Stock Market Update

[BRIEFING.COM] The stock market traded higher right out of the gate in a continuation of the rebound that began last Friday. That move was short-lived, however, leading the major indices to trade below prior closing levels for most of the session. 

Factors for the renewed selling pressure included concerns about tariffs on Canada and Mexico, which were seemingly placed on the backburner after comments made by Treasury Secretary Bessent and Commerce Secretary Lutnick left an impression that Canada and Mexico might not face a full 25% tariff rate on March 4. Fears were piqued again after White House Trade Advisor Navarro said in a CNBC interview that he doesn't see the president wavering on tariffs.

This morning's data was another factor for renewed selling after the ISM Manufacturing PMI showed manufacturing activity decelerating in February at the same time prices for manufacturers accelerated.

Treasuries, which logged solid gains last week on growth concerns, saw increased buying in response. The 10-yr yield was at 4.23% earlier, but sits at 4.18% now. The 2-yr yield, which was at 4.03% ahead of the report, dipped below 4.00% in recent action.

Many stocks participated in downside moves, but mega caps have been especially influential. NVIDIA (NVDA 115.25, -9.67, -7.8%) is a standout in that respect, declining after buzz about a potential tightening of export restrictions on chips for China.

This price action has contributed to the loss in the technology sector (-2.1%), which sports the largest decline among the 11 sectors by a wide margin. The consumer discretionary sector (-1.3%) is another laggard, reflecting the underperformance of mega cap names.

Reviewing today's economic data:

• February S&P Global US Manufacturing PMI - Final 52.7; Prior 51.6
• February ISM Manufacturing Index 50.3% (Briefing.com consensus 50.7%); Prior 50.9%
  • The key takeaway from the report is that there is a bad mix of decelerating activity, rising prices, and weakening employment for the manufacturing sector. It is the kind of mix that will stir talk of stagflation.
• January Construction Spending -0.2% (Briefing.com consensus 0.0%); Prior 0.5%
  • The key takeaway from the report is that the weakness in private residential spending was concentrated in multifamily construction.