Stock Market Update

[BRIEFING.COM] The S&P 500 (-1.2%), Nasdaq Composite (-1.2%), and DJIA (-1.1%) are ticking lower again today as geopolitical turmoil in Iran and the subsequent increase in fuel prices continue to put broad pressure on the market. 

Financial Times reported that Qatar's energy minister, Saad al-Kaabi, warned that all Gulf oil producers could be forced to halt production in the coming days as the conflict endangers operations. Crude oil is currently up $10.57 (+13.1%) to $91.58 per barrel as tanker traffic through the Strait of Hormuz remains at a near standstill. 

Additionally, President Trump said via Truth Social that an end to the war will not be negotiated without an "unconditional surrender" from Iran, leaving investors to face concerns that the conflict may last longer than anticipated.

The market faces broad weakness with few pockets of relative strength today. The energy sector (flat) has spent the session oscillating around its flatline, while a solid earnings report from Costco (COST 996.51, +13.94, +1.42%) and continued post-earnings strength in Kroger (KR 74.37, +2.80, +3.91%) help keep the consumer staples sector (-0.2%) within reach of its own unchanged level. 

Meanwhile, several pockets of the market are under particular stress amid the surge in oil prices. Cruise line names such as Carnival (CCL 25.76, -1.40, -5.14%) are among the laggards, with the consumer discretionary sector (-1.9%) near the bottom of today's leaderboard. 

Airlines are also under pressure, with Southwest Air (LUV 40.90, -3.00, -6.84%) a notable laggard in the industrials sector (-1.5%), while Old Dominion (ODFL 195.30, -15.38, -7.30%) also faces a sharp retreat. 

The financials sector (-2.2%) holds the widest loss, though some of the weakness is more directly attributed to a continuation of recent pressure across asset managers. Financial Times reported that BlackRock (BLK 959.18, -75.82, -7.33%) has limited withdrawals from its HPS Corporate Lending Fund. 

This morning's batch of economic data has also weighed on sentiment today. A surprising 92,000 decrease in February nonfarm payrolls has prompted stagflation concerns. While the data provided a modest increase to the market's rate cut expectations, Fed officials warn that the outlook could become clouded by the surge in oil prices showing up on inflation readings. 

The major averages are now tracking for a lower finish to the week, facing pressure on multiple fronts today. It is worth noting that stocks have followed a trend of finishing off of their session lows this week as the afternoon hours have delivered more optimistic headlines related to the mitigation of oil prices. However, a decisive move above $90 per barrel highlights that mitigation talks have yet to offer real relief, as the oil surge remains a major overhang.

Reviewing today's data:

• Nonfarm payrolls declined by 92,000 in February (Briefing.com consensus: 60,000). Revisions for December and January combined were 69,000 lower than previously reported. The bright spot was average hourly earnings, which jumped 0.4%, leaving the year-over-year increase at 3.8% versus 3.7% in January, and real earnings on a positive trajectory.
  
  • The key takeaway from the report, however, is that it muddles the economic view for the Fed, too, with its twin planks of negative job growth and higher wage inflation. Accordingly, look for the Fed to sit on its policy hands, unwilling to cut rates for now as it also contends with the spike in oil prices and the uncertainty of the Iran war
• Total retail sales were down 0.2% month-over-month (Briefing.com consensus: -0.1%) following an unchanged reading for December. Excluding autos, retail sales were flat (Briefing.com consensus: 0.2%) for the second straight month.
  
  • The key takeaway from the report is that sales activity was disrupted by the winter storms, so the result isn't as disappointing as it looks, which comes through in the fact that nonstore retailer sales were up a robust 1.9% month-over-month.
• December Business inventories increased 0.1% from an unchanged prior reading.