Euphoria Alert: S&P sectors whisper caution 03/10/2025

HOT stories for today

US market wrap:

• The S&P 500 and Nasdaq hit new records on Thursday as tech strength and optimism over a rate cut outweighed concerns about the shutdown. The S&P 500 added 0.28% while the Nasdaq climbed 0.35%. Investors continue to pile into equities, undeterred by the government shutdown or shaky jobs data, with all three major benchmarks finishing at record highs. With the Senate not meeting on Thursday due to Yom Kippur, the U.S. government remained closed for a second day.
• Treasury Secretary Scott Bessent told CNBC that economic growth could take “a hit” if the standoff drags on, but markets largely shrugged off the warning. Meanwhile, the labor market already appears weakened, particularly in terms of new hiring activity. The lack of official payroll data due to the shutdown leaves investors with fewer signals to gauge the actual state of employment, thereby increasing their reliance on private surveys, such as ADP.

Sector gauge warns of overconfidence

• DataTrek Research flagged unusually low correlations across five major S&P 500 sectors: technology, industrials, consumer discretionary, financials, and healthcare. Co-founder Nicholas Colas noted readings fell below two standard deviations of the long-term average, a signal that has consistently preceded 5–18% pullbacks since 2023.
• While the S&P 500 ended Thursday at its 30th record close of the year, Colas warned that “sector correlations currently reflect excessive investor confidence.” He stressed this is not a call to “sell everything,” but a caution that a catalyst may reset markets in the weeks ahead. DataTrek sees the VIX crossing above its long-term average of 19.5 as a potential entry point to “buy the dip.”

Stocks on the move:

• Acadia Healthcare (ACHC): Jumped 7% after Khrom Capital urged the company to consider strategic alternatives, though shares remain down 33% YTD.
• Sarepta Therapeutics (SRPT): Rallied 6%, adding to a three-month gain of over 20%, even without a clear catalyst.
• Starbucks (SBUX): Rose 2.6% after raising its quarterly dividend from $0.61 to $0.62 per share.
• Occidental Petroleum (OXY): Dropped 6% despite Berkshire Hathaway’s nearly $10B cash deal to acquire its OxyChem division. Berkshire Class B shares edged down 0.2%.

Watchlist: SRPT, NVDA, RDDT, LLY, PFE, JPM, SMCI, INTC

Today’s action

• Stock futures were flat after Thursday’s rally, with AI-led gains overshadowing shutdown risks. Dow futures added 1 point, S&P futures were marginally higher, and Nasdaq 100 futures traded near unchanged.
• The shutdown has created a data blackout, with the Labor Department halting the release of Friday’s jobs report. While this limits Fed inputs for the October meeting, it also removes a near-term risk factor for the stock market.

Bitcoin

• Bitcoin (BTC) broke above $120,000 for the first time in two months, buoyed by rate cut hopes and October’s bullish seasonality.
• Altcoins followed, with Ether, Solana, and Dogecoin all gaining over 5%. Analysts warn, however, that Washington’s political turmoil could weigh on momentum and trigger sharp reversals.
  Watchlist: Bitcoin: 98 000-125 000, Ethereum: 4000-4980, Solana: 180-240
   

Forex

• EUR/USD hovered near 1.1740 in Asia, with the dollar under pressure from the shutdown and the absence of jobs data.
• USD/JPY traded close to 149.50, supported by expectations of further BoJ tightening, but capped by domestic uncertainty.
  Watchlist: EUR/USD: 1.0700-1.1880, USD/JPY: 140-151

Basic Materials

• Gold steadied near $3,860, set for a seventh straight weekly gain on Fed cut bets and safe-haven demand. Overbought conditions, however, kept buyers cautious.
• WTI crude traded around $62, recovering slightly despite U.S. inventory builds. Geopolitical risks and demand uncertainty tied to the shutdown kept traders wary.
  Watchlist: GOLD: 2600-3880, US Oil: 55.60-75.80

Key Economic Events Today:

EST time
10:00 am: USD ISM Services PMI
01:30 pm: USD FOMC Member Logan Speaks


Earnings

BMO (Before Market Open):

No major earnings today!



The TEFS Analyst team wishes you a successful day!