Wall Street wanders into March with hopes of a recovery, but obstacles from jobs to tariffs loom
Investors could use a break heading into a new month, but there are no shortage of obstacles ahead, including next week’s February jobs report and looming tariff deadlines. Stocks are in a different place at the end of February than at the start. The S & P 500 on Friday ended the month down 2.3%, and the week lower by 1.9%, after tariff threats and waning megacap tech stocks dented confidence in markets already priced for perfection. Tariffs will also loom large in the week ahead, with President Donald Trump this week vowing that 25% levies on Mexico and Canada will go into effect Tuesday, March 4, along with an additional 10% on China. Recent economic data came in soft, further spooking investors. The macroeconomic picture will grow more important in March, as investors move on from earnings season and look ahead to the Federal Reserve meeting on the 18th and 19th. Hopes center on price data weak enough to support the central bank’s rate cutting path and an economy strong enough to avoid concerns about growth and profits. “The last couple of weeks has shown that the market is anxious,” said John Belton, portfolio manager at Gabelli Funds. “The data kind of supports the valuations, but probably valuations that didn’t adequately price in some of the uncertainty that comes with a new administration.” “The market’s really going to be analyzing any data more than normal in this environment,” Belton said. .SPX 5D mountain S & P 500 over the past week On Friday, the Dow Jones Industrial Average posted a weekly gain, up by 0.2%, while the Nasdaq Composite slid by 4.5%. On a monthly basis, the move was sharper. In February, the 30-stock Dow slid 2.3% while the tech-heavy Nasdaq lost about 5%. February jobs report The February jobs report next week is expected to show that the labor market is easing, with fewer jobs being created and businesses capping new hires. Economists expect that the U.S. economy added 160,000 jobs last month, up from 143,000 jobs in January, with the unemployment rate holding at 4.0%, according to FactSet. Thomas Simons, chief U.S. economist at Jefferies, expects an in-line to slightly cooler report won’t do much to move stocks, insofar as it doesn’t drastically change what markets are pricing in for interest rates. Markets were last pricing in two or three quarter-point cuts later this year, possibly starting in June, according to CME Group data based on interest rate futures trading. The bar for a drastic change in rate cut expectations is fairly high, Simons noted. Given that Fed Chair Jerome Powell has repeatedly said that the central bank is in “no hurry” to lower rates, policymakers will need several months of negative payrolls, as well as an unemployment rate above 4.5%, maybe approaching 5%, for the Fed to start getting more accommodative, he said. Still, Simons, who said he remains optimistic longer term, is nevertheless downshifting his expectations for growth for the first half of 2025. He said further economic weakness in the first six months will be supportive of the Fed cutting three times this year, instead of the two the central bank projected in December. In particular, the economist is awaiting the impact of cuts to the federal workforce ordered by the Department of Government Efficiency (DOGE), which he expects could start showing up in the March jobs report due out in April. “In the next six months, I think that it’s more likely than not that we’ll end up, you know, seeing more of the downside risk manifest rather than upside,” Simons said. Ides of March As it is, investors are wary of weakness in the months to come. While many remain confident the major stock averages can notch sizable advances this year, they’re less confident in the near-term picture given the uncertainty around Trump’s trade policies. Seasonally speaking, the month presents its own challenges. March is the fifth best month of the year for the S & P 500, typically averaging a 1.1% advance, and a 0.8% rise in a post-election year, according to the Stock Trader’s Almanac. However, in recent years, the month has seen some “wild fluctuations,” typically starting out bullish before upward momentum gives way later in the month, the Almanac showed. Elsewhere, economists next week will monitor the February ISM manufacturing numbers, as well as the January trade balance, which together could give some early indication as to whether the effort to reshore manufacturing to the U.S from abroad is taking effect. On the earnings front, Broadcom on Thursday will give investors insight into the state of the artificial intelligence play. Week ahead calendar All times ET. Monday, March 3 9:45 a.m. S & P PMI Manufacturing final (February) 10 a.m. Construction Spending (January) 10 a.m. ISM Manufacturing (February) Tuesday, March 4 2:20 p.m. New York Federal Reserve Bank President and CEO John Williams speaks at Bloomberg Invest in New York Earnings: Ross Stores , CrowdStrike Holdings , Best Buy , AutoZone Tariffs on Canada, Mexico set to go into effect and those on China are raised 9 p.m. Presidential address to joint session of Congress is traditionally held Wednesday, March 5 8:15 a.m. ADP Employment Survey (February) 9:45 a.m. PMI Composite final (February) 9:45 a.m. S & P PMI Services final (February) 10 a.m. Durable Orders final (January) 10 a.m. Factory Orders (January) 10 a.m. ISM Services PMI (February) 2 p.m. Federal Reserve Beige Book 6:15 p.m. New York Federal Reserve Bank SOMA Manager Roberto Perli gives keynote remarks on Monetary Policy Implementation in New York Earnings: Campbell’s Company Thursday, March 6 8:30 a.m. Continuing Jobless Claims (02/22) 8:30 a.m. Initial Claims (03/01) 8:30 a.m. Unit Labor Costs final (Q4) 8:30 a.m. Productivity final (Q4) 8:30 a.m. Trade Balance (January) 10 a.m. Wholesale Inventories final (January) Earnings: Broadcom , Hewlett Packard Enterprise , Costco Wholesale , Fastenal , Kroger Friday, March 7 8:30 a.m. February Jobs REport 10:45 a.m. New York Federal Reserve Bank President and CEO John Williams dicusses at US Monetary Policy Forum Report “Monetary Policy Transmission Post-Covid”, NY 3 p.m. Consumer Credit
