Yesterday, the stock market opened at the highest point of the session, and it went downhill from there. Thirty minutes into the session, it was clear that buyers would not materialize for those seeking a relief rally. Instead, selling begets selling.

There were several factors for the selling, although you will only read about one this morning:

Tariffs!

Markets Down, Fear Up

Four small safe haven sectors eked out gains, but growth was hammered.

Heat Map

Considering the degree of selling, there were more green swaths than one might imagine. These were small squares and rectangles, as noted in the sector chart above.

Consumer Staples (XLP), with consistent pricing power, is a classic safe haven, along with drugmakers.

Disastrous Breadth & Factors

• % Decliners
• SML (small-caps) 85%
• SMID (mid-caps) 83%
• SPX (S&P 500) 66%
• NASDAQ Composite 80%

Extended Factor Performance

Nothing to Fear

The Volatility Index, the so-called Fear Index, spiked higher to levels that generally get the attention of the Federal Reserve, which might be the desired outcome. However, bad news continues to be bad news because of doubts that the Fed is ready to come to the rescue.

Economic Data (bad news is bad news)

First-quarter Gross Domestic Product (GDP) estimates from the Atlanta Fed GDPNow stumbled again.

The estimate began at 3.9% - hit 2.3% last Wednesday, -1.5% on Friday, and -2.8% yesterday.

The sharp decline in key categories removes the ratio of all those trade related.

Manufacturing Red Flags

Manufacturing remained expanding for a second month, but there were many red flags.

Late Buying

Late buying wasn’t as dramatic as last Friday, but there was strong buying into the close (see action and volume), which I assume was so-called smart money.

Gaming Oversold Markets

The most important thing about buying during periods of weakness:

1. You desire to own the stock long-term and believe in the underlying fundamental story.
2. Chasing up rather than guessing the absolute bottom is okay.

Today’s Session

The S&P 500 has had a wild ride these past three days, gaining and losing 1.5%, which was not seen since September 20. Ryan Detrick, at Carson Group, points out that strong future results across all timeframes are seen with performance like this. 

Gold retook the $2,900 level as investors move to more risk-off areas.

Investors await more important policy announcements with the State of the Union happening tonight at 9 PM EST.

Comments

My opinion is the market draw down is being caused by less input of monies into the market via 401k, IRA by the federal employees being let go. The federal government is a large employer maybe the largest employer in the US. As more fed employees are let go you will likely see more outflow from the market as these former employees grapple with being let go. Don't get me wrong the government is due for some trimming to be more efficient but the exfed employees will need time to reestablish themselves. It doesn't happen overnight. Please advise with your learned opinion if you think differently. DSUNDMAN on 3/4/2025 8:52:24 AM

He should tell congress that the tax cuts and regulation cuts are a high priority and theior failure will mean the American people will lose faith in republicans David Deiwert on 3/4/2025 9:47:02 AM

Tell everyone there is hard time coming. FRITZ E PIEPER on 3/4/2025 9:53:10 AM

On shoring manufacturing to reduce reliance on China especially in key sectors. Brian Stadnick on 3/4/2025 9:54:48 AM

Reduced federal government spending has to continue to reduce the federal deficit. Then tax cuts should be implemented and made retroactive if necessary to stimulate the economy with the goal of achieving a federal surplus so we can pay down debt on a regular and sustained basis. This a message that everyone should agree on and our congress should bring about. President Trump's speech should convey this and give a sense of urgency to get these things done NOW! Ric Walter on 3/4/2025 10:01:08 AM

DSUNDMAN: The entire Federal Government is only 2% of the National Workforce...I think most 401k money input left after Covid with the majority of retirements across National Workforce. Negative 2.8 GDP forecast is the most relevant topic. GDT on 3/4/2025 10:06:19 AM

The President needs to tell all Republicans (RINOs) to get on board with Trump's agenda and pass the tax cuts and relief NOW. Waiting until the third quarter for implementation is NOT ACCEPTABLE. If necessary, Mr. Trump should parade around the guilty and threaten to primary the perps, to get his agenda passed now. Kenn Nordstrom on 3/4/2025 10:10:36 AM

Trump needs to stay the course on all the policies he did bring to the table. The two main issues for me is passing the bill to, complete the boarder closing and pass the tax bill or the working class will be in big trouble. Carlos Santos on 3/4/2025 10:22:10 AM

This is the time to buy! Stocks ste on sale. curtis p seborowski on 3/4/2025 11:01:29 AM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.