1. Moving the market

Despite Nvidia exceeding fourth-quarter estimates and providing strong AI guidance, mixed aspects of their earnings report led to an 8.5% drop in the stock. Major indexes followed suit, closing another session in the red.

Adding to the market’s woes, Trump’s announcement that tariffs on Mexico and Canada would proceed as planned, effective March 4th after a one-month moratorium, caused only the dollar to gain.

A rise in jobless claims to 242,000, higher than the estimated 225,000, further dampened market sentiment. Additionally, a collapse in Pending Home Sales to all-time lows failed to encourage dip buyers to push equities higher.

Consequently, the US Macro data index sank deeper, with the threat of “Stagflation” becoming more pronounced. The bullish case is losing momentum, with “big money” positioning to increase sell activity if crucial thresholds are broken.

Bond yields were mixed, Bitcoin initially bounced but took another hit late in the session, and gold couldn’t overcome the dollar’s strength, breaking below the $2,900 level. However, crude oil rallied sharply, regaining the $70 marker.

Both Bitcoin and the S&P 500 follow global liquidity, as shown by this chart, which highlights a divergence in dire need of correction.

Will this correction happen on the last trading day of February?

1. Moving the market

After four consecutive losing sessions, the S&P 500 and other major indexes found some stability as bullish sentiment returned to Wall Street, at least initially.

The Nasdaq led the way ahead of Nvidia’s earnings announcement, which is due after today’s close. In anticipation of a positive report, Nvidia gained 3.5% after a 3% advance on Wednesday, although the stock is still down 2% year-to-date.

Nvidia, a bellwether and favorite tech stock, plays a crucial role in the broader markets and the AI sector. Its performance is often seen as an indicator for equities in general, and any weakness could set a bearish tone for the broader market, especially given the recent weak economic reports.

This morning’s rally was short-lived as the bears regained control by mid-day, pulling the major indexes off their highs. Only the Nasdaq managed to close moderately in the green.

Disappointing macroeconomic data, including a plunge in New Home Sales, reinforced the stagflation scenario, pushing rate-cut expectations higher and bond yields lower.

Cryptocurrencies followed the downward trend, with Bitcoin seeking support around its 200-day moving average. Bitcoin’s major support level appears to be around $80,000, assuming it continues to follow the path of global liquidity.

Gold made a comeback after a late-session dip attracted buyers, successfully defending its $2,900 support level.

The next critical data point to watch is Friday’s Personal Consumption Expenditure (PCE) price index, the Fed’s preferred inflation gauge. Depending on the results, the PCE could significantly impact the markets.

1. Moving the market

The markets broadly declined, with the S&P 500 falling for the fourth consecutive day and the Nasdaq leading the downturn. The Dow fared the best, managing to close slightly in the green.

Economic concerns took center stage as the latest Consumer Confidence survey plummeted from 105.3 to 98.3, well below the expected 102.5. This marks the lowest level since 2024 and is near the bottom of its range since 2022, as noted by ZH.

Simultaneously, inflation expectations surged, highlighting the risk of “Stagflation”—a scenario I’ve frequently mentioned. This comes on the heels of flat manufacturing and retail sales reports.

Trade tensions are escalating, with tariffs on Canada and Mexico set to proceed after the current 30-day moratorium ends. Traders will need to find new catalysts to lift equities out of their slump.

Despite a nearly 12 basis point drop in the 10-year bond yield to 4.30%, comeback attempts failed today. All bond yields ended lower, with bonds serving as a safe haven.

Bitcoin ETF outflows continued, dragging the cryptocurrency below $90k. All markets experienced heavy selling, typical of the seasonally weakest period of the year. Even the Mag 7 stocks suffered, losing $1.5 trillion in market cap year-to-date and over $900 billion in the past week.

The dollar declined, breaking its 100-day moving average, while oil prices plunged below $70. Gold also retreated amid growing uncertainty but held above the $2,900 level.

The growth scare has increased expectations for rate cuts amid calls for lower rates. Will the Fed respond?

It’s fascinating to me to observe the synchronized behavior of Bitcoin and global liquidity with a slight lag. As this chart shows, Bitcoin could drop as low as $80k before rebounding and heading back toward record highs.

Will history repeat itself?

1. Moving the market

Despite opening on a positive note, the major indexes wavered and fell below their respective unchanged lines. The Dow showed the most resilience, ending as the only index to close in the green.

The tech sector experienced the steepest decline, with companies like Palantir, Nvidia, and Microsoft pulling back. A report indicating that Microsoft is cutting spending on data centers raised concerns about potential weakness in the AI sector.

Adding to the bearish sentiment, February data pointed to economic weakness. The US Service sector contracted for the month, and the Consumer Sentiment index came in below expectations.

Key earnings reports are due this week, with Nvidia’s report on Wednesday being highly anticipated. Given Nvidia’s close ties to AI chips, any weakness in this sector could impact the company’s outlook.

Today’s macroeconomic data highlighted that growth is fading, and even AI stocks are retreating.

Slipping bond yields failed to support equities or Bitcoin, which fell below the $94k level. Gold emerged as the winner, gaining, and closing above $2,965, despite the dollar recovering from an early sell-off.

Traders now foresee a weaker period of growth for the US, which may prompt the Fed to lower rates sooner than expected. This has pushed rate-cut expectations to a two-month high.

However, will the Fed ignore inflation pressures just to appease the markets?