February 28, 2025
S&P futures up 0.4% Friday morning after a sharp selloff Thursday, where the S&P 500 fell 1.59% and the Nasdaq dropped 2.78%. The Mag 7 suffered its worst pullback of 2025, extending its losing streak to six sessions. High-beta names like meme stocks, non-profitable tech, travel/leisure, and autos underperformed, while defensives, regional banks, and bond proxies held up better. Global markets weak overnight, with Hong Kong down over 3%, Japan nearly 3%, and China around 2%. European markets off ~0.6%. Treasury yields dipped 1-3 bps, while the dollar edged up 0.1%. Gold fell 0.7%, and Bitcoin futures dropped 5.2%. WTI crude was flat.
No major drivers behind the bounce attempt, with tariff and tax headlines quiet overnight. Markets remain on track for a big weekly decline, led by tech, amid concerns over Trump 2.0 policy uncertainty, growth worries, sticky inflation, stretched valuations, and deteriorating technicals. Key focus today is the personal income and spending report, with core PCE inflation expected to rise 0.3% m/m while slowing to +2.6% y/y from +2.8%. Also on tap: trade balance, wholesale inventories, and Chicago PMI. Chicago Fed’s Goolsbee speaks at 10:15 ET, while Trump meets with Zelensky to sign a minerals deal, though markets remain more focused on any new tariff-related comments. Looking ahead, next week brings scheduled tariff implementation, ISM manufacturing and services, NFP, ECB decision, and China NPC meeting.
Earnings Highlights:
- DELL: Sales missed, but EPS and margins beat; Q1 guidance weak.
- ADSK: In-line sales; EPS, margins, and FY26 guidance topped expectations.
- HPQ: Revenue light, but PC commentary was more upbeat.
- MNST: Beat on sales and margins, citing strong global energy drink demand.
- RKT: Lower expenses and stronger origination volume guidance flagged.
- NTAP: Down big on weak sales and guidance, citing inconsistent execution.
- ESTC: Surged on a beat and strong guidance, with positive takeaways on GenAI traction.
- MTZ: Gained on better-than-expected EBITDA, FCF, and backlog.
- BE: Up on stronger product revenue and margins.
- MOS: Benefited from stronger phosphate pricing.
- PGNY: Gained on increased utilization.
U.S. equities finished lower on Thursday, with the S&P 500 down 1.59%, the Nasdaq dropping 2.78%, and the Dow slipping 0.45%, as stocks ended near their worst levels of the session. The broader market remains on pace for its worst weekly performance since September, with weakness led by tech stocks, semiconductors, and software. Nvidia (NVDA) tumbled 8.5% despite beating expectations, as concerns over gross margins and a more muted revenue beat pressured the stock. Other notable laggards included airlines, cruise lines, chemicals, homebuilders, autos, and apparel retailers. However, financials outperformed, with larger-cap banks, insurers, payments companies, and exchanges bucking the broader market weakness. Energy stocks also held up well, supported by a 2.5% gain in WTI crude, which closed back above $70 per barrel. In fixed income, Treasuries were little changed to weaker, with a mild steepening in the curve, while the U.S. dollar strengthened 0.8% against a basket of currencies. Gold fell 1.2%, while Bitcoin futures dipped 0.9%, reversing earlier gains.
Market sentiment remained pressured by Trump 2.0 policy uncertainty, particularly on trade, after the former president confirmed 25% tariffs on Canada and Mexico would take effect on March 4, alongside an additional 10% tariff on Chinese imports. These comments added to a flurry of conflicting tariff headlines from Wednesday, leaving investors wary of the potential impact on global trade. Concerns over growth were also back in focus following a higher-than-expected jump in initial jobless claims to 242K, while an upward revision to Q4 core PCE inflation reinforced the stagflation narrative. Meanwhile, technical factors also played a role, with the S&P 500 testing key support around 5,886, a level that Goldman Sachs previously flagged as a potential trigger for accelerated selling by systematic funds.
On the economic front, data was mixed. Weekly initial jobless claims rose to 242K, above the expected 220K, though continuing claims fell slightly. The second reading of Q4 GDP held at 2.3%, in line with expectations, while January durable goods orders rose 3.1%, topping forecasts, though core capital goods orders were softer. Pending home sales fell 4.9% in January, missing estimates but improving slightly from December’s decline. Fed speakers maintained a cautious tone, with Kansas City Fed’s Schmid expressing concern over inflation risks from tariffs, while Richmond Fed’s Barkin reiterated support for the 2% inflation target. Cleveland Fed’s Hammack warned that inflation risks remain, and Philadelphia Fed’s Harker stated that rates are restrictive enough to push inflation lower.
Sector/Stock Performance
Technology (XLK) -3.79%
- Nvidia (-8.5%): Beat and raised guidance but drew scrutiny on gross margins, which fell due to the Blackwell ramp. Q4 revenue growth remained strong, but the $1.2B revenue beat was lower than recent quarters’ $2B+ outperformance. Nvidia talked up extraordinary demand for Blackwell, which generated $11B in Q4 revenue, and put a positive spin on DeepSeek, highlighting that reasoning models require 100x more compute than pre-training models. Some concerns linger over whether Q1 will be the bottom for margins before recovery in F2H26.
- Salesforce (-4%): Q4 revenue missed and FY26 guidance was below consensus, raising concerns about growth sustainability. However, some analysts expect upside from AI-driven Agentforce adoption.
- Snowflake (+4.5%): Q4 product revenue beat expectations, and FY26 revenue guidance surprised to the upside (+24% YoY growth), with strong performance in core and emerging AI-driven products.
- Synopsys (-1.2%): Maintained FY25 guidance despite China headwinds.
- C3.ai (-9.7%): Narrowed FY25 revenue guidance but raised operating income outlook. Analysts noted that non-recurring demo licenses drove much of the revenue growth, raising concerns over sustainability.
Financials (XLF) +0.57%
- HEICO (+13.9%): Q1 revenue, EBITDA, and EPS all beat. Defense strength was a standout, with organic growth accelerating and M&A activity driving efficiency gains.
- LegalZoom (+13.2%): Q4 results and guidance ahead of expectations; analysts highlighted a 10% YoY shift toward premium/professional packages as a key positive.
- Viatris (-15.2%): Q4 earnings missed and FY25 guidance fell below expectations, citing Indore plant issues. Announced $500M–$650M in share buybacks.
Consumer Discretionary (XLY) -1.78%
- Tesla (-7.2%): Extended its sharp weekly losses, reflecting continued pressure on the EV sector.
- Urban Outfitters (+8.2%): Q4 results beat, with positive FY25 guidance. Analysts noted a UO recovery and strong momentum at Anthropologie and Free People.
- Bath & Body Works (-12.7%): Q4 earnings beat, but FY25 EPS guidance fell short. Management noted that the tariff impact on China-imported goods was factored in, but other potential tariff changes were not.
Industrials (XLI) -0.37%
- Kratos Defense (+5.3%): Q4 earnings beat, but revenue missed due to underperformance in Services. The company announced a JV with Rafael for solid-rocket motor production.
- Pure Storage (-14.8%): Q4 revenue beat, but gross margins disappointed amid record QLC flash costs. Q1 and FY revenue guides in line, but operating income guidance fell short.
Healthcare (XLV) -0.41%
- Moderna (-7.4%): Trump administration reconsidering a $590M Biden-era funding contract for bird flu vaccine development, raising uncertainty about future federal support.
- Universal Health Services (+3.3%): Q4 earnings and revenue beat, with strong Acute Care and Behavioral Health revenue growth. FY guidance was well above consensus.
- Teladoc (-13.6%): FY25 revenue guidance in line, but EBITDA outlook fell short. Takeaways focused on **slower
Eco Data Releases | Friday February 28th, 2025
S&P 500 Constituent Earnings Announcements | Friday February 28th, 2025
Data sourced from FactSet Research Systems Inc.
