Stocks Rebound, Trade War Fears Linger

U.S. stocks ended higher on Friday, concluding a volatile week and a losing month for major indexes. The markets experienced fluctuations, briefly pulling back during a tense Oval Office meeting between President Donald Trump and Ukrainian President Volodymyr Zelenskyy.

However, stocks regained momentum and rallied into the close. The S&P 500 started the week on a weak note, declining on Monday as concerns over a global trade war resurfaced. This came after President Trump confirmed that tariffs on Mexico and Canada would take effect on Tuesday and signed an order to increase tariffs on China. Trump stated that there was "no room left" for negotiation to prevent the tariffs. The news led to a sell-off in U.S. automakers, with General Motors (NYSE:GM) dropping 3.6%. The late-session recovery was attributed to index rebalancing and technical factors, with significant buy-side imbalances in market-on-close orders at the New York Stock Exchange.

For the month, the Nasdaq saw the largest decline, dropping nearly 4% in February, including a 3.5% loss for the week—its worst monthly performance since April 2024. The S&P 500 fell 1% for the week and 1.4% for the month, while the Dow fared slightly better, rising 1% on the week but slipping 1.6% in February. The S&P 500’s decline was led by the technology and energy sectors, with most mega-cap growth stocks ending lower, including Amazon (NASDAQ:AMZN), which dropped 3.4%. The technology sector, particularly artificial intelligence and semiconductor companies, saw significant declines, with Nvidia (NASDAQ:NVDA) dropping 8.7%, entering bear market territory.

The earnings season is nearing its conclusion, but several major reports remain on the horizon. Investors are closely watching upcoming earnings from Broadcom Inc. (NASDAQ:AVGO) and Costco Wholesale (NASDAQ:COST). Broadcom, a key player in the AI boom, is set to release its fiscal Q1 2025 results on March 6, with analysts projecting a 47.7% year-over-year increase in earnings per share. Other notable companies reporting this week include CrowdStrike (NASDAQ:CRWD), MongoDB (NASDAQ:MDB), and Hewlett Packard Enterprise (NYSE:HPE). Despite weakness in technology stocks, defensive sectors such as real estate, healthcare, utilities, and consumer staples performed well.

Goldman Sachs strategists warned that the S&P 500 rally might struggle in the near term following last week’s 5% sell-off, driven by economic growth concerns and repositioning in the market. They noted that cyclical stocks have underperformed defensive stocks by 9%, and their sentiment indicator is now at -0.4, signaling a cautious outlook. Goldman maintains a year-end target of 6,500 for the S&P 500, a projected 9% increase from current levels, contingent on an improved economic growth outlook.

Meanwhile, Citi strategists cautioned that the market may not be fully pricing in the risks associated with Trump’s proposed tariffs. While strong fourth-quarter earnings set a positive tone for 2025, Citi anticipates downward revisions to earnings estimates. Analysts expect EPS estimates to decline to the $265-$268 range before stabilizing near their $270 target by year-end. They noted that while tariffs and macroeconomic risks persist, strong fundamentals could still support corporate earnings growth.

Investors are focusing on upcoming economic reports, particularly the U.S. jobs report, which is expected to show 133,000 job additions in February—the weakest gain in four months—while the unemployment rate is projected to remain at 4% with wage growth slowing to 0.2%. However, Goldman Sachs strategists anticipate a stronger report, estimating 170,000 jobs added, citing positive data indicators and a surge in immigration-driven hiring. Other key labor market indicators due this week include the ADP Employment Change, Challenger job cuts, and final productivity and labor cost figures. Additionally, the ISM Manufacturing PMI is expected to indicate a slight slowdown in factory activity, while the ISM Services PMI may reflect continued economic expansion.

Data for Technical Analysis (1H) CFD US30 DJIA

Resistance : 43268.9, 43289.1, 43322.0

Support : 43203.1, 43182.9, 43150.0                

1H Outlook  

Source: TradingView                              

Buy/Long 1 If the support at the price range 43133.1 - 43203.1 is touched, but the support at 43203.1 cannot be broken, the TP may be set around 43288.5 and the SL around 43098.1, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 43268.9 - 43338.9, TP may be set around 43400.0 and SL around 43168.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 43268.9 - 43338.9 is touched, but the resistance at 43268.9 cannot be broken, the TP may be set around 43202.5 and the SL around 43373.9, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 43133.1 - 43203.1, TP may be set around 43083.0 and SL around 43304.0, or up to the risk appetite.       

Pivot Points Mar 4, 2025 01:42AM GMT