Tariffs and NVDIA turn the market into a bear party 28/02/2025

HOT stories for today

US market wrap:
 

• The S&P 500 tumbled in a choppy session as markets reacted to President Donald Trump’s confirmation that tariffs on Canada and Mexico would move forward, coupled with a sharp downturn in Nvidia after its earnings report. Adding to the unease, a spike in jobless claims reinforced fears of economic slowdown. This follows a string of disappointing data, including weaker consumer confidence, sluggish retail sales, and deteriorating sentiment—raising concerns about the strength of the U.S. economy.
• The S&P 500 dropped 1.59% to 5,861.57, extending losses for the week and month. The Nasdaq Composite plunged 2.78% to 18,544.42, weighed down by Nvidia’s 8.5% decline. The Dow Jones Industrial Average shed 193.62 points, or 0.45%, closing at 43,239.50. Both the S&P 500 and Nasdaq are heading toward their worst week since September 2024, as uncertainty grips investors.

Tariffs and NVDIA turn the market into a bear party
 

• President Donald Trump reaffirmed Thursday that tariffs on Canada and Mexico—currently on hold—will proceed, while separately threatening a 25% levy on the European Union. These moves target some of the U.S.'s closest allies and largest trade partners, raising fears of economic and geopolitical fallout. Signs of strain may already be emerging. U.S. jobless claims for the week ending February 22 surged to their highest level since October, surpassing expectations. Meanwhile, major tech firms like Google, Meta, and Microsoft have announced layoffs this year, hinting at the economic squeeze companies may face as higher import costs take hold.
• Nvidia could also be at risk. The AI chip giant relies heavily on TSMC in Taiwan for manufacturing, but Trump has accused Taiwan of undercutting the U.S. chip industry and suggested imposing tariffs on its semiconductors. Nvidia shares plunged Thursday after its earnings release, wiping out billions in market value. If tariffs on Taiwan materialize, the impact could be severe—not just for Nvidia, but for the entire semiconductor industry.

 
Stocks on the move:       

• Autodesk (ADSK) — Shares surged nearly 7% after the design software company reported stronger-than-expected fourth-quarter earnings.
• NetApp (NTAP) — The data storage stock tumbled about 14% as fiscal third-quarter revenue of $1.64 billion fell short of the $1.69 billion analyst consensus from LSEG. The company also provided weaker-than-expected full-year guidance.
• Dell (DELL) — Shares dipped slightly despite the tech firm posting earnings of $2.68 per share, excluding certain items, beating LSEG's forecast of $2.53 per share.
• Duolingo (DUOL) — The online language-learning platform slid nearly 3%. While fourth-quarter revenue exceeded analyst expectations, its adjusted EBITDA guidance for the current quarter came in lower than FactSet projections.

Today’s action

• Asia-Pacific markets declined on Friday after U.S. President Donald Trump confirmed that tariffs on imports from Mexico and Canada will take effect next week, adding to market jitters. Australia’s S&P/ASX 200 dropped 1.16% to close at 8,172.4. Japan’s Nikkei 225 tumbled 2.81%, while the Topix shed 1.87%. Hong Kong’s Hang Seng Index slid 2.34%, and China’s CSI 300 dipped 0.62%.
• U.S. stock futures were little changed early Friday as investors braced for the end of a losing week and month while awaiting key inflation data. Dow Jones Industrial Average futures slipped 18 points (less than 0.1%), while S&P 500 futures and Nasdaq 100 futures edged up 0.04% and 0.07%, respectively. Markets are closely watching January’s personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge. Economists surveyed by Dow Jones expect a 0.3% monthly rise, with an annual increase of 2.5%. Core PCE, which excludes food and energy, is projected to grow 0.3% month over month and 2.6% year over year. Additional economic reports on personal income and consumer spending are also expected in the morning.

Wahtclist: SMCI, NVDA, RKLB, DUOL, DELL, NTAP, ADSK, COIN


Bitcoin

• Bitcoin’s decline deepened Friday, falling to $80,500 in early Asian trading, down 3.45% on the day and nearly 25% below its mid-December all-time high. The selloff wipes out gains that followed Donald Trump’s election victory, when optimism surged over his pro-crypto stance. The downturn comes as investors retreat from riskier assets amid global market weakness, uncertainty over Trump’s tariff policies, and ongoing geopolitical tensions in Russia-Ukraine and Israel-Gaza. Sentiment took another hit after Bybit, a major crypto exchange, suffered a $1.5 billion hack, the largest crypto heist on record.
• Market volatility has intensified in response to the Bybit incident, according to Jeff Mei, COO at crypto exchange BTSE. He also cited inflation worries and a pause in Fed rate cuts as factors weighing on the market. Despite the slump, some crypto bulls remain optimistic, looking ahead to potential regulatory clarity from the Trump administration. 
  Watchlist: Bitcoin: 80 000-100 000, Ethereum:2000-2200, Solana: 120-176

Forex

• EUR/USD remains under pressure near 1.0390 in Friday’s Asian session, down 0.16% on the day, as escalating tariff threats weigh on the euro. A cautious market mood favors the US dollar, while Federal Reserve officials signal interest rates are likely to stay on hold for now. Traders are now focused on the US Personal Consumption Expenditures (PCE) Price Index, set for release later in the day.
• The Japanese yen struggled to hold onto its early gains against the strengthening US dollar. The USD/JPY pair rebounded from the 149.00 level after Japan’s government lowered its FY25/26 budget plan to ¥115.2 trillion. However, expectations of further Bank of Japan rate hikes could help limit the yen’s downside. Investors now await the US PCE data for further market direction.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 149-158.80

Basic Materials

• WTI crude oil is set for its first monthly decline since November as concerns over weakening fuel demand overshadow supply risks. The US will impose a 10% tariff on Canadian energy imports starting March 4, adding to market uncertainty. Oil prices surged Thursday after President Trump revoked Chevron’s license to operate in Venezuela but edged lower on Friday, trading near $69.90 per barrel in Asian hours. Economic slowdown fears and tariff-related tensions continue to weigh on crude prices.
• Gold prices extend losses for a second consecutive day, pressured by a stronger US dollar. Despite a risk-off mood and sliding US bond yields, the precious metal struggles to find support, dipping to a two-week low around $2,860 in Asian trading. Expectations that the Federal Reserve will maintain a hawkish stance due to persistent inflation have boosted the dollar, drawing flows away from gold. Traders now await the US PCE Price Index for further market direction.
  Watchlist: GOLD 2600-2945, US Oil: 68.00-79.00

Key Economic Events Today:

EST time:

08:30 am: USD Core PCE Price Index
08:30 am: USD Goods Trade Balance
08:30 am: USD Wholesale Inventories
09:45 am: USD Chicago PMI
10:15 am: USD FOMC Member Goolsbee Speaks

Earnings

BMO (Before the US Market opens)

PSO            Pearson Plc
FRO            Frontline Plc
RDNT          RadNet Inc.

AMC (After the US Market closes): Enjoy your weekend!

The TEFS Analyst team wishes you a successful day!