Market News 6 MAR
Key Events and Their Impact on Investment Strategies
The stock market closed the trading session with strong gains across all major indices. The S&P 500 gained 1.1%, the Dow Jones Industrial Average strengthened by 1.1%, and the Nasdaq Composite rose by 1.5%. Despite a slow start, momentum picked up in the second half of the day due to several key factors.
Main Growth Drivers
One of the key events was the White House's announcement of a one-month delay in auto tariffs under the USMCA agreement. This move helped reduce uncertainty in the automotive industry and boosted automakers' stock prices.
Additionally, the Federal Reserve’s February "Beige Book" report indicated slight growth in economic activity since mid-January. The stock market also found support in the fact that the S&P 500 remained above its 200-day moving average of 5,728 points, reinforcing investor confidence.
Another catalyst was short-covering activity following recent sell-offs, which further fueled gains in the major indices.
Sector Performance
Mega-cap companies led the rally. For instance, the Vanguard Mega Cap Growth ETF (MGK) recovered from early losses and closed up 1.5%. Notable performers included NVIDIA (NVDA), which rose 1.1% to $117.30, and Microsoft (MSFT), which gained 3.2% to $401.02, driving a 1.4% increase in the technology sector.
Seven S&P 500 sectors posted gains of more than 1%, while only two sectors ended the day in negative territory. The energy sector was the biggest laggard, dropping 1.5% as oil prices fell to $66.27 per barrel amid ongoing concerns about demand growth.
Global Market Influence
Initially, the stock market was cautious due to mixed headlines. Optimism over potential tariff relief for U.S. imports was tempered by the realization that the relief would come through USMCA revisions rather than lower tariff rates. Meanwhile, Germany’s ambitious budget plan, which includes significant infrastructure and defense spending, led to a sharp rise in 10-year German bond yields by 28 basis points to 2.79%.
U.S. Treasury yields also climbed, with the 10-year yield rising six basis points to 4.27%, prompting a reassessment of stock valuations.
Economic Data
Today’s macroeconomic indicators had a mixed impact on the market:
MBA mortgage applications surged 20.4% (previous reading: -1.2%).
ADP employment change for February was 77,000 (consensus: 145,000), marking the weakest growth in seven months.
U.S. Services PMI (S&P Global) for February came in at 51.0 (previous: 49.7).
ISM Services Index rose to 53.5%, beating expectations (forecast: 53.0%).
January factory orders increased by 1.7%, exceeding the consensus forecast (1.3%).
The key takeaway from the ISM Services report is the accelerated expansion of the largest sector of the economy in February, easing concerns about economic slowdown, although this was accompanied by rising prices.
Stock Market Reactions
There were significant movements in various sectors:
Tech Giants: Semiconductor stocks, including Micron (MU), ON Semiconductor (ON), and ASML (ASML), gained over 4% following reports that the U.S. would maintain its semiconductor subsidy program under the Chips Act.
Energy Sector Decline: Falling oil prices weighed on stocks such as Marathon Petroleum (MPC), which fell more than 5%, Valero Energy (VLO), which lost 4%, and ExxonMobil (XOM), which dropped more than 1%.
Automotive Rally: General Motors (GM) and Stellantis (STLA) gained over 7%, while Ford (F) climbed 5% after news of the temporary tariff delay.
Healthcare Boom: Moderna (MRNA) soared 15% after announcing plans to release a personalized cancer vaccine by 2027.
Retail Gains: Victoria’s Secret (VSCO) posted a 5% increase in sales, boosting its stock price.
Forecasts and Expectations
Markets are now closely watching Friday’s U.S. employment report. Job growth is expected to reach 160,000, while the unemployment rate is projected to remain at 4%. Average hourly earnings are forecast to remain unchanged at a year-over-year rate of +4.1%.
Additionally, Federal Reserve Chairman Jerome Powell will deliver a keynote speech on Friday, which could provide further guidance on monetary policy.
As of today, the probability of a 25-basis-point rate cut at the March FOMC meeting stands at just 9%.