Stock Market Update

The S&P 500 futures are down 32 points and are trading 0.6% below fair value, the Nasdaq 100 futures are down 139 points and are trading 0.7% below fair value, and the Dow Jones Industrial Average futures are down 140 points and are trading 0.3% below fair value.

Contracts linked to the S&P 500, Nasdaq 100, and Dow industrials are lower. The negative bias is a continuation of yesterday's retreat. Buying has also continued in the Treasury market. The 10-yr yield is down three basis points to 4.15%.

Focus remains on the tariff front after President Trump imposed 25% tariffs on imports from Canada and Mexico. Canada announced retaliatory actions, including 25% tariffs on $30 billion worth of goods immediately. Mexico hasn't announced actions yet, but previously vowed retaliation. 

Tariffs on Chinese imports increased to 20% from 10% and China also announced retaliatory actions, including additional 10% and 15% tariffs on US agricultural products beginning March 10.

Market participants are now waiting on President Trump's address to a joint session of Congress tonight at 9:00 p.m. ET.

There's also some market-moving data later in the week, capped off by the February Employment Situation report on Friday. 

In corporate news:

• Target (TGT 120.68, -0.08, -0.1%): beats by $0.15, reports revs in-line; guides FY26 EPS in-line, revs below consensus; CEO Brian Cornell on CNBC says consumer has been cautious for sometime; had strong performance in February; cold weather had negative impacts; optimistic about this year, but concerned about tariffs; consumers will see price increases over the next couple of days
• Tesla (TSLA 274.61, -10.04, -3.5%): China made EV sales fell 29% yr/yr in January and February, according to WSJ
• Walgreens (WBA 10.74, +0.48, +4.7%): nearing $10 bln deal to go private, according to WSJ
• Okta (OKTA 99.00, +11.84, +13.6%): beats by $0.04, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY26 EPS above consensus, revs above consensus; achieves milestone of reaching $1 billion in aggregate sales over the past four years in AWS Marketplace (AMZN)

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -1.2%, Hong Kong's Hang Seng: -0.3%, China's Shanghai Composite: +0.2%, India's Sensex: -0.1%, South Korea's Kospi: -0.2%, Australia's ASX All Ordinaries: -0.7%.
  • In economic data:
    • Japan's January Unemployment Rate 2.5% (expected 2.4%; last 2.4%) and jobs/applications ratio 1.26 (expected 1.25; last 1.25). Q4 Capital Spending -0.2% yr/yr (expected 4.9%; last 8.1%). February Monetary Base -1.9% yr/yr (expected -0.5%; last -0.7%). February Household Confidence 35.0 (expected 35.2; last 35.2)
    • South Korea's January Industrial Production -2.3% m/m (expected -3.1%; last 3.9%); -4.1% yr/yr (expected -2.0%; last 4.4%). January Retail Sales -0.6% m/m (last 0.2%) and January Service Sector Output -0.8% m/m (last 1.1%). February Manufacturing PMI 49.9 (last 50.3)
    • Australia's Q4 Current Account deficit AUD12.5 bln (expected deficit of AUD11.8 bln; last deficit of AUD13.9 bln). Q4 Net Exports Contribution 0.2% (expected -0.1%; last 0.1%). January Retail Sales 0.3% m/m, as expected (last -0.1%)
    • New Zealand's January Building Consents 2.6% m/m (last -5.6%)
  • In news:
    • China will impose tariffs between 10 and 15% on some imports from the U.S. and place additional American companies on its export control list early next week.
    • Japan's Prime Minister Ishiba and Finance Minister Kato pushed back against President Trump's suggestion that Japan is looking to devalue its currency intentionally.
    • The latest policy Minutes from the Reserve Bank of Australia cautioned against expectations for additional rate cuts since the return to target inflation is uncertain.
• Major European indices trade in the red with Italy's MIB (-2.8%) pacing the retreat. STOXX Europe 600: -1.4%, Germany's DAX: -2.4%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -1.5%, Italy's FTSE MIB: -2.8%, Spain's IBEX 35: -2.4%.
  • In economic data:
    • Eurozone's January Unemployment Rate 6.2% (expected 6.3%; last 6.2%)
    • France's January government budget balance -EUR17.3 bln (last -EUR156.3 bln)
    • Italy's January Unemployment Rate 6.3% (expected 6.2%; last 6.4%)
    • Spain's February Unemployment Change -6,000 (expected 45,200; last 38,700)
  • In news:
    • Stellantis is the weakest performer in Milan while financials are also among the laggards.
    • Elsewhere, shares of Continental are falling after the auto parts supplier reported solid results for the quarter, but issued a cautious outlook for 2025.
    • Defense contractors are bucking the trend after it was reported that the U.S. has halted the flow of military aid to Ukraine.
    • In addition, European Commission President von der Leyen proposed that the EU borrow EUR150 bln as part of an EUR800 bln military expenditure fund.