MARKET WRAP

Another pullback from the highs over the past two days, but unlike recent rough weekends, equities weakened further into today’s close as new tariff headlines crushed any bounce attempt and put the SPX back at the day’s lows. Is this selling from the highs different? We dive into that at the end of the email. For today:

• SPX: -0.5% | QQQ: -1.2% | IWM: -0.8%

• Defensive rotations weren’t as strong as Friday, though the DJIA was slightly green, helped by BRK, NKE, and WBA.

• Nasdaq struggled. PLTR continues its correction.

• Yields stayed out of the way, with the US10Y yield slightly red, now at 4.40%.

• The VIX was higher again, now at 19 and was above 20 in the first hour of trading

Today
RiskReversal Pod: Liz joins to break down tariffs, tech, and more.
MRKT Call: A deep dive into HD, DELL, and NVDA ahead of earnings.

This Week
Tuesday: Gene Munster sits down with Dan to talk tech.
Friday: Tom Lee joins the show for a market outlook.

MRKT MATRIX: February 24, 2025

Today’s Top Stories:

• S&P 500 closes lower Monday as market’s comeback attempt fizzles (CNBC)

• Apple Will Add 20,000 US Jobs Amid Threat from Trump Tariffs (Bloomberg)

• Microsoft Cancels Leases for AI Data Centers, Analyst Says (Bloomberg)

• Anthropic says it’s released its ‘most intelligent’ AI model yet as competition ramps up (CNBC)

• Walmart Wants to Be Something for Everyone in a Divided America (Bloomberg)

• Alibaba Shares Tumble as Trump Order Stirs China Trade Angst (Bloomberg)

• U.S. to Hit Chinese Ships With Hefty Port Fees (WSJ)

• Jamie Dimon calls U.S. government ‘inefficient’ and says Elon Musk’s DOGE effort ‘needs to be done (CNBC)

• Warren Buffett sounds warning to Washington as Berkshire reports record profit, cash (Reuters)

• The U.S. Economy Depends More Than Ever on Rich People (WSJ)

Today’s MRKT Call is Presented by MoneyLion

Nvidia Earnings: Make or Break Moment for the Markets

Guy and Dan kick things off with today’s SPX price action, focusing on its attempt to rebound from Friday’s sell-off. They then dive into WMT’s post-earnings slide and debate if it’s ready to bounce. Next, they discuss the broader economy, highlighting how much growth has been driven by AI infrastructure in tech. Guy flags concerns in housing (TOL), retail, and autos, while Dan notes some charts hinting at an under-appreciated growth slowdown. They review sector performance and how market breadth has kept the SPX up 2.5% YTD, then compare the volatility in HIMS to NVO, pointing out HIMS’s lack of branded weight-loss drugs. On the earnings front, they preview HD, dive into ZM’s report tonight, and look ahead to DELL. Viewer questions cover TXN’s post-earnings rally and PLTR’s decline. In the Call of the Day, they discuss BABA’s pullback and BA’s stealth rally before wrapping up with a deep dive into NVDA’s big report on Wednesday and a quick look at META.

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What’s Next?

In what’s become a recurring weekend pattern over four of the past five weeks, the SPX has once again sold off sharply near all-time highs—either late Friday or in pre-market trading on Monday. Each time, buyers have stepped in to keep the index within its tight trading range, holding between 5950 and 6000. That has kept the SPX in a tight trading range of about 5950 to 6150 since January.

Looking further back, since the post-election rally in early November, the SPX has been chopping sideways within a broader range of about 5825 to 6150. Despite day-to-day and week-to-week volatility—especially in individual stocks—the overall market has essentially been moving sideways.

As we’ve noted recently, when range trading becomes the norm, trader sentiment starts to harden. Patterns like “buy the dip” and “sell the rip” take over, with neither bulls nor bears panicking on a 2-3% move. Today was a bit different, in that the buy the dip action for most of the day ultimately failed into the close. We’ll see if there’s a turnaround Tuesday, but it certainly felt different than recent action.

What could break this cycle?

• The Upside Remains the Same: There’s still significant overhead liquidity (supply) just above the 6150 level, which should last through March. Until proven otherwise, it remains a place to sell. However, if buyers can push the SPX above that resistance, it could trigger a breakout, abd could even lead to a mini buying frenzy as traders rush to chase stocks and upside calls, fearing they’ll miss the year’s big move.

• New Downside Risk?: The 6000 level—which we are flirting with once again—acts as a neutral zone. If the index drops below 5950, selling pressure could intensify. And if we breach 5850, things could get ugly fast, with little technical or options-based support below, opening the door for a much steeper decline. Should we continue to find buyers just below 6000, as we have the past month, nothing really changes, and IV will continue to correct lower quickly following each example of traders buying the dip.

For now, the market remains range-bound, but there’s a subtle shift in focus. Instead of everyone watching the 10Y yield, traders are increasingly searching for signs of a slowing economy. A decisive move could break us out of this grind—NVDA’s earnings on Wednesday could be a catalyst, but it’s looking more likely that economic data will need to ultimately provide answers.

Suddenly, consumer sentiment, GDP, housing data, car sales, and big-ticket retail numbers are becoming market-moving factors. This week brings a few key reports, alongside NVDA earnings and the PCE release. Watch how the market reacts—these data points may be taking over from yields and bond auctions as the metrics traders are now laser-focused on.

Additionally, today’s action wasn’t exactly the same as recent weeks. We did not get the sort of upward momentum all day as we have in recent Mondays and Tuesdays. And the past few days have seen some rotations into defensive names. Something to keep an eye on the rest of the week.

And speaking of housing and the consumer. HD reports tomorrow morning. The market is pricing in about a 4% move. The largest earnings move the stock has seen in the past year has been just 1.25%. So keep an eye on the reaction tomorrow morning, especially if it exceeds 4% either way.


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