S&P 500
Overview for March 6
US market: growth from strong support
On Wednesday, major US stock indices saw gains: Dow Jones +1.1%, NASDAQ +1.5%, and S&P 500 +1.1%. The S&P 500 ended at 5,842, within a range of 5,650–6,200.
The stock market posted growth across all sectors.
The S&P 500 surged by 1.1%, the Dow Jones Industrial Average gained 1.1%, and the NASDAQ Composite climbed by 1.5%.
The session started slowly, but buying activity picked up significantly in the second half of the day, driven by the following factors: White House spokesperson Caroline Levitt announced that President Trump would provide a one-month exemption from tariffs for US automakers operating in both the United States and Mexico.
The Federal Reserve's Beige Book for February showed a slight increase in economic activity since mid-January.
The S&P 500 index remained above its 200-day moving average (5,728) at the session's lows. There was noticeable activity in closing short positions, and trading focused on buying the dips following recent declines. Mega-cap stocks benefited from a surge in buying activity, which provided an additional boost to major indices.
The Vanguard Mega Cap Growth ETF (MGK), which had been down 0.8% from the opening price at its worst point of the day, closed with a 1.5% increase.
NVIDIA (NVDA 117.30, +1.31, +1.1%) and Microsoft (MSFT 401.02, +12.41, +3.2%) led the way, contributing to a 1.4% gain in the tech sector.
Seven sectors of the S&P 500 saw an increase of over 1.0%, with only two sectors closing in the red.
The energy sector (-1.5%) was the worst performer, falling along with oil prices (66.27 USD per barrel, -2.03, -3.0%), reflecting ongoing concerns about economic growth and its potential impact on demand.
The moderate movement in stocks was influenced by mixed news. There were some optimistic rumors that certain districts might receive tariff exemptions, though reports also indicated that the relief would not consist of tariff rate cuts but instead include changes to the USMCA rules.
The stock market also reacted to Germany's major new fiscal plan to improve infrastructure and increase defense spending, in contrast to U.S. efforts to reduce government spending. In response, the value of German bonds dropped sharply, and the yield on 10-year German bonds jumped by 28 basis points to 2.79%.
In the meantime, the EUR/USD pair soared to 1.0800, with the US dollar index moving lower.
Year-to-date:
Dow Jones Industrial Average: +1.1% S&P 500: -0.7% S&P Midcap 400: -3.4%
Nasdaq Composite: -3.9% Russell 2000: -5.8%
Economic data review:
MBA Weekly Mortgage Index: +20.4%; Prior: -1.2%
February ADP Employment Change: 77K (Consensus: 145K); Prior: revised to 186K from 183K.
S&P Services PMI for February: Final reading of 51.0; Prior: 49.7
February ISM Services PMI: 53.5%; Consensus: 53.0%; Prior: 52.8%
The key takeaway from the report is that the expansion of the largest sector in the country—services—accelerated in February, easing concerns about market growth. However, the acceleration in activity was accompanied by higher prices.
January Factory Orders: +1.7%; Consensus: +1.3%; Prior: revised to -0.6% from -0.9%.
The report highlights not only a recovery in aircraft and parts orders but also strong growth in business spending, as evidenced by a 0.8% jump in new orders for non-defense capital goods excluding aircraft.
Thursday's economic calendar includes:
8:30 AM ET: January Trade Balance (Consensus: -$93.5B; Preliminary forecast: -$98.4B)
Revised Q4 Productivity (Consensus: +1.2%; Previous: +1.2%)
Revised Q4 Labor Costs (Consensus: +3.0%; Previous: +3.0%)
Weekly Initial Jobless Claims (Consensus: 234K; Previous: 242K) and Continuing Claims (Previous: 1.862M)
10:00 AM ET: January Wholesale Inventories (Consensus: +0.7%; Previous: -0.5%)
10:30 AM ET: Weekly Natural Gas Stocks (Previous: -261B cubic feet)
Energy:
Brent crude oil: $69.70. Brent dropped below $70, marking the lowest level of the year. Oil prices are under pressure due to concerns over the US economy.
Conclusion: The US market is well-positioned to show new growth towards its one-year highs, but we are still awaiting the February jobs report scheduled for Friday. Therefore, it is recommended to keep holding long positions from support levels.
