largest in 2.5 years, signaling growing concerns among Americans about the economic outlook.
Cryptocurrency Market Declines
The risk-off sentiment extended to the cryptocurrency market, with Bitcoin dropping 6% and Ethereum falling 5%, continuing Monday’s decline.
The crypto sector also suffered from last week’s news of a $1.5 billion hack of the Bybit exchange, as well as a scandal involving Argentina’s President Milei and a meme coin.
Stocks tied to the crypto industry saw significant losses: MicroStrategy fell over 11%, MARA Holdings lost 10%, while Coinbase and Riot Platforms declined by more than 6%.
Bond Market and Interest Rates
The sharp decline in consumer confidence increased demand for safe-haven assets, pushing the yield on 10-year U.S. Treasury bonds down by 10.8 basis points to 4.293%.
However, the bond market faced pressure from a high volume of new issuances. On Tuesday, the U.S. Treasury auctioned $70 billion in 5-year bonds, and on Wednesday, it plans to sell an additional $44 billion in 7-year bonds.
European bond yields also declined, with 10-year German bonds down by 2 basis points and UK bonds dropping by 5.5 basis points.
Real Estate Market: Steady Price Growth
Despite macroeconomic concerns, the U.S. housing market continues to show resilience. The S&P CoreLogic Home Price Index rose 0.52% month-over-month and 4.48% year-over-year in December, exceeding analyst expectations. Similarly, the FHFA Home Price Index recorded a 0.4% month-over-month and 1.4% year-over-year increase.
Key Events This Week
The most anticipated event of the week is Nvidia’s earnings report, set to be released after Wednesday’s market close. Additionally, investors are awaiting Thursday’s U.S. GDP report, which is expected to show 2.3% growth, as well as Friday’s Personal Consumption Expenditures (PCE) Index—a key inflation measure for the Federal Reserve.
Futures markets currently assign only a 3% probability of a 25-basis-point rate cut by the Fed in March, indicating low expectations for near-term monetary policy easing.
Markets remain under pressure due to technology sector weakness, negative macroeconomic data, and increasing geopolitical tensions.