March 2, 2026
S&P futures are down 1% Monday morning following Friday’s tech-led pullback, where semis and software were the primary drags. However, the equal-weight S&P 500 managed a modest gain, supported by energy and defensive leadership — reinforcing that February’s dominant theme has been dispersion rather than broad-based de-risking.
Overseas markets are weaker as U.S./Israel strikes on Iran enter their third day. Hong Kong fell more than 2% and Japan dropped over 1%, while mainland China gained roughly 0.5%. European equities are down approximately 2%. WTI crude is surging 7.6% amid reports that the Strait of Hormuz is effectively closed, elevating supply concerns. Gold is up 3%, silver +2.5%, and bitcoin futures +1.4%. Treasuries are modestly weaker (yields up 1–2 bps) with curve flattening, reflecting inflation risk from higher oil rather than a classic flight-to-quality bid. The dollar index is up 0.6%.
While U.S. equities have historically discounted geopolitical flare-ups, the magnitude of the oil spike complicates that framework. The duration and severity of the conflict remain uncertain, with President Trump suggesting operations could conclude within days or extend several weeks. Mixed commentary around sanctions relief and regime change adds to policy uncertainty.
Outside geopolitics, markets remain focused on AI disruption themes, scrutiny around hyperscaler capex sustainability, and lingering private credit concerns. Counterbalancing those risks are still-constructive earnings expectations, labor market stabilization, prior Fed easing, and anticipated fiscal stimulus via OBBBA.
On today’s calendar, final S&P Global Manufacturing PMI and ISM Manufacturing (consensus 51.5 vs. 52.6 prior) are due. The week progresses with ADP, ISM Services, and the Beige Book on Wednesday, followed by Friday’s employment report and retail sales. Multiple Fed speakers are scheduled throughout.
Company-Specific News
- NVIDIA: Reportedly set to unveil a new Groq-designed AI inference chip at GTC; OpenAI expected to be one of the largest early customers, integrating it into Codex.
- OpenAI: Reached agreement with the Pentagon to provide AI technology for classified systems.
- Anthropic: Plans legal challenge after being labeled a supply chain national security risk by the Pentagon.
- DeepSeek: Expected to release V4 multimodal LLM this week (image, video, and text capabilities).
- Alphabet: CNBC reported its Intrinsic robotics unit aims to replicate Android’s ecosystem strategy in robotics.
- Amazon: FT highlighted internal morale pressure following recent job cuts.
- Berkshire Hathaway: CEO Greg Abel stated elevated cash levels do not signal retreat from dealmaking activity.
U.S. equities closed lower Friday, finishing a volatile February defined by dispersion, AI fatigue, and steady rotation into defensive positioning. The Dow declined 1.05%, the S&P 500 fell 0.43%, the Nasdaq dropped 0.92%, and the Russell 2000 underperformed with a 1.68% loss. For the month, the S&P and Nasdaq posted their largest declines since March 2025, even as equal-weight performance held up relatively better — underscoring that factor rotation rather than outright liquidation has been the dominant theme.
Rates were the clearest signal of underlying caution. Treasuries rallied with a bull steepening move, pushing the 2-year yield down 5 bps to 3.39% (its lowest level since August 2022) and the 10-year yield down 5 bps to 3.96%, back below the 4% threshold. The dollar index slipped 0.2% to 97.6, while gold advanced 1.67% to $5,281 and silver surged 6.5%. WTI crude gained 3.17% to $67.28, supported by persistent geopolitical risk premiums as U.S.–Iran discussions failed to produce meaningful breakthroughs.
Importantly, the bond rally came despite a hotter-than-expected January PPI report. Headline PPI rose 0.5% m/m versus 0.3% expected, while core PPI climbed 0.8% m/m, well ahead of consensus and marking an acceleration from December. Although food and energy prices softened, final demand services inflation remained firm, complicating the disinflation narrative. At the same time, growth-sensitive data remained constructive: February Chicago PMI printed at 57.7 — its highest level in nearly four years — and December construction spending rose 0.3% m/m.
Looking ahead, next week’s ISM Manufacturing (consensus 51.8), ISM Services, ADP payrolls, Challenger layoffs, retail sales, and the February employment report (consensus ~60K payroll growth) will be pivotal. Manufacturing in particular has become central to the cyclical rotation debate, especially given January’s standout 52.6 print.
February closed with three dominant themes: widening AI dispersion, falling yields driven more by growth anxiety than inflation relief, and rotation rather than capitulation. Equal-weight resilience and defensive leadership continue to argue for internal repositioning rather than systemic stress.
Sector Highlights
Sector performance reinforced the ongoing defensive tilt. Healthcare led with a 1.77% gain, followed by Energy (+1.68%), Consumer Staples (+1.51%), Communication Services (+1.44%), Utilities (+1.07%), and Materials (+0.80%). Real Estate and Industrials posted modest gains, while Consumer Discretionary finished roughly flat.
Technology (-2.17%) and Financials (-1.99%) were clear laggards. The underperformance in Tech reflected renewed scrutiny around AI capex sustainability, margin pressure within infrastructure builds, and broader fatigue in high-beta AI beneficiaries. Financials were pressured by falling yields, which weighed on net interest margin expectations, alongside increased caution surrounding private credit.
Overall, the sector tape continues to signal rotation rather than systemic breakdown — with capital gravitating toward quality balance sheets, earnings visibility, lower-volatility factors, and commodity-linked hedges, while higher-beta cyclicals and select AI-linked exposures remain under pressure.
Information Technology
AI infrastructure and capex discipline remained the central debate.
- Dell Technologies (DELL) +21.9%: Strong Q4 beat and improved FY27 guidance. AI server strength, Nvidia platform adoption, backlog growth, and margin stabilization offset DRAM pressure.
- Autodesk (ADSK) +5.3%: Q4 beat and above-consensus guidance; backlog and margin expansion narrative intact.
- Zscaler (ZS) -12.2%: Despite raised guidance, ARR transparency concerns and competitive backdrop weighed.
- Elastic (ESTC) -15.5%: Beat and raise but weaker near-term cloud guidance pressured shares.
- CoreWeave (CRWV) -18.5%: Revenue beat but heavy capex ramp (> $30B FY capex) and margin pressure reinforced AI circularity concerns.
AI ecosystem headlines included OpenAI confirming a $110B capital raise at a $730B valuation and expanding its relationship with Amazon, which will invest $50B. Reports also indicated that Alphabet and Meta Platforms signed multibillion-dollar TPU rental agreements.
Financials
Financials underperformed amid private credit scrutiny and lower rates.
- Block (XYZ) +16.8%: Workforce reduction (~40%) framed as AI-enabled efficiency; Cash App strength noted.
- TCFC (private credit) under pressure following NAV deterioration and dividend cut.
- Banks, credit cards, and life insurers broadly lagged with falling yields compressing NIM outlooks.
Communication Services
- Netflix (NFLX) +13.8%: Walked away from WBD transaction, clearing path for PSKY deal; resumes buybacks and entitled to a $2.8B breakup fee.
- Duolingo (DUOL) -14%: Softer 2026 guidance as investment phase weighs; DAU growth decelerated to +30% y/y.
Consumer Discretionary
- Flutter Entertainment (FLUT) -13.8%: Weak Q4 and soft FY guide; intensifying US competition.
- Sweetgreen (SG) -9.6%: Missed Q4; macro and weather headwinds in FY26 guide.
- Rocket Lab (RKLB) -4.9%: Neutron launch delayed to F4Q26.
Homebuilders outperformed amid lower yields.
Consumer Staples
- Monster Beverage (MNST): Q4 beat and strong January trends; tariffs remain a margin headwind.
Energy
Energy equities gained alongside crude strength as geopolitical risks and tighter positioning supported the complex.
Healthcare
Broad pharma and biotech outperformed as capital rotated toward earnings durability and lower-volatility growth profiles.
Industrials & Materials
Machinery lagged, but aerospace & defense and high-performance computing-linked industrials showed relative resilience. Precious metals strength supported Materials sector gains.
Eco Data Releases | Monday March 2nd, 2026
S&P 500 Constituent Earnings Announcements | Monday March 2nd, 2026
Data sourced from FactSet Research Systems Inc.
