The S&P 500 Index ($SPX) (SPY) Friday closed up +0.55%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.52%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.74%. March E-mini S&P futures (ESH25) are up +0.51%, and March E-mini Nasdaq futures (NQH25) are up +0.63%.
Stock indexes Friday recovered from early losses and settled moderately higher. Positive comments from Fed Chair Powell sparked short covering in stocks when he said, "The US economy continues to be in a good place." Mr. Powell's comments helped the S&P 500 recover from a 5-1/2 month low, the Dow Jones Industrials rebound from a 7-week low, and the Nasdaq 100 recover from a 5-month low. Also, easing geopolitical risks boosted stocks Friday after Bloomberg reported that Russian President Putin is willing to discuss a temporary truce in Ukraine. Strength in chip stocks also supported the broader market Friday as Broadcom rallied more than +8% after it reported better-than-expected Q1 earnings results and gave an outlook that was seen as strong.
Stock indexes also found support Friday on the Fed-friendly US Feb payroll report that showed nonfarm payrolls and average hourly earnings rose less than expected, and the unemployment rate unexpectedly ticked higher.
Stocks initially retreated Friday due to economic uncertainty from the Trump administration's trade policies and the US Feb payroll report that showed an unexpected increase in the unemployment rate.
Hawkish Fed comments Friday also pushed bond yields higher and were negative for stocks. Fed Chair Powell said, "Despite elevated levels of uncertainty, the US economy continues to be in a good place," and the Fed doesn't need to rush to adjust policy. Also, Fed Governor Kugler said it's likely appropriate for the Fed to hold interest rates steady for "some time" due to upside risks to inflation and recent increases in inflation expectations. In addition, Fed Governor Bowman said the neutral rate, the Fed policy level that neither promotes nor restricts economic activity, has likely risen since the Covid-19 pandemic.
US Feb nonfarm payrolls rose +151,000, weaker than expectations of +160,000, and Jan nonfarm payrolls were revised lower to +125,000 from the previously reported +143,000. The Feb unemployment rate unexpectedly rose +0.1 to 4.1%, showing a weaker labor market than expectations of no change at 4.0%.
US Feb average hourly earnings rose to 4.0% y/y from a revised 3.9% y/y in Jan, weaker than expectations of 4.1% y/y.
US Jan consumer credit rose +$18.084 billion, stronger than expectations of +$14.900 billion.
Fears that US tariffs will start a global trade war that weakens economic growth and corporate earnings are a bearish factor for stocks. President Trump imposed 25% tariffs on Canadian and Mexican goods on Tuesday and doubled the tariff on Chinese goods to 20% from 10%. However, Mr. Trump granted US automakers a one-month tariff exemption and exempted tariffs for one month on Canada and Mexico for all goods and services compliant with the United States-Mexico-Canada Agreement (USMCA) but reiterated that he would impose reciprocal tariffs on foreign nations on April 2.
Chinese trade news Friday was weaker than expected, a negative factor for global growth prospects. China Feb exports year-to-date roe +2.3% y/y, weaker than expectations of +5.9% y/y. China Feb imports year-to-date unexpectedly fell -8.4% y/y, weaker than expectations of +1.0% y/y and the biggest decline in nearly two years.
The markets are discounting the chances at 4% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets on Friday settled lower. The Euro Stoxx 50 closed down -0.94%. China's Shanghai Composite Index fell from a 2-1/4 month high and closed down -0.25%. Japan's Nikkei Stock 225 fell to a 5-1/2 month low and closed down sharply by -2.17%.
Interest Rates
June 10-year T-notes (ZNM25) Friday closed down -7 ticks. The 10-year T-note yield rose +3.9 bp to 4.317%. June T-notes Friday gave up an early advance and turned lower on hawkish Fed comments. Fed Chair Powell said the US economy continues to be in a good place" and the Fed doesn't need to rush to adjust policy, and Fed Governor Kugler said it's likely appropriate for the Fed to hold interest rates steady for "some time." Also, Atlanta Fed President Bostic said he favors holding monetary policy steady for the foreseeable future.
T-notes Friday initially moved higher on the Fed-Friendly US Feb payroll report that showed nonfarm payrolls and Feb average hourly earnings rose less than expected. Also, a decline in inflation expectations supports T-notes after the 10-year breakeven inflation rate fell to a 2-1/4 month low Friday at 2.312%.
European bond yields on Friday were mixed. The 10-year German bund yield rose +0.3 bp to 2.836%. The 10-year UK gilt yield fell -2.2 bp to 4.638%.
Eurozone Q4 GDP was revised upward to +0.2% q/q and +1.2% y/y from the previously reported +0.1% q/q and +0.9% y/y.
German Jan factory orders fell -7.0% m/m, weaker than expectations of -2.5% m/m and the biggest decline in a year.
ECB Governing Council member Muller said, "The ECB needs to be increasingly cautious about further interest rate cuts as several factors, such as tariffs or the impact of defense spending, could accelerate price increases in the near future."
Swaps are discounting the chances at 61% for a -25 bp rate cut by the ECB at the April 17 policy meeting.
US Stock Movers
Strength in chip stocks lifted the broader market Friday, led by an +8% rally in Broadcom (AVGO) after it reported Q1 adjusted net revenue of $14.92 billion, stronger than the consensus of $14.61 billion, and forecast Q2 revenue of $14.90 billion, above the consensus of $14.59 billion. Also, ARM Holdings Plc (ARM) closed up more than +6%, and Micron Technology (MU) and GlobalFoundries (GFS) closed up more than +4%. In addition, Lam Research (LRCX), Qualcomm (QCOM), ON Semiconductor (ON), and NXP Semiconductors NV (NXPI) closed up more than +3%.
Market uncertainty is boosting demand for defensive stocks such as food producers. JM Smucker (SJM) and the Campbell Company (CPB) closed up more than +5%, and Conagra Brands (CAG) closed up more than +4%. Also, General Mills (GIS) and Hormel Foods (HRL) closed up more than +3%, and Kraft Heinz (KHC), Archer Daniels Midland (ADM), and Hershey Co (HSY) closed up more than +2%
Energy stocks moved higher Friday after US Energy Secretary Wright said he plans to seek up to $20 billion to refill the Strategic Petroleum Reserve. As a result, Schlumberger (SLB) closed up more than +4%, and Occidental Petroleum (OXY) closed up more than +3%. Also, ConocoPhillips (COP), Devon Energy (DVN), Chevron (CVX), Hess Corp (HES), Phillips 66 (PSX), and Halliburton (HAL) closed up more than +2%.
The Gap (GAP) closed up more than +19% after reporting Q4 comparable sales rose +3.00%, stronger than the consensus of +1.88%.
Walgreens Boots Alliance (WBA) closed up more than +7% after it agreed to be purchased by Sycamore Partners for $10 billion.
Sandisk Corp (SNDK) is up more than +10% after Cantor Fitzgerald initiated coverage of the sock with a recommendation of overweight and a price target of $60.
Zscaler (ZS) closed up more than +3% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $240.
HP Enterprise (HPE) closed down more than -11% to lead losers in the S&P 500 after reporting Q1 adjusted gross margin of 29.4%, below the consensus of 31.2%, and forecast full-year adjusted EPS of $1.70 to $1.90, weaker than the consensus of $2.12.
Cooper Cos (COO) closed down more than -6% after reporting Q1 net sales of $964.7 million, below the consensus of $982.1 million.
Costco Wholesale (COST) closed down more than -6% to lead losers in the Nasdaq 100 after reporting Q2 EPS of $4.02, weaker than the consensus of $4.11.
Samsara (IOT) closed down more than -15% after forecasting 2026 total revenue of $1.52 billion-$1.53 billion, below the consensus of $1.53 billion.
Walmart (WMT) closed down more than -3% to lead losers in the Dow Jones Industrials after it asked its Chinese suppliers to cut prices by as much as 10% to help pay for the cost of the Trump tariffs.
Intuitive Machines (LUNR) closed down more than -21%, adding to Thursday's -20% plunge after it said it believes its second lander may be in the wrong orientation on the moon.
Earnings Reports (3/10/2025)
Oracle Corp (ORCL), Seaport Entertainment Group Inc (SEG), Standardaero Inc (SARO), Vail Resorts Inc (MTN).
