Stock Market Update

[BRIEFING.COM] The stock market closed with gains across the board thanks to a late afternoon push following an otherwise tumultuous session. The S&P 500 registered a 1.6% gain and the Nasdaq Composite jumped 1.6%.

Just about everything came along for the afternoon rise, which was led by big gains in mega cap stocks following a soft showing this week in the space. NVIDIA (NVDA 124.92, +4.77, +4.0%), Apple (AAPL 241.84, +4.54, +1.9%), and Microsoft (MSFT 396.99, +4.46, +1.1%), which comprise nearly 20% of the S&P 500 in terms of market capitalization, were standouts from the space. 

The equal-weighted S&P 500 closed 1.1% higher and all 11 S&P 500 sectors closed in the green. The consumer discretionary (+1.8%) and technology (+1.7%) sectors, which house mega cap components, were top performers along with the financial sector (+2.1%).

Treasuries also settled with gains, reflecting ongoing concerns about growth. The 10-yr yield dropped five basis points to 4.23%, which was 19 basis points lower this week. The 2-yr yield dropped eight basis points today to 4.00%, which was 19 basis points lower for the week.

This followed the Personal Income and Spending report for January, which showed welcome disinflation on a year-over-year basis in the core-PCE Price Index (the Fed's preferred inflation measure), yet there was a noticeable 0.5% month-over-month decline in real personal spending, which is going to be a big drag on Q1 GDP forecasts.

As a result, the Atlanta Fed GDPNow forecast for Q1 GDP was revised to a 1.5% contraction from 2.3% growth in the last estimate. 

There was also new developments on the geopolitical front that market participants were responding to. Stocks took a sharp turn lower around mid-day after President Trump and Ukraine's President Zelenskyy had a heated meeting in the White House, leading Mr. Trump to tell Mr. Zelenskyy he is "gambling with World War III."

• Dow Jones Industrial Average: +3.1% YTD
• S&P 500: +1.2% YTD
• S&P Midcap 400: -0.8% YTD
• Nasdaq Composite: -2.4%
• Russell 2000: -3.0% YTD

Reviewing today's economic data:

• January Adv. Intl. Trade in Goods -$153.3 bln; Prior was revised to -$122.0 bln from -$122.1 bln
• January Adv. Retail Inventories -0.1%; Prior was revised to -0.5% from -0.3%
• January Adv. Wholesale Inventories 0.7%; Prior was revised to -0.4% from -0.5%
  • The key takeaway from the report is the widening goods deficit. That was likely a byproduct of the tariff push as importers worked to get ahead of the tariffs, yet it will likely stoke President Trump's push to get going with the tariff implementation.
• January Personal Income 0.9% (Briefing.com consensus 0.3%); Prior 0.4%, January Personal Spending -0.2% (Briefing.com consensus 0.2%); Prior was revised to 0.8% from 0.7%, January PCE Prices 0.3% (Briefing.com consensus 0.3%); Prior 0.3%, January PCE Prices - Core 0.3% (Briefing.com consensus of 0.3%; Prior 0.2%
  • The key takeaway from the report isn't singular. There are two: there was welcome disinflation on a year-over-year basis, yet there was a noticeable 0.5% month-over-month decline in real personal spending, which is going to be a big drag on Q1 GDP forecasts. Net-net, not a great report for the growth outlook considering, too, that the personal savings rate jumped to 4.6% from 3.5%.
• February Chicago PMI 45.5 (Briefing.com consensus 41.2); Prior 39.5

Looking ahead to Monday, market participants receive the following data: February ISM Manufacturing Index (prior 50.9%) and January Construction Spending (prior 0.5%) at 10:00 ET.