MARKET WRAP

Stocks began the day with a steep sell-off that took the SPX to its 200-day moving average (near 5735), triggering a technical bounce that had the indices green on the day. (The last time the SPX traded below its 200d was way back in November of 2023.) However, as we’ve seen a lot recently, the last half hour of trading saw serious volatility, erasing most of the intra-day bounce. For the day, SPX/SPY was -1.2%, QQQ -0.4% and IWM -1.1%. The VIX spiked above 26 earlier in the day and finished just under 24. the 10y yield was slightly higher on the day, now 4.24%.

On today’s RiskReversal Pod, Jesse Chasse of RBC, and on MRKT Call a look at banks, credit cards and much more. Enjoy!

MRKT MATRIX: March 4, 2025

Today’s Top Stories:

• Dow tumbles 700 points as sell-off intensifies again into the close (CNBC)

• Trump Escalates Global Trade War, Sparking Tit-for-Tat Tariffs (Bloomberg)

• Bessent Shrugs Off Tariff Selloff, Says Wall Street Isn’t Focus (Bloomberg)

• Citi Says Tariffs Could Hasten Rate Cuts (WSJ)

• Investor Dan Niles says he’ll ‘probably force’ himself to buy some beaten-up tech (CNBC)

• Bank of America slashes Tesla price target as U.S. tariffs become reality (CNBC)

• Target warns February sales were soft, adding to concerns about consumer health (CNBC)

• Best Buy CEO warns price increases are ‘highly unlikely’ after Trump tariffs (CNBC)

• Walgreens Nears Roughly $10 Billion Deal to Go Private (WSJ)

• Putin Agrees to Help Trump Broker Nuclear Talks With Iran (Bloomberg)

• U.S. Pauses All Military Aid to Ukraine (WSJ)

Today’s MRKT Call is Presented by Robinhood

Stock Selloff Accelerates: Where’s the Bottom?

The show kicks off with a breakdown of today’s market sell-off, the impact of tariffs, and the relationship between stocks and yields. Next, a check-in on the SPX, highlighting the risk of continued volatility—where sharp rallies can occur, even as the broader trend remains lower. Dan revisits the 2017-2018 period, drawing parallels to how historically low market volatility was eventually disrupted, largely due to policy shifts. Then, a deep dive into today’s sector performance, noting a clear rotation into defensive names. The discussion turns to the sharp declines in big banks, debating whether this is simply profit-taking or a signal of deeper growth concerns.

• Trade Idea: That leads into a look at Visa (V), along with a trade idea targeting a potential pullback toward $300.

• Chart of the Day: KRE and the state of regional banks.

Next, an analysis of TSLA—how low can it go? Followed by NVDA and is there potential for a 50% retracement? A quick check-in on META, before previewing CRWD ahead of earnings. Viewer questions include:

• MCD – Can it outperform in this environment?

• AAPL – Why has it held up better than other tech stocks and can that last?

The show wraps up with a discussion on tonight’s speech and the heads up to be prepared for counter-trend rallies.

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Today’s RiskReversal Podcast is Presented by Current and RBC

Have We Reached Peak Market Uncertainty?

Dan and Guy start the pod with a quick update on the stock market after Monday's massive sell-off sparked by recent tariff announcements.

After the break: Dan Nathan and Jesse Chasse, the Head of Tech Equity Capital Markets & Venture Coverage at RBC Capital Markets, discuss the current state of the market on the Risk Reversal Podcast. They delve into macroeconomic trends, the IPO pipeline, and market conditions influencing both small and mid-cap companies. The conversation covers topics such as the political landscape, economic resilience, and the impact of tariffs and regulatory scrutiny on strategic M&A activities. Jesse emphasizes the importance of liquidity and secondary markets for private tech companies, while debating the potential reopening of IPO markets by the end of the year. They also touch on the AI sector's influence on the market and the implications of large-cap IPOs on market health.

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What’s Next?

The market has been under pressure due to mounting concerns over tariffs, government layoffs, and deteriorating consumer sentiment. While today’s rally seemed like a welcome relief, bounces seem like countertrend moves until the underlying issues—such as the ongoing tariff trade war—show signs of resolution. Without a shift in these fundamental concerns, downside risks remain, and volatility likely persists. However, the technical bounce we saw today is important and what the market does over the next few days is more important. 

• Key Technical Level: The longer the SPX lingers near its 200-day moving average (this morning’s lows), the greater the risk of breaking below it. If that happens, the presence of significant negative put gamma would accelerate selling.

• What Could Bring Stability?: If the market can string together multiple days of gains and push back toward the 5950-6000 range, day-to-day price action could stabilize a bit. For any rally to be sustainable longer term, a shift in the news cycle is probably necessary.

Tariff News Cycle & Market Reactions

• The market’s response to today’s Canadian tariff retaliation seemed counterintuitive but highlights an important dynamic:

  • Many investors are looking for signs that the trade war will be short-lived.

  • Right now, the duration of the tariff conflict matters more than the severity of the tariffs in terms of market impact. Counterintuitively, escalation may be read as bringing the end closer (right or wrong).

  • A prolonged trade war with no clear resolution and no movement at all is likely the worst-case scenario for equities.

Volatility

• Implied volatility spiked everywhere early in the session, with the VIX briefly above 26. It pulled back slightly during the day, but remains extremely elevated.

• Options are still pricing in a 1.9% move in SPX for the rest of the week, implying these levels based on today’s close:

  • Downside: ~5670

  • Upside: ~5900

The combination of tonight’s speech to Congress and Friday’s jobs report could be pivotal. In order for any bounce bounce from here to be real it likely needs to take the SPX back towards 6000 where we’d see a collapse in the VIX back into the teens and a massive compression in the daily realized moves. If we end the week at or below the 200 day it’s likely even more volatility ahead.

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