Market Recap – Friday March 7, 2025
Stocks Rebound After Thursday’s Selloff
U.S. equities closed higher on Friday, attempting to recover from Thursday’s sharp selloff that marked the worst pullback of the year. The S&P 500 gained 0.55%, the Nasdaq rose 0.70%, and the Dow and Russell 2000 climbed 0.52% and 0.43%, respectively. Despite today’s gains, both the S&P 500 and Nasdaq posted their third consecutive weekly decline, the worst since September. The market saw mixed sector performance, with semiconductors, energy, REITs, biotech, food & beverage, and utilities leading the upside, while airlines, banks, credit card stocks, retail, and apparel lagged.
Key Drivers of Today’s Market Move
Jobs Report & Powell’s Comments: The February nonfarm payrolls report came in slightly below expectations, but Fed Chair Jerome Powell provided some dovish commentary, downplaying recent sentiment surveys and acknowledging heightened uncertainty. Markets initially reacted positively, though concerns over falling labor force participation lingered.
Tariff Uncertainty Remains: While the White House confirmed a one-month reprieve on auto and USMCA-related tariffs, Trump’s broader protectionist stance continues to unsettle investors. Reciprocal tariffs from Canada, Mexico, and China remain a looming threat, adding to volatility.
Tech Earnings Under Scrutiny: Broadcom (AVGO) surged 8.6% after a strong earnings report, helped by robust AI semiconductor demand and the addition of two new hyperscaler customers. However, Hewlett Packard Enterprise (HPE) plunged 12% on soft margins, weaker-than-expected guidance, and concerns about execution risks and tariff-related cost pressures.
Fed Rate Cut Expectations Hold Steady: The bond market remained relatively stable following Powell’s remarks, with rate cut expectations for 2025 unchanged at ~75bps. However, Fed Governor Adriana Kugler flagged rising inflation expectations as a concern, hinting at a potentially more patient Fed stance.
Economic Data & Geopolitical Developments
February Payrolls Report: The economy added 151K jobs, below expectations (160K), while January’s figure was revised lower. The unemployment rate ticked up to 4.1%, though wage growth remained in line with forecasts.
Russia-Ukraine Ceasefire Speculation: Bloomberg reported that Russia may be open to a temporary ceasefire, contingent on progress toward a broader peace settlement. This follows Trump’s push for sanctions unless negotiations advance.
Corporate Buybacks & Institutional Flows: Despite market weakness, U.S. equities saw their third consecutive week of inflows, led by dip-buying in tech and energy. Retail investors and institutions remain cautious, but depressed sentiment levels could set the stage for a contrarian rebound.
Notable Gainers & Decliners
Top Gainers:
Gap (GPS) +18.8% – Strong earnings, revenue beat, and guidance highlight brand strength and improved inventory management.
Broadcom (AVGO) +8.6% – AI-driven revenue growth and new hyperscaler customer wins lift sentiment.
Walgreens (WBA) +7.5% – Set to be taken private by Sycamore Partners in a $23.7B deal.
Top Decliners:
Hewlett Packard Enterprise (HPE) -12.0% – Weak gross margins, disappointing guidance, and concerns over execution and competition.
Intuitive Machines (LUNR) -22.1% – Pressure continues as its moon lander landed sideways, raising mission success concerns.
Samsara (IOT) -15.6% – Q4 billings missed expectations, while FY26 guidance was viewed as disappointing.
Investment Takeaways
Volatility Likely to Persist: The VIX hit its highest level of the year on Thursday, reflecting growing market uncertainty. While today’s rally helped stabilize sentiment, broader concerns over tariffs, earnings quality, and economic growth remain.
AI & Energy Still in Focus: AI-related names continue to show strong demand, though high valuations and earnings expectations are raising the bar. Meanwhile, energy stocks benefited from oil price gains and global supply concerns.
Fed Policy & Economic Data Still Key Catalysts: With Powell’s tone leaning slightly dovish, upcoming CPI and PPI reports will be crucial in shaping rate expectations. If inflation remains sticky, the Fed may be forced to delay cuts, adding to market headwinds.
Potential for Tactical Buying: Depressed sentiment, three straight weeks of equity inflows, and resilient earnings in select sectors suggest that patient investors could find attractive entry points in high-quality stocks.
Next week, markets will be watching tariff policy updates, inflation data, and continued developments in corporate earnings for further clarity on the path ahead.