Here are the 3 things we’re watching in the stock market in the week ahead
The bulls on Wall Street emerged victorious Friday but not for the week. Investors shook off a midday, end-of-the-week sell-off on geopolitical concerns sparked by President Donald Trump’s Oval Office spat with Ukraine President Volodymyr Zelenskyy . Still, the advance Friday was not enough for the S & P 500 and Nasdaq to overcome weekly losses. Wall Street has been wrestling with mounting uncertainty over Trump’s trade policy and the overall health of the U.S. economy. The week ahead will shine a light on both, with more tariffs supposedly set to kick in and fresh jobs data on the way. All three major averages gained more than 1.3% in a volatile Friday. Stocks were initially supported by the Federal Reserve’s preferred inflation measure, the PCE index, matching expectations before the Oval Office drama caused a temporary reversal. The market’s gains accelerated into the close. Still, the broad S & P 500 lost nearly 1% for the week and finished the month of February lower by 1.4%. The tech-heavy Nasdaq led to the downside, dropping 3.5% over the past five sessions and losing almost 4% in February. The Dow Jones Industrial Average was the outperformer, climbing roughly 1% for the week, supported largely by strong weekly gains in shares of insurance firm Travelers and paint maker Sherwin-Williams . The 30-stock Dow lost 1.6% in February. Another Dow component that finished the week higher was Club name Home Depot , which kicked off our week of earnings reports last Tuesday. The home improvement’s fourth-quarter report cleared a lowered bar , and we reiterated our buy-equivalent rating on the stock. A decline in the 10-year Treasury yield this past week may also have lent support to Home Depot shares. That’s because mortgage rates track the 10-year yield, and lower borrowing costs can spur housing market activity, which is good for Home Depot’s business. We heard from three Club names on Wednesday, with off-price retailer TJX Companies demonstrating why it remains one of our core holdings and prompting us to bump up our price target on the stock. Salesforce and Nvidia reported after Wednesday’s close, and the sharp sell-off in both tech stocks the following day did not match up to our perceptions of the quarters. The broader negative sentiment that swept through the market Thursday may have contributed to the size of the declines, particularly in Nvidia, given its exposure to geopolitics due to AI chip sales in China. Salesforce’s print wasn’t perfect, but the software maker gave us enough to stay believers in its AI story. Nvidia, in yet another supposedly make-or-break quarter, delivered stronger-than-expected results and outlook, even if the magnitude of the guidance beat was not as large as investors have grown accustomed to. We affirmed our “own it, don’t trade it” view on Nvidia. Trades for the week ended Feb. 28 We took a generally cautious approach to buying the market weakness and only made three trades for the week. On Tuesday, we bought 100 shares of Texas Roadhouse , our newest stock, as the market took another leg down. Later Tuesday, we trimmed 50 shares of Abbott Laboratories after a standout stretch for the stock to protect against a reversal in the market rotation. On Friday, we peeled back our position in Starbucks , trimming 50 shares and locking in a 35% gain. 1. Economy The biggest economic report of the week drops on Friday when the government releases its monthly employment data. The numbers will offer a crucial look at the health of the U.S. labor market at a time of growing worry on Wall Street over the health of the economy. Economists are projecting that 160,000 nonfarm jobs were added last month, according to FactSet. The unemployment rate in February is seen coming in at 4%, which would be unchanged from the prior month. In addition to inflation data, the Fed closely tracks employment to guide its interest rate decisions. Remember, the Fed has a dual mandate of fostering price stability and maximum employment. While there has been a string of weaker economic reports, the Fed has said it is not in a hurry to ease policy further. Traders currently expect the Fed will keep rates steady at the next two meetings — set for March 18-19 and May 6-7 — before cutting by a quarter percentage point in June, according to the CME FedWatch tool. Other economic data to call out include a pair of reports from the Institute for Supply Management. On Monday, the group releases its monthly purchasing managers’ index, or PMI, looking at manufacturing activity. On Wednesday, ISM delivers its PMI for the services sector. Depending on what they contain, the readings could advance or undercut, the narrative that the U.S. economy is softening. However, these reports are for February, and we know the first half of the month was impacted by adverse weather across the country. 2. Trump tariffs Tariffs will continue to be a major economic story. Last week, Trump said that 25% tariffs on imports from Canada and Mexico will go into effect this Tuesday, along with an additional 10% tax on goods from China. The levies on Canadian and Mexico imports were set to go into effect in early February before Trump agreed to 30-day pauses after conversations with the leaders of both nations. It’s unclear how it will play out this time around, and therein lies the problem for investors in this moment. Uncertainty on tariffs, or the economy overall, makes it harder to estimate what earnings will be, so investors pile into non-economic sensitive names where there is generally more predictability, as Director of Portfolio Analysis Jeff Marks explained on Friday’s Morning Meeting . It also makes it harder for CEOs to make business decisions – they aren’t going to invest in new regions if they a restriction or tariff could be placed any day. A clearer trade policy will go a long way for the stock market right now. 3. Earnings CrowdStrike is the first of three Club holdings to report earnings this week, with fiscal 2025 fourth-quarter numbers due out after Tuesday’s closing bell. CrowdStrike shares have been on a wild ride this year. They got off to a rip-roaring start, soaring more than 30% on their way to an all-time closing high of $455.36 per share on Feb. 18. But it’s been downhill since, with the stock losing more than 15%. We booked profits out of discipline on Feb. 19, which has made the pullback easier to stomach and tempered expectations into Tuesday’s print. In general, there’s been nothing to change the strong long-term outlook for cybersecurity companies including CrowdStrike. However, with this report specifically, analysts say there could be some noise in the numbers thanks to discounting activities in contract renewal negotiations. The company’s fourth quarter is its largest renewal period, and it might have been forced to be “aggressive in pricing and payment” terms to assuage customers hurt by last summer’s IT disruption, Bank of America analysts said in a Wednesday note. Last July, a botched CrowdStrike software update caused a major outage of computer systems worldwide. Nevertheless, fiscal fourth-quarter net new annual recurring revenue, or NNARR, exceeding expectations and indications that an acceleration can occur in the second half of the current fiscal 2026 year “should be enough” for investors, UBS analysts wrote Feb. 25. As of Friday, analysts expect CrowdStrike to report revenues of $1.03 billion and adjusted earnings per share of 85 cents. Our other two earnings reports both arrive Thursday night when we’ll hear from AI chipmaker Broadcom and retail giant Costco . The backdrop for Broadcom’s fiscal 2025 first-quarter release is messy after the AI trade has been scrambled in recent weeks. The stock has followed a similar trajectory to Nvidia, plunging in the initial DeepSeek sell-off before recovering much of those losses, only to give up those gains — all within a month. Broadcom’s AI revenue — consisting of both networking components and sales of custom chips to tech titans such as Alphabet and Meta Platforms — is the biggest watch item, though Wall Street is generally expecting the custom silicon business to experience a lull in the first half of its fiscal 2025 year before shipments of Alphabet’s sixth-generation AI chip ramp in the second half. Any comments on Broadcom’s long-term AI revenue opportunity, or serviceable addressable market, will be notable. The outlook for Broadcom’s wireless business serving Apple also will be in focus because there have been reports about Apple switching to its own WiFi chip from a Broadcom-made version for future iPhones. At the same time, Broadcom has potentially picked up some different iPhone components that used to be solely sourced from Skyworks Solutions . Any clarity CEO Hock Tan can provide about how this push-pull nets out will be helpful. More broadly, we want to see signs that the recovery in Broadcom’s legacy chip business continues apace in areas such as industrial and broadband. We won’t be surprised to see Tan get a question about reports that Broadcom has kicked the tires on Intel ‘s chip-design operations. Tan, a serial dealmaker, has effectively integrated VMWare since that acquisition closed in late 2023, and he may be looking to get back in the M & A ring. As of Friday, the consensus on Wall Street is for revenues of $14.61 billion and adjusted EPS of $1.49, according to LSEG. Costco shares gained more than 4% during Wall Street’s rough February, though the stock has also pulled back from its all-time closing high of roughly $1,077 set on Feb. 13. Nevertheless, it should be a steady-as-it-goes quarter. The retailer’s monthly sales reports have been strong, so we know what to expect on the top line. Margins will be a key metric to watch, with the Street currently expecting gross margins of 11.8%, according to FactSet. Same-store sales, always a key focus for investors in the retail industry, are expected to be up 6% year over year in the quarter, per FactSet. On the December earnings call, Costco CFO Gary Millerchip shared a positive update on the company’s first targeted advertising campaign in partnership with a large consumer packaged goods partner, saying it generated two to three times more return on ad spending than typically expected. He said Costco’s ad team was working with more than 25 suppliers on future opportunities. We want to hear a progress report on these initiatives, which Millerchip has called a “significant growth opportunity” down the road. As of Friday, Costco is expected to earn $4.10 a share on revenue of $63.07 billion, per LSEG. Week ahead Monday, March 3 ISM’s manufacturing PMI at 10 a.m. ET Census Bureau’s construction spending report at 10 a.m. ET Before the bell: Sphere Entertainment (SPHR), After the bell: Gitlab (GTLB), Okta (OKTA) Tuesday, March 4 Tariffs on Mexico and Canadian imports set to take effect New York Fed President John Williams speaks at conference at 2:20 p.m. ET Before the bell: AutoZone (AZO), Best Buy (BBY), Flutter Entertainment (FLUT) After the bell: Ross Stores (ROST), Box (BOX), CrowdStrike (CRWD) , Nordstrom (JWN), ChargePoint (CHPT) Wednesday, March 5 ADP Employment Survey at 8:15 a.m. ET ISM Services PMI at 10 a.m. ET Census Bureau’s Manufacturers’ Shipments, Inventories, & Orders Report at 10 a.m. ET Before the bell: Adidas (ADS), Bayer (BAYN), Thor Industries (THO), Foot Locker (FL), Abercrombie & Fitch (ANF), Campbell’s (CPB), Brown-Forman (BF), Dine Brands (DIN) After the bell: Marvell Technology (MRVL), MongoDB (MDB), Zscaler (ZS), Victoria’s Secret (VSCO) Thursday, March 6 Initial jobless claims at 8:30 a.m. ET Before the bell: JD.com (JD), BJ’s Wholesale (BJ), Burlington Stores (BURL), Macy’s (M), Kroger (KR), Cracker Barrel (CBRL) After the bell: Hewlett Packard Enterprise (HPE), Broadcom (AVGO) , Costco Wholesale (COST) , Gap (GAP), Cooper Companies (COO) Friday, March 7 Nonfarm payrolls report for February at 8:30 a.m. ET (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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Street signs hang outside the New York Stock Exchange at Wall Street in New York on Feb. 3, 2025.
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The bulls on Wall Street emerged victorious Friday but not for the week.