MARKET WRAP

A bit of a bounce for equities today, or at least a Thank God It’s Friday relief rally. Equities spent most of the morning in the red following a jobs number that wasn’t horrible but was on the low end of expectations. The SPX was below its 200 day moving average once again and looked ominous, but it reversed higher midday and stayed that way (without much volatility) into the close. For the day, SPX was +0.5%, QQQ +0.75% and IWM +0.4%. That SPX move snapped a 6 day streak of moving at least 1% (although today’s intraday range was nearly 2%). We’ll see if today’s relatively calmer reversal is what the market needs to hold this level.

The 10yr yield was higher again today, now at 4.31%. Oil rebounded a bit, up 1%. DXY was lower by -0.3%, but a lot less volatile than recent days. The VIX was lower into the weekend but remains elevated historically at 23.50. More on the week that was at the bottom of the email, and check your inbox Sunday for a preview of next week.

On today’s RiskReversal Pod, Dan is joined by Brian Hartigan of Invesco for a deep dive into ETFs. Enjoy!

MRKT MATRIX: March 7, 2025

Today’s Top Stories:

• S&P 500 rises, but heads for worst week since September (CNBC)

• Powell says Fed is awaiting ‘greater clarity’ on Trump policies before making next move on rates (CNBC)

• Trump 2.0 is leaving investors ‘overwhelmed’ — and strategists warn the volatility isn’t over (CNBC)

• Highest Number of S&P 500 Companies Citing “Tariffs” on Earnings Calls Over Past 10 Years (FactSet)

• Chipmakers are finding that good earnings aren’t enough to please Wall Street (CNBC)

• What’s at Stake as Trump Looks to Scrap the Chips Act (Bloomberg)

• TSMC is ‘not afraid’ of losing US chip subsidies (FT)

• Palantir Is Delivering AI-Laden Trucks to the US Army (Bloomberg)

• America Is Finding Out It’s Very Difficult to Import Eggs (Bloomberg)

• Apple Confirms Delay of AI-Infused, Personalized Siri Assistant (Bloomberg)

• SpaceX Again Loses Spacecraft During Latest Starship Test Flight (WSJ)

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What’s Next?

This week was an ugly one for the markets, with broad-based selling pressure. The S&P 500 (SPX) lost 3.2%, while the Nasdaq 100 (QQQ) fell 3.4%, and small caps were hit even harder, with the Russell 2000 (IWM) dropping 4.2%. The primary drivers of the sell-off of the past few weeks center on the economic fallout from the ongoing tariff trade war, as well as signs of slowing growth. Federal job losses, weak small business hiring, and hesitation from companies (and consumers) due to policy uncertainty are all weighing on sentiment.

Despite multiple attempts at a rebound, the market struggled to sustain any rally. We’ll see on Monday if today’s reversal has a follow through. Perhaps even more concerning was the shift in how the market responded to trade war headlines—earlier in the cycle, any hint of resolution would spark relief rallies, but by the end of this week, "good" news was largely ignored. This shift suggests that investors are growing skeptical of short-term headlines and are more focused on the underlying economic risks.

The volatility wasn’t confined to equities. Oil tumbled 3.5% on the week, reflecting concerns about global demand and economic slowing. Meanwhile, the U.S. dollar (DXY) fell nearly 4%, an unusually sharp move. Heightened volatility across multiple asset classes is a signal that investors are struggling to find a consistent narrative following such a long period where the only thing that mattered was inflation/rates. With sentiment fragile and policy risks unresolved, next week’s price action is unpredictable. But it’s possible today’s calmer bounce was constructive.

We’ll have our official preview (on Sunday) looking ahead at a week that includes inflation data in the CPI/PPI and Consumer Sentiment, which has become a critical number of late.

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