Daily Market Recap – Thursday Feb 27, 2025
Equities Decline as Tech Selloff and Trade Uncertainty Weigh
U.S. equities were broadly lower on Thursday, with the S&P 500 (-1.59%) and Nasdaq (-2.78%) leading declines, while the Dow (-0.45%) and Russell 2000 (-1.59%) also finished in the red. The major indices are now on pace for their worst week since September, driven by a tech-led selloff and escalating trade concerns. Big tech was mostly lower, with Nvidia (NVDA) declining post-earnings and Tesla (TSLA) extending its weekly losses. Other notable underperformers included semiconductors, software, airlines, cruise lines, and homebuilders. Meanwhile, larger-cap banks, insurers, aerospace and defense stocks, logistics, and quick-service restaurants showed relative resilience.
In fixed income, Treasury yields were little changed, but the curve steepened, with rates still notably lower for the week. The dollar index strengthened (+0.8%), while gold fell (-1.2%). Bitcoin futures also declined (-0.9%), reversing earlier gains. WTI crude rebounded (+2.5%), climbing back above $70 per barrel.
Tech Weakness and Tariff Uncertainty Take Center Stage
Tech stocks continued their slide, with Nvidia’s post-earnings reaction contributing to the downside. While NVDA beat estimates and guided higher, the magnitude of the beat was smaller than in recent quarters, and the company's gross margin guidance was a key concern. The broader AI sector remains a focal point, but valuations and positioning have led to some profit-taking.
Trade policy uncertainty also resurfaced after Trump reaffirmed plans to impose a 25% tariff on imports from Canada and Mexico starting March 4, along with an additional 10% tariff on Chinese goods. While markets have largely viewed tariff threats as a negotiating tactic, the latest developments have contributed to broader risk-off sentiment.
On the macro front, initial jobless claims jumped to 242K, above expectations, fueling renewed stagflation concerns when combined with an upward revision to Q4 core PCE inflation. Meanwhile, January pending home sales dropped to a record low, reinforcing concerns about housing market softness.
Earnings Highlights: Nvidia, Snowflake, Warner Bros., and More
Despite the market weakness, earnings reports continued to provide mixed signals. Nvidia (NVDA) reported strong Q4 results, but its gross margin guidance weighed on sentiment. Salesforce (CRM) also disappointed with weaker-than-expected FY26 guidance. In contrast, Snowflake (SNOW) surprised to the upside with better-than-expected product revenue guidance, and Warner Bros. Discovery (WBD) highlighted strong DTC subscriber growth. Nutanix (NTNX) rallied after raising revenue and operating margin guidance, while LegalZoom (LZ) surged on strong transaction and subscription revenue.
On the downside, IonQ (IONQ) plunged (-16.8%) after issuing soft guidance, despite beating revenue and bookings estimates. Teleflex (TFX) fell (-21.7%) on disappointing FY25 guidance, while Ibotta (IBTA) cratered (-46.1%) after missing revenue and EBITDA targets and lowering its outlook.
Economic Data: Growth and Inflation Signals Send Mixed Messages
The second reading of Q4 GDP remained at 2.3%, in line with expectations, but core capital goods orders exceeded forecasts despite downward revisions to December data. Meanwhile, initial jobless claims jumped to their highest level in months, signaling potential labor market softening. Fed officials maintained a cautious stance, emphasizing the need for patience in cutting rates, with Kansas City Fed’s Schmid highlighting potential tariff-driven inflation risks.
Here’s Our Take:
Markets are facing renewed pressure from multiple fronts — tech valuation concerns, trade policy uncertainty, and signs of economic softening. The AI growth story remains intact, but investors are now focusing more on execution and margins rather than just revenue growth, as seen with Nvidia's post-earnings reaction. Meanwhile, rising jobless claims and weak housing data add to economic uncertainty, reinforcing expectations for a cautious Fed.
While the current pullback may provide buying opportunities in high-quality AI and tech names, managing exposure to overextended stocks and monitoring macro risks will be key in the coming weeks. The S&P 500’s 5,886 level remains an important technical threshold, as a break below could trigger increased selling by trend-following funds, potentially accelerating downside momentum. Looking ahead, market participants will remain focused on inflation data, Fed policy signals, and geopolitical developments as key drivers of sentiment.